Co-determination update: DGB presents proposal for reform of the Works Constitution Act.

 The aim: More say on more issues. Conversely, employers want speed and future viability.

Co-determination update: DGB presents proposal for reform of the Works Constitution Act.

DGB, member unions and the trade union-affiliated Hans Böckler Foundation, together with professors from the universities of Göttingen and Bremen, have drafted a Draft law for a revised Works Constitution Act. The aim is to strengthen co-determination at companies. In view of the transformation of the world of work through digitalization and climate protection, the draft provides for more say in job security, workforce planning, further training and digital performance monitoring.

Crisis-tested co-determination?

Scientific studies indicate that companies with co-determination demonstrate high productivity and are economically successful, according to the trade union-affiliated Hans Böckler Foundation referring to the Leibniz Institute for Economic Research in Halle. It is true that during difficult phases, such as the financial crisis and the corona pandemic, companies have definitely had positive experiences when cooperating with employee representatives to bridge the economic downturn by implementing flexible working time models, for example.

In view of the on-going changes to the world of work as a consequence of climate change and new technologies, trade unions no longer regard the current co-determination rights as adequate. They are also circumvented by cross-border company structures.

The proposal identifies six areas of action

In its proposal, the DGB describes six areas for action. These range from environmental protection and equality issues to expanding co-determination to church employees, greater protection of privacy along with regulations regarding the remuneration of works councils. Section 28 (3) of the Works Constitution Act draft (BetrVG-E) stipulates that works councils at companies with 100 or more employees would be required to establish an environmental committee, for example. Section. 87 (1) No. 15 of the Works Constitution Act draft BetrVG-E states that the works council shall have the right of co-determination regarding production issues that affect environmental and climate protection. In response to technologies such as artificial intelligence, Industry 4.0 and home office along with their influence on the employees’ privacy, Section 87 (1) no. 6 a and b of the Works Constitution Act draft (BetrVG-E) demands co-determination concerning measures to protect personal privacy and data privacy. To simplify establishing works councils and strengthen these bodies, employers at companies without works councils shall be required to provide information regarding possible works council elections via some form of promotional event (Section 17 (1c) BetrVG-E). To enable employees to better exercise their participation rights, Section 81 (5) of the Works Constitution Act draft (BetrVG-E) stipulates a right to weekly release from duties for a period of one hour.

This would result in essentially no further measures without co-determination. As such, the draft does not represent a new Works Constitution Act from the ground up. Rather, it extends the works council’s participation and co-determination rights. The draft ignores the practical difficulties involved. In the age of digitization, this draft appears anachronistic and is riddled with contradictions.

Extensive interference in entrepreneurial freedom

One significant change concerns the reconciliation of interests. Currently, employers have to attempt to achieve a reconciliation of interests in the event of a change in operations, such as a partial closure of the plant. The reconciliation of interests concerns the planned measure and how it is implemented. As such, this affects the company’s decision itself. Although employers are obliged to involve the conciliation body if a reconciliation of interests cannot be achieved, the works council cannot force a reconciliation of interests. Therefore, employers can carry out the measure even without the consent of the works council if negotiating a reconciliation of interests has failed. The new draft aims to change this. If the employer and the works council cannot reach an agreement, a conciliation body shall decide on the reconciliation of interests pursuant to Section 112 (5) of the Works Constitution Act draft (BetrVG-E). Currently, this is only required for the social plan, which governance the compensation or mitigation of economic disadvantages caused to employees suffer due to the planned measure. This represents an extremely extensive interference with entrepreneurial freedom, as the external chairperson of a conciliation body would have the ability decide on the scope of personnel changes, for example.

The revisions regarding hiring and other individual personnel measures follow the same trend. According to the DGB, the (entire) works council should be invited to all job interviews. If the works council refuses to consent to the measure, the conciliation body should be responsible for replacing the measure rather than the labor court. This would even apply to the provisional implementation of the measure.

The proposed changes to protection against dismissal pursuant to Section 102 of the Works Constitution Act draft (BetrVG-E) are also highly extensive. In future, the works council would be able to object if it considers a regular termination to be socially unjustified. In this case, the employer would have to submit an application to the labor court to have the dismissal approved within two weeks. The employer would only be able to issue a notice of termination after receiving approval from the labor court. These regulations are comparable to the special protection against dismissal enjoyed by works councils. Yet there is no need to make regular termination any more difficult. Employees already have the option of taking legal action against dismissal. As a rule, the employer and the dismissed employee reach a settlement during the legal proceedings. The same also applies to works councils.

No digitalization

The Works Council Modernization Act has already been rightly criticized of being far too hesitant in addressing the reality of new technologies in the workplace and in society. Although the Works Council Modernization Act continues to permit works council meetings to be held via video conference, for example, digital meetings shall remain an exception to the rule and must be regulated in the works council’s rules of procedure. The regulations regarding reconciliation meetings further highlight the lack of acceptance of operational realities. Although these were possible during the corona pandemic in accordance with Section 129 of the Works Constitution Act (BetrVG) and were well received by both works councils and employers alike, the draft law fails to include this option.

Employers call for “modernization” and acceleration

Given the current challenges created by the Ukraine war and the consequences of the corona pandemic, the Confederation of German Employers’ Associations (BDA) has been calling for a moratorium on the burdens imposed. The Employer President Rainer Dulger used the 50th anniversary of the Works Constitution Act as an opportunity to demand for its “modernization”. For example, the co-determination process needs to be accelerated. General deadlines for the involvement of the works council are also necessary. The BDA has proposed a maximum period of three months for co-determination regarding working hours and means of communication. Furthermore, the negotiations should take no more than two months and the decision by the conciliation body no more than one month. Expert literature describes the DGB’s draft as lacking awareness of the problems and being more focused on a “backward-looking council ideology”.

The common goal: securing employment

Trade unionists and employers share the common goal of safeguarding employment in times of a shortage of skilled workers while also preventing staff reductions wherever possible. As we have already reported, the Alliance of Opportunities and the BDA have developed proposals and concepts regarding how to further qualify the workforce for the new job profiles of the smart factory and new business models resulting from climate protection and the transformation toward electromobility. Entirely without the constraints of extended co-determination rights. The “Kornwestheim agreements” also demonstrate that a legal cudgel not necessarily essential for employers, works councils and trade unions to discuss ideas, proposals and specific concepts for reorienting a plant ahead of any changes to the company. The metal and electrical industries in Baden-Württemberg reached agreement with trade unions and works councils last spring concerning a path towards a future collective agreement. This would enable reductions in working hours with partial compensation in order to shape the transformation. According to the Südwestmetall employers’ association, precisely this flexibility and lack of compulsion encourage the Companies involved to initiate processes of this nature.

Although political conditions in Berlin are currently favorable, the DGB’s reform proposal as it stands comes at an inopportune time given the war on the Ukraine and the on-going consequences of the corona pandemic. This draft is anything other than innovative and plagued with contradictions. Ultimately, it aims to place the works council on an equal footing with the management yet, of course, entirely without having to bear comparable liability and entrepreneurial risks. Initiatives by companies and the agreements concerning the future of the metal and electrical industry in Baden-Württemberg are proof of this: In response to the shortage of skilled workers, companies want to successfully address the digital transformation by securing employment to the greatest extent possible and by further qualifying their existing workforce. Yet their freedom to act should not be further restricted for this to succeed. These circumstances are the perfect opportunity for employers to enter into discussions and draw on a greater pool of ideas, even if they are not legally obligated to do so. Enabling the most open discussion possible on various levels concerning the path towards digital and green transformation could avoid management by “preventers” who propose simple solutions by keeping everything the way it is.