1. A German Works Council (‘works council’, or, ‘Betriebsrat’) is a group of elected employees that represent the interests of a company’s workforce. A works council collaborates with management on key decisions within the company.
2. Although it is formally mandatory for companies with five or more permanent employees to set up a works council, this does not mean that all companies do. Companies can operate without a works council until it is formally requested by employees to hold an election to set one up.
3. The Works Constitution Act grants elected members of a works council a range of rights to effectively conduct their purposed tasks: This includes a right to information, a right to consultation, a right to decline, and a right to co-determination.
4. There are various pros and cons to having a works council within any given company. The pros include that works councils protects employee rights, provide a unified voice for negotiation with employees, are free for employees, and increase productivity. The cons include the costs of operation and maintenance, arguably lesser employee freedoms, and longer decision-making timeframes.
Germany has some of the strictest labor laws in the world, with a key focus on protecting the rights of employees. To ensure a balanced relationship between the employer and employees, two systems exist alongside legislation to bridge the gap that can exist in corporate systems. The work undertaken by a German Works Council within companies is the system that focuses on company-level matters for decisions that impact employees.
If your company is looking at doing business in Germany, it’s important to know what a works council is, how they operate, and what this might mean for your international company.
What Is a German Works Council [betriebsrat]?
A German Works Council or as it is referred to in German, Betriebsrat, is a company-level body of representatives that serves the direct interest of the employees of a company. Any German Works Council representing each company is independent of national trade unions and the German Employer Associations. A works council has significant powers when it comes to employee representation on a large variety of matters.
The work of a German Works Council is governed by provisions outlined under the Works Constitution Act (Betriebsverfassungsgesetz). It is formally mandatory for companies to have a works council, but enforcement of this mandate only happens when a lack of action is taken by a company to set one up at the request of their employees.
What Is the Purpose of a German Works Council?
A German Works Council bridges the gap between employers and employees. The main purpose is to advocate for the interests of the employees of the company and make sure the key decisions of an employer are not taken alone: This is through working in collaboration with management. A works council is granted significant rights to make sure this collaboration happens in a balanced manner. These rights are as follows.
What Are the Requirements to Elect a German Works Council?
Regular works council elections are held every four years. In 2022, the election period was from March 1 to May 31. The exception is where a workplace does not have a works council, in which case, employees may elect the works council outside this period.
The election is overseen by an election committee, itself consisting of employees. Employers must provide the committee with all the necessary information (about employees) to perform this function.
Votes are cast either for individual candidates, or for lists of candidates, and immediately following the election, the election committee counts the votes, and announces the outcome. Within one week, the committee must call the first meeting of the new works council which will hold office for four years.
Note, the employer must bear all costs of the election process.
Who Sits on a German Works Council?
The work council members are elected by the workforce of each company. Each member elected is an existing employee of the company and must be able to serve a four-year term.
For employees to be eligible to be elected as a works council member, they must be over the age of 18m and have been at the company for a minimum of 6 months on a permanent basis. Potential selectees do not have to be union members to serve on the council. The number of elected members that make up a works council depends on the size of the company.
Is a Works Council Mandatory in Germany?
A works council is formally mandatory for companies with five or more permanent employees. However, it is possible for companies that meet this criterion to not have a works council. A works council is only set up at the request of the employees. If this request does come up at a company that is yet to set up a works council, then the company must organize an election as soon as possible. Not doing so is in breach of criminal law.
What Are the Pros and Cons of a German Works Council?
Like many forms of employment regulation, there are pros and cons of having works councils within a company.
Pros of German Works Councils
Some of the pros or benefits of German Works Councils include:
Cons of German Works Councils
While they have many benefits, it is clear that there are some perceived disadvantages to German Works Councils — whether from the employer or the employee’s perspective.
The cons of German Works Councils arguably include:
Video: The German Works Council in Action
The head of the works council at German auto manufacturer, Daimler, Michael Brecht, explains how co-determination is part of the German Works Council model.
Works Council vs Union: What’s the Difference?
As mentioned, a German Works Council is different from the national trade unions. Trade unions serve the industry-specific interests of employees outside of the company through collective bargaining agreements and the right to industrial action, while a works council serves the internal employee interests by monitoring compliance with employee protection laws and collective bargaining agreements. The decisions negotiated by trade unions can, however, trickle down to fall within the realm of works council matters.
Compliant Hiring in Germany with Horizons
A Global PEO such as Horizons can help support your organisation to expand your operations into Germany. Horizons hold an AUG license, and has its European HQ in Berlin, which makes it an ideal entity to hire and onboard German contractors and employees for international companies.
Horizons are also experts in German labor laws, meaning your company can remain compliant with works council requirements, and other employment laws, while conducting business in Germany.
To find out more about hiring in Germany, get in touch with Horizons today.
Frequently Asked Questions (FAQ)
What is the rationale for works councils in Germany?
The purpose of a German Works Council is to represent a company's employees’ interests on a variety of internal matters. A works council helps bridge the gap between employer and employee by working in collaboration with the employer. To keep representation fair, a works council does not represent anyone in management positions.