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27 May 2020
Formal requirements to works council consultations
Formal requirements to works council resolutions
Consequences of an invalid resolution and recommendations for employers
Communication between works councils and employers
The COVID-19 crisis poses many challenges for employers and employees alike. It also raises new questions about the cooperation process between employers and works councils and the latter's co-determination. While nobody is questioning that the works councils' co-determination rights continue to apply, employers are often found wondering how best to consult works councils when regular operations are suspended. After all, business needs to continue, which can also mean that personnel measures (eg, terminations, onboarding and promotions) and other changes need to be carried out – all of which are subject to works council consultation. This is particularly important as notices of termination issued by an employer are invalid if the employer did not properly involve the works council.
There are no formal requirements for works council consultations on personnel measures. Therefore, the consultation process could even be initiated via telephone. However, for reasons of documentation, written or textual consultations are recommended. Therefore, employers should either provide the works council's chair with a written consultation form or send the form via email and request confirmation of receipt. Conversely, the works council can provide its statement to the respective measure via email.
While consultations on personnel measures are not subject to specific formal requirements, it is questionable whether works council resolutions could be passed outside of a formal meeting (eg, via video, telephone or virtual conference). Based on the current wording of the Works Constitution Act, the prevailing opinion in legal literature tends to deny their validity, arguing that:
In reaction to the COVID-19 crisis, on 23 March 2020 Minister for Labour and Social Affairs Hubertus Heil issued a declaration pursuant to which resolutions passed in video or telephone conferences or WebEx or Skype meetings are, in the eyes of the ministry, valid – at least during the current state of matters. However, such a ministerial declaration would not be binding for the courts. In addition, other commentators such as the German Lawyers' Association have raised deviating opinions.
Recent (temporary) changes
Given the remaining uncertainty as to whether works councils would be able to adopt resolutions virtually, on 9 April 2020 the government announced plans to temporarily amend the Works Constitution Act. Works councils will be able to adopt resolutions via video and telephone conferences. The amendment is temporary and will apply until 31 December 2020. Similar amendments are planned for the Federal Act on Public Sector Staff Committees and will apply until 31 March 2021. The main purpose of the new law is to avoid physical meetings that naturally come with a high infection risk and preserve the capacity of staff representatives for effective co-determination and decision making. Having undergone the formal legislative procedure, the new regulations are expected to come into force within the next few days. In order to ensure that resolutions already adopted via video or telephone conference remain valid, the new law will have retroactive effect as of 1 March 2020.
Even with the expected amendments, there is no guarantee that works council resolutions are always properly adopted. However, according to the Federal Employment Court case law, deficiencies that fall within the competence and responsibility of the works council generally do not affect the consultation process as such, even if the employer knows or can assume at the time of implementing individual personnel measures that the works council's handling of the matter was not faultless. The court further held that, for instance, the incorrect composition of the works council or the presence of the employer during the voting would not lead to the invalidity of a notice of termination issued afterwards.
Nevertheless, it is crucial that employers do not influence works council processes. The decision on how meeting are held and how resolutions are passed must remain with the works council's chair. This is because, contrary to the abovementioned case law, the Federal Employment Court found that the invalidity of a works council's resolution can result in the invalidity of the later termination if the employer caused or influenced the error in the decision-making process by improper conduct.
Irrespective of the individual measure at hand, employers and works councils should agree on channels of communication that ensure one can reach the other even where regular operations cannot be upheld. As it remains unpredictable when the legal and practical situation might change due to the COVID-19 pandemic, employers and works councils must ensure that quick and pragmatic solutions can be found, and that the necessary means have been established to reach such results.
For further information on this topic please contact Hagen Köckeritz or Svenja Fries at Mayer Brown by telephone (+49 69 7941 0) or email (email@example.com or firstname.lastname@example.org). The Mayer Brown website can be accessed at www.mayerbrown.com.
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