Shaping transformation: Proper planning is half the job.

 Structural transformation and labor law (2) – Company changes and qualification social plans.

Transformation gestalten: Gut geplant, ist halb gewonnen.

When job profiles and requirements change as a consequence of digitalization and climate protection, companies rapidly undergo changes that exceed the company transformation threshold. How are works councils entitled to be involved? What are the benefits of a qualification social plan? Part 2 of our series provides answers for employers and human resources specialists.

Digital colleagues can take on an ever-greater range of tasks: According to a study by the Institute for Employment Research (IAB), automation is increasingly capable of handling more complex activities, especially in manufacturing occupations. Yet at the same time, new job areas are emerging, such as product customization using 3D printing. The transformation toward a climate-neutral economy creates a similar situation: On one hand, jobs are being lost at blast furnaces in the steel industry. Yet on the other hand, new jobs are being created to control metallurgical processes. If you would like to know how easy it is to replace your own job, check this with the IAB Job Futuromat.

Company transformation as a consequence of new work?

Whether the structural change results in staff cutbacks, new production methods or to an agile company organization – the company change threshold as per Section 111 sentence 3 No. 1,4,5 of the Works Constitution Act (BetrVG) is easily exceeded. The involves consequences for HR managers: The works council has to be involved and companies must negotiate a reconciliation of interests with the employee representatives and agree on a social plan. The reconciliation of interests describes the specific measures and how they will be implemented. This concerns the “whether” and “how” of the company transformation. In contrast, the social plan governs how the employees’ financial disadvantages can be compensated. Although the solution to date has primarily consisted of severance pay social plans, this approach is currently changing in light of the shortage of skilled workers: Companies will often prefer to retain all or part of their core workforce and qualify them for the new work processes and production methods.

Complexity creates potential for delays

A company transformation is by nature highly complex, and good strategic planning is a decisive factor. For example, manufacturing in the context of Industry 4.0 can only be implemented in combination with properly qualified employees. Therefore, when planning, companies need to consider which employees can and require further qualification. Who receives which qualification training and when? Accordingly, a reconciliation of interests and a social plan have to be negotiated to determine which employees will remain with the company and receive further training. If the works council decides to block even only parts of the project, for example because it fears that new digital production methods will monitor employees excessively, the entire schedule can quickly be disrupted. Under some circumstances, a conciliation committee may need to be repeatedly involved.

What are the benefits of a qualification social plan?

Given that a transformation project generally consists of a process with numerous interacting parts, creating a complete package including a qualification social plan is often a sensible approach. This plan not only describes the activities and how the transformation is implemented but also the employees’ further education in the new activities. This serves as a form of qualified reconciliation of interests and combines severance cost savings for personnel cutbacks with the employees’ individual rights to qualification, for example, which cannot be regulated in a classic reconciliation of interests. Therefore, this represents a hybrid agreement that can be concluded as a company agreement. Further advantages of a qualification social plan from the employer’s perspective: Giving the works council the opportunity to negotiate issues that are not subject to co-determination, such as individual employees’ rights to training, increases the level of acceptance among employee representatives and the workforce. This helps to more quickly resolve concerns regarding sub-aspects of the project. At the same time, corresponding company agreements provide financial support options, as we reported in Part 1.
The typical provisions of a qualification social plan include the following:

  • Qualification requirements for the newly created jobs based on a current-target analysis,
  • Qualification targets and methods,
  • Specific participation rules, such as the duration and scope,
  • Funding.

Change to win: Digital transformation and climate-neutral business need not cause upheavals on the job market in times of a shortage of skilled workers, as Daniel Terzenbach, Executive Board Member of the German Federal Employment Agency, predicts in the Handelsblatt. Permanent on-going qualification and targeted further education for future employment are key factors. We presented intelligent concepts for acquiring the skills of the future in part 1 of our series. However, the actual implementation itself is complex because such projects often involve changes to the company. That is why: Proper planning is half the job.