Employment law in Germany Works Council

Transcription

1 Employment law in Germany Works Council Steffen Nguyen-Quang, EMBA 9 June 2016

2 Agenda Employee representative bodies Establishment of a works council General functions and competencies of the works council Works council s rights Co-determination rights in case of a restructuring Special dismissal protection Q&A Session Simmons & Simmons LLP Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 1 /

3 Employee representative bodies Simmons & Simmons LLP Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 2 /

4 Employee representative bodies Trade Unions Negotiation of collective bargaining agreements with employers' association Co-determined supervisory board (private limited companies and public limited companies; GmbH and AktG) 1/3 of the supervisory board (more than 500 employees) 1/2 of the supervisory board (more than 2,000 employees) 3 / L_LIVE_EMEA1: v1

5 Employee representative bodies Economic Committee ( EC ) Shall be established in companies with more than 100 employees Discussion of economic matters with management and report to works council Employer has to keep EC advised about economic matters 4 / L_LIVE_EMEA1: v1

6 Employee representative bodies works council Competence of WC limited to a particular operation A company with multiple operating sites could have several works councils 5 / L_LIVE_EMEA1: v1

7 Employee representative bodies Types of works councils: (Single) Works Council Joint Works Council Two or more works councils of a company can form a joint works council Competence for matters concerning the entire company or several operations Competence for operations without a works council Group Works Council Two or more works councils of affiliated entities could establish a group works council Authority for matters concerning the entire group or multiple companies and for matters of those establishments without a works council European Works Council 1,000 employees within the Member States and at least 150 employees in each of at least two Member States; EWC is responsible for decisions with international impacts 6 / L_LIVE_EMEA1: v1

8 Establishment of a works council 7 / L_LIVE_EMEA1: v1

9 Establishment of a works council It is not mandatory for an employer to set up a works council Works council elections have to be initiated by the employees But: if employees request the establishment of a works council, the employer is obliged to enable its employees to set one up Prerequisite: at least five constantly employed employees who are entitled to vote ( 18 years old) 8 / L_LIVE_EMEA1: v1

10 Establishment of a works council Establishment of an election committee by resolution of a works meeting The election committee initiates and holds the election of the works council All employees ( 18 years) are entitled to vote with the exception of agency workers Agency workers authorised to participate in works council elections after a tenure of 3 months Agency workers occupying a permanent position shall be counted for the purpose of determining the size of the works council 9 / L_LIVE_EMEA1: v1

11 Establishment of a works council The number of works council seats depends on the size of the relevant establishment: 5 to 20 employees entitled to vote: one member 21 to 50 employees entitled to vote: three members 51 to100 employees entitled to vote: five members 101 to 200 employees: seven members 201 to 400 employees: nine members 10 / L_LIVE_EMEA1: v1

12 General functions and competencies of the works council 11 / L_LIVE_EMEA1: v1

13 General tasks of the works council Monitoring the employer Ensuring that laws, safety regulations, collective agreements etc. are adhered to Promoting the integration of young or elderly workers, disabled persons and foreign employees Participating in the organisation of the workspace Making applications to the employer for the introduction of measures serving the interests of employees Dealing with employees grievances 12 / L_LIVE_EMEA1: v1

14 Competencies of the works council Not covered by the authority of the works council: Matters which are subject to a collective bargaining agreement Authority limited to matters concerning the respective establishment (which may include sales force and/or home office employees) No representation of senior management Management board Managing directors Executive employees 13 / L_LIVE_EMEA1: v1

15 Works Council s rights 14 / L_LIVE_EMEA1: v1

16 Works council s rights Information Consultation Participation Co-determination 15 / L_LIVE_EMEA1: v1

17 Information rights Sec. 80 WCA Duty of the employer to supply comprehensive information to the works council Upon the works council s request, it shall be granted access to documentation it may require to comply with its duties Includes access to payroll documentation showing the gross wages and salaries of the employees Simmons & Simmons LLP Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 16 /

18 Consultation rights regarding dismissals I Sec. 102 WCA Consultation before each dismissal Employer must inform works council about The type of dismissal (ordinary or for cause) The reasons for the termination Further information depending on the reasons for the termination Social data of the individual Available vacancies for the individual [ ] Employer limited to reasons/information in a dismissal protection proceeding shared with the works council before Simmons & Simmons LLP Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 17 /

19 Consultation rights regarding dismissals II Failure to properly inform the works council will render the dismissal invalid Deadline of one week for works council to make a statement Works council approves dismissal or No statement: works council shall be deemed to have given its consent or Objection In case of a dismissal for cause, the deadline is reduced to 3 days Simmons & Simmons LLP Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 18 /

20 Consultation rights regarding dismissals III Works council may oppose a dismissal if: The employer in selecting the employee did not take sufficient account of social aspects The dismissal violates guidelines for the selection of employees for dismissals A vacancy is available within the company (not only the operation) The employee could be kept on after a reasonable period of training The employment could be continued under altered conditions provided the employee has indicated his agreement to such change Simmons & Simmons LLP Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 19 /

21 Consultation rights regarding dismissals IV Effect of an objection Employee could claim to be employed beyond the notice period until a final decision in the dismissal protection case is reached Employer can apply to be released from the obligation in the following cases Action brought by the employee is not likely to succeed or appears abusive Continuation of the employment relationship imposes an unreasonable financial burden on the employer Objection raised by the works council is manifestly unfounded Simmons & Simmons LLP Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 20 /

22 Co-determination rights Most powerful form of works council participation Includes information and consultation Generally exerted by means of works agreements ( Betriebsvereinbarungen ) Direct effect for all individual employment relationships within their scope Individual employment contracts cannot validly deviate from a works agreement to the employee s disadvantage Establishment of an Arbitration Committee ( Einigungsstelle ), if the parties do not reach an agreement The chairperson is a neutral person as agreed upon by both parties The other members will be delegated by the parties Final and binding decision Simmons & Simmons LLP Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 21 /

23 Approval rights regarding staff matters I Sec. 94 WCA Approval of the works council required regarding Staff questionnaires Any personal data contained in written employment contracts that are to be generally used in the establishment Establishment of general assessment criteria Establishment of an Arbitration Committee if no agreement is reached on their contents Simmons & Simmons LLP Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 22 /

24 Approval rights regarding staff matters II Sec. 95 WCA Approval of the works council required regarding guidelines for the selection of employees for Recruitment Transfer Regrading Dismissal If no agreement is reached on the guidelines or their contents, the employer may apply to the Arbitration Committee for a decision Simmons & Simmons LLP Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 23 /

25 Approval rights regarding staff matters III Sec. 99 WCA Requirement: usually more than 20 employees with voting rights The employer shall notify the works council in advance of any Recruitment Grading Regrading Transfer Simmons & Simmons LLP Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 24 /

26 Co-determination rights regarding social affairs I Sec. 87 WCA (extract) No. 1: No. 2: Matters relating to the rules of operation of the establishment and the conduct of employees in the establishment Ban on smoking (Private) use of telephones and computers, Facebook etc. Time recording The commencement and termination of the daily working hours including breaks and the distribution of working hours among the days of the week Implementation of working time accounts Begin and end of the daily working time Time and duration of breaks 25 / L_LIVE_EMEA1: v1

27 Co-determination rights regarding social affairs II Sec. 87 WCA No. 6: No. 8: The introduction and use of technical devices designed to monitor the behaviour or performance of the employees New phone system Cameras The form, structuring and administration of social services whose scope is limited to the establishment, company or combine Retirement funds (but not pension commitments) Cafeteria 26 / L_LIVE_EMEA1: v1

28 Co-determination rights regarding social affairs III Sec. 87 WCA No. 10: Questions related to remuneration arrangements in the establishment, including in particular the establishment of principles of remuneration and the introduction and application of new remuneration methods or modification of existing methods Bonus budget and distribution of bonus payments Only collective arrangements regarding the remuneration Not the amount of the individual remuneration (but the criteria to determine the amount) 27 / L_LIVE_EMEA1: v1

29 Consequences of inobservance of the works council s codetermination rights The works council may apply for an interim injunction to refrain from implementing the measure until an agreement is reached Ineffectiveness of the measure Establishment of an arbitration committee ( Einigungsstelle ) Claim for omission or declaratory judgment Annulment of a measure and threat of a penalty payment (sec. 101 WCA) Imposition of a fine of up to EUR 10,000 (sec. 121 WCA) 28 / L_LIVE_EMEA1: v1

30 Co-determination rights in case of a restructuring 29 / L_LIVE_EMEA1: v1

31 Co-determination rights in case of a restructuring Sec. 111 et seq. WCA Requirement: usually more than 20 employees Co-determination rights regarding Intended business changes Which could lead to substantial disadvantages For the whole or a substantial part of the workforce Examples: Collective redundancies Business closure Employer must inform works council about the intended measures in a timely manner Before the final decision, thus at a time when the works council could still influence the proposed measures Agreement on a reconciliation of interests (and a social plan in the event of collective redundancies) Simmons & Simmons LLP Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 30 /

32 Works council involvement in a restructuring I Transfer by way of a share deal: no co-determination right Co-determination right regarding reorganisations or operational measures which could have a material impact on the workforce Works council can demand Consultations regarding the implementation of the envisaged measures (Interessenausgleichsverfahren, reconciliation of interests) as well as A compensation package for the affected employees (Sozialplan, social plan). Works council can t prevent the reorganisation, but may delay it Works council may also apply for an interim injunction to stop the implementation of the restructuring until a balance of interests agreement has been agreed 31 / L_LIVE_EMEA1: v1

33 Works council involvement in a restructuring II Reconciliation of interests = agreement about the implementation of the envisaged restructuring (whether, when and how) Employer is obliged to inform the works council before a binding decision has been made; and Obliged to enter into negotiations with the works council about the planned measures Case has to be taken to the conciliation committee if an agreement cannot be reached Ultimately no obligation to conclude a balance of interests agreement 32 / L_LIVE_EMEA1: v1

34 Works council involvement in a restructuring III Social plan = Agreement on the compensation and mitigation of economic disadvantages, ie severance payments Case has to be taken to the conciliation committee if a social plan cannot be reached In contrast to the reconciliation of interests a social plan is compulsory Binding decision of the conciliation committee 33 / L_LIVE_EMEA1: v1

35 Special Dismissal Protection 34 / L_LIVE_EMEA1: v1

36 Special protection against dismissal Works council members benefit from special dismissal protection Applies to Current members; and Deputy members who have actually covered another member; and Former works council members within a year after their dismissal Ordinary termination excluded, however, termination for cause possible Gross misconduct Wind down of the operation or a part thereof 35 / L_LIVE_EMEA1: v1

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38 Further Questions? Thank you for your kind attention! simmons-simmons.com elexica.com This document is for general guidance only. It does not contain definitive advice. SIMMONS & SIMMONS and S&S are registered trade marks of Simmons & Simmons LLP. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated practices. Accordingly, references to Simmons & Simmons mean Simmons & Simmons LLP and the other partnerships and other entities or practices authorised to use the name Simmons & Simmons or one or more of those practices as the context requires. The word partner refers to a member of Simmons & Simmons LLP or an employee or consultant with equivalent standing and qualifications or to an individual with equivalent status in one of Simmons & Simmons LLP s affiliated practices. For further information on the international entities and practices, refer to simmonssimmons.com/legalresp. Simmons & Simmons LLP is a limited liability partnership registered in England & Wales with number OC and with its registered office at CityPoint, One Ropemaker Street, London EC2Y 9SS. It is authorised and regulated by the Solicitors Regulation Authority. A list of members and other partners together with their professional qualifications is available for inspection at the above address. 37 / L_LIVE_EMEA1: v1