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Ready for digitalisation – new features of the Works Councils Modernisation Act

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In companies where cooperation with the works council is strained or even conflict-laden, HR Managers are likely to react with scepticism or even fear at the news that the German legislators have decided to expand the works constitution. And there are not just a few such companies. In contrast, the Works Councils Modernisation Act (Betriebsrätemodernisierungsgesetz, here “WCMA”) adopted by the German Bundestag on 21 May 2021 is based on the (ideal) notion: where works councils are active, there is more scope for innovation, the working conditions are better, economic success is more stable and crises can be better mastered. It is therefore unsurprising that the WCMA originated during the Corona pandemic, the undeniable catalyst for the new rules on the digitalisation of work organisation. While making it simpler to establish works councils and extending the co-decision rights of existing works councils, the WCMA also aims to reform the rules on codetermination concerning remote working and the performance of work by means of IT and communications technologies. The Bundesrat also voted in favour of the WCMA on 28 May 2021, which makes this a good time to take an initial tour through the legal changes.

Establishment and election of the works council

According to the explanatory memorandum for the WCMA, the legislator assumes that many companies, particularly small ones, deliberately decided not to establish works councils. The high formal standards for establishment were supposedly a disincentive.  The WCMA reduces the obstacles by allowing the simplified election procedure under § 14a of the Works Constitution Act (Betriebsverfassungsgesetz, BetrVG) to be used in works with up to 100 employees (rather than up to only 50 employees, as is currently the case). The simplified election procedure has shorter time limits to expedite the overall election. In works with 101 to 200 employees, the election committee and the employer can agree to use the simplified procedure as an alternative to the normal election procedure. The time limits applicable to the election procedure are also reduced. To encourage more employees to run for a position on the works council, the WCMA reduces the number of necessary supporting signatures for a list of candidates.

Another change concerns the right to challenge a works council election, a difficult, time-consuming, and expensive process in practice: where the challenge is based on the falsity of the electoral roll and the challenger failed to use the available legal avenues to clarify such an election flaw, the right to challenge the election is limited in favour of legal certainty.

Youth and trainee representatives (YTR)

The election procedures for YTR have also been simplified. The maximum age limit has been abolished to encourage trainees to become involved; instead, the status of the employee as a trainee will be decisive.

Special protection against dismissal

The Act Against Unfair Dismissal (Kündigungschutzgesetz, KSchG) already contains rules providing special protection against unfair dismissal for various groups of people who are involved in the works council election. The WCMA additionally provides that those employees who are responsible for inviting others to a works council election or appointing an election board may not be dismissed from the point of time of the invitation or appointment until the results of the election have been announced (§15 (3a) Act Against Unfair Dismissal, revised version).

Remote working and working from home

The rules introduced by the WCMA on remote working and working from home are the most significant. Sections 30 to 34 of the Works Constitution Act (revised version) provide the option of meetings of the works council to be held via video or telephone conference in accordance with the framework – to be established by the works council itself - while face-to-face meetings are still preferred. In addition, the new law clarifies that a qualified electronic signature can be used in the future to conclude works agreements. Both the works council and employers should welcome these changes as they facilitate cooperation and the work of the works council.

A key element of the WCMA is the introduction of a new co-determination right concerning arrangements for remote working, established in § 87 (1) No. 14 of the Works Constitution Act. This new right is designed to promote remote working and protect workers when performing their duties from a home office. The precise wording of this new rule should be observed. The co-determination right concerns the arrangements for but not the introduction of remote working. In contrast to other co-determination rights in social matters, the works council does not have a right of initiative that would enable it to request that remote working be allowed. This wording took some of the sting out of the new rule; originally, the proposed new right was much broader.

Artificial intelligence

Artificial intelligence has become increasingly significant with the advance of digitalisation of the working world. The WCMA establishes that the co-decision rights of the works council concerning the planning of procedures and workflows continue to apply where there are plans to use artificial intelligence, such as algorithm-based decision-making systems. The works council must be informed of these plans and consulted on the measures and their effects on employees. The co-decision rights for the establishment of selection guidelines pursuant to § 95 of the Works Constitution Act continue to apply even when they are developed exclusively or partly with the support of artificial intelligence; without the approval of the works council, these guidelines cannot be implemented. If you have ever experienced works council negotiations on technical items, you will know that these discussions are likely to cost companies both time and money. What’s more: the works council can consult an expert for information and communications technology – a rule that is likely to be met with little enthusiasm from the company due to the already high costs for advisors for the works council.

Continuing education

Qualifications are vitally important especially in light of digitalisation, but also with respect to ecological and demographical change. To take this into account, the WCMA strengthens the rights of the works council concerning continuing education and extends the works council’s general right of initiative in vocational training to include the option of involving the conciliation board. If the works council demands, for example, that training measures be provided for certain programmes or tools and the employer disagrees, the conciliation board can help both parties reach a compromise, such as on the duration of the training and the participants.

Data protection

The new version of § 79a of the Works Constitution Act contains a clarifying provision on the responsibility of the employer under the General Data Protection Regulation when the works council processes personal information. According to this provision, the employer remains responsible for the data processing within the meaning of data protection law. More specifically, this means that the employer’s liability also extends to possible data protection infringements committed by the works council.

Summary

Given the increasing digitalisation of the working world, the amendments to the Works Constitution Act were definitely necessary. As a whole, the new provisions introduced by the WCMA can also be viewed as moderate, even if they are associated with increased costs. Only those works councils that prefer to delay taking decisions and adopting resolutions for tactical reasons are unlikely to welcome the use of modern technology to facilitate their work. The future will show whether the extension of the simplified election procedure to works with up to 100 employees or in certain cases up to 200 employees will have the desired effect of more works councils being formed.

Author: Dr Thomas Lambrich

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