The Works Council Modernization Act is the first step in the digitization of works council work, which was already being handled in an unbureaucratic manner during the Covid-19 pandemic. It remains to be seen whether the declining numbers of works councils in companies can be halted or even reversed by making it easier to establish them and by extending co-determination rights. The Works Council Modernization Act also leaves several questions unanswered that need to be addressed in practice. The following is an overview of the main changes.
Facilitation of the establishment and election of works councils
Lowering the age for eligible voters to the age of 16 (instead of 18 years of age so far) (Sec. 7 Works Constitution Act Draft (BetrVG-E))
Extension of the scope of application of the simplified election procedure: it shall be mandatory for companies with five to 100 (instead of 50 so far) employees entitled to vote (Sec. 14a para. (1) sentence 1 BetrVG-E); it shall be optionally compatible for 101 to 200 employees entitled to vote (Sec. 14a para. (5) BetrVG-E). It is doubtful whether this will reverse the trend of falling works council numbers, as the simplified election procedure is also complex, contrary to its name.
Reduction of "supporting signatures" (Sec. 14 para. (4) BetrVG-E) and limitation of the right to contest elections: Persons entitled to vote shall only be able to successfully contest an incorrect electoral list if they have previously lodged a proper objection (Sec. 19 para. (3) sentence 1 BetrVG-E). In the future, employers shall no longer be able to claim errors based on their own incorrect information (Sec. 19 para. (3) sentence 2 BetrVG-E).
Extension of protection against dismissal: The first six (instead of the previous three) employees listed in the invitation to a works meeting or appointment of an election committee shall have protection against dismissal (Sec. 15 para. (3a) sentence 1 Dismissal Protection Act Draft (KSchG-E)). In addition, preparatory acts shall also be protected in that employees have protection against dismissal as soon as they have made a publicly certified declaration that they wish to establish a works council (Sec. 15 para. (3b) KSchG-E). This is intended to prevent employees who initiate the establishment of a works council from being dismissed for (pretextual) personal or behavioral reasons. The protection against dismissal is limited to ordinary dismissals on grounds of personal or behavioral reasons.
Consent to the extraordinary termination of certain persons (e.g. members of works councils, board representatives, election committees): The extraordinary termination of these members already requires the consent of the works council or the replacement of the same by the labor court (Sec. 103 para. (1), (2) BetrVG). A new provision shall clarify that the consent of the labor court is also required in establishments without a works council or which have become without a works council (Sec. 103 para. (2a) BetrVG-E). However, this merely reflects the established case law of the federal labor court (cf. BAG of May 30, 1978, 2 AZR 637/76).
Facilitation of the election of youth and trainee representatives
Comparable minor changes shall be made to the election of youth and trainee representatives (Sec. 63 para. (4) sentence 1, para. (5) BetrVG-E). It shall be emphasized that in future the age of trainees will no longer be a factor in the establishment of youth and trainee representatives and their involvement in them (until now, an age limit of 25 years applied) (Sec. 60 para. (1) BetrVG-E). In view of the associated latent age discrimination against older trainees, this adjustment is to be welcomed.
Digitization of works council work
Digital meetings and resolutions: The option introduced for a limited period during the Covid-19 pandemic of holding meetings and passing resolutions digitally (Sec. 129 BetrVG) shall basically remain in place (Secs. 30 para. (1) sentence 5, 33 para. (1) sentence 1, 51 para. (3) BetrVG-E). There shall be a comparable provision for the representative body of executive employees (Secs. 12 para. (5-7), 13 para. (1) Representative Body for Executive Staff Act Draft (SprAuG-E)). However, meetings shall be held primarily in presence in the future as well (Sec. 30 para. (1) sentence 5 BetrVG-E). A digital meeting shall be possible if:
the respective rules of procedure ensure the principle of presence,
¼ of the members do not object within a period to be determined by the chair, and
it is ensured that third parties cannot take note of the meeting (Sec. 30 para. (2) BetrVG-E).
The works council is responsible for the precise formulation of the framework conditions. The principle of presence can be safeguarded, for example, by limiting the number or content of digital meetings. Furthermore, a works council member who participates digitally in meetings shall confirm his or her participation to the chair (Sec. 34 para. (1) sentence 4 BetrVG-E). It remains to be seen whether a violation of the requirements for a digital meeting can lead to the invalidity of the works council resolution as a "gross violation". Employers should therefore take the precaution of ensuring that these requirements are met, particularly when concluding important works council agreements.
However, the Works Council Modernization Act falls short of the interim regulation (Sec. 129 BetrVG) in one important respect: it does not allow a digital meeting of a conciliation body. This option ends on June 30, 2021, and it will also not be possible to hold a works meeting, works council meeting or youth and trainee meeting digitally in the future.
Works council agreements/conciliation board resolutions in electronic form: Recording resolutions of the conciliation board and works council agreements in electronic form, i.e., with a qualified electronic signature (Secs. 76 para. (3) sentence 4, 77 para. (2) sentence 3 BetrVG-E), is one of the major simplifications the Act brings into force. The same applies to agreements on reconciliations of interests and social compensation plans (Sec. 112 para. (1) sentence 1 BetrVG-E) as well as to guidelines and agreements of the representative body of the executive employees (Sec. 28 SprAuG).
Data protection officer: Designating the employer as data protection officer within the meaning of the General Data Protection Regulation (GDPR) in cases where the works council processes personal data on its own responsibility (Sec. 79a BetrVG-E) leaves several questions unanswered. Although it has been clarified that the works council itself is not a data protection officer, which was not stated by the courts so far (cf. BAG of April 9, 2019, 1 ABR 51/17), the following questions remain still open: How can employers ensure that the works council complies with the data protection rules? Do they have any means of control and, if so, what are they? To what extent can the data protection officer influence the works council? Instead of responding to these questions, the new law simply demands employers and works councils to support each other in the area of data protection (Sec. 79a sentence 3 BetrVG-E). The clarification of this legal uncertainty – especially as regards liability – was handed over to the practice and the courts.
Co-determination as regards mobile working
Due to the Covid-19 pandemic, many companies gained experience with employees working from home and other types of mobile working. This often took place largely unregulated. This is a quite risky approach regarding the associated questions of occupational health and safety, data protection, cost bearing and working hours regulations. In view of the increasing importance of mobile working, the works council shall have a right of co-determination regarding the organisation of mobile work (Sec. 87 para. (1) no. 14 BetrVG-E). Consequently, the works council has a co-determination right on "how" mobile work is carried out; the final decision "whether" mobile work is carried out or not remains with the employer.
Considering the current and expected future meaning of different types of mobile working, the new regulation is unsatisfactory, as it does not lead to any new conclusions: Under current law, the works council already plays an important role in the organisation of mobile work, e.g. as regards the organisation of daily working hours, data protection and occupational safety regulations (Sec. 87 para. (1) nos. 1, 6, 7 BetrVG).
Involvement of the works council in AI
The new regulations relating to the use of artificial intelligence (AI) should also be seen in the context of advancing digitization.
In the future, works councils shall have the option of consulting an external expert if the introduction or application of AI is in discussion. The statutory requirement of necessity is thus deemed to exist (Sec. 80 para. (3) sentence 2 BetrVG-E). A permanent expert shall also be able to be appointed in this way (Sec. 80 para. (3) sentence 3 BetrVG-E). The parties then "only" have to conclude an agreement which regulates the deployment of the expert – in particular his costs – in detail (Sec. 80 para. (3) sentence 1 BetrVG-E). The legislature estimates the additional financial burden per company at around EUR 833.00 annually, assuming only one working day per year. Just as surprising as the cost estimate is the legislative decision itself. This is a permanent exception to the principle that works councils must first have access to in-house expertise before commissioning an external expert (cf. BAG of November 16, 2005, 7 ABR 12/05).
In the future, the use of AI shall also be part of the information provided to the works council so that it can act in an advisory capacity. In this respect, the law now clarifies that work procedures and work processes include the use of AI (Sec. 90 para. (1) no. 3 BetrVG-E).
The participation of the works council in this regard is also to be ensured for individual personnel measures. Guidelines on personnel selection in the case of recruitment, transfers, regrouping and dismissals are subject to approval (Sec. 95 para. (1) sentence 1 BetrVG). If the company has more than 500 employees, the works council can also demand that they need to be set up (Sec. 95 para. (2) sentence 1 BetrVG). These rights shall also apply if AI is used for the guidelines (Sec. 95 para. (2a) BetrVG-E).
Rights of the works council in further training
The rights of the works council in professional training shall also be strengthened. The works councils' existing right of initiative shall be extended to include the option of appealing to the conciliation body if necessary (Sec. 96 para. (1a) BetrVG-E). This is intended to counteract the changes in the world of work brought about by Industry 4.0 by enabling the parties to the works council to reach agreement on the qualification of employees on a needs-oriented basis. However, according to the legislative reasons, there is expressly no obligation to reach such an agreement. The provision is therefore not very convincing. Enabling a time-consuming and cost-intensive conciliation procedure as an end in itself is not in line with needs. In any case, works councils already have differentiated rights in the area of professional training. The trustful cooperation of the parties is not served if the conciliation board can now be used as a deterrent.
Accident insurance coverage for mobile working
Considering the growing importance of work in the home office associated with the Covid-19 pandemic, the planned closure of the gap in accident insurance protection is to be welcomed (Sec. 8 para. (1) sentence 2, para. (2) no. 2a Social Insurance Code VII (SGB VII-E)). The same accident insurance coverage shall be applied to mobile work as to the company site; i.e. accident insurance coverage shall also exist for ways in the employee's own household for personal business purposes. In addition, the insurance coverage shall also be extended to the ways made to care for children outside the home due to the employee’s occupation. According to the legislative reasons, this is necessary because, as in the case of work at the place of business, the employer has an interest in accommodating the children in order to enable the insured person to carry out his or her professional activities.
The Works Council Modernization Act therefore does not lead to any major changes. Apart from the welcome simplification of the form of works council agreements and the permanent option of holding meetings digitally, the Act contains little to adapt the Works Council Constitution Act to the modern working world. Although the relevant issues are addressed, the regulations do not make a substantial contribution to modernizing of the works constitution law. The treatment of works council work under data protection law and the right of co-determination for mobile work are just two examples here.
Authored by Dr. Katrin Maily
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