In Germany, the Works Council Modernization Act entered into force on 18 June 2021. The Act is supposed to update the Works Constitution Act and adjust it to the needs of digitalisation and new working methods. However, a closer look at the Act reveals that it raises a lot of questions and modernises only to a limited extent.
Works council elections
Fewer supporting signatures are now required to facilitate the election of works councils. Furthermore, the right to vote for works councils has been extended to 16-year-old employees, and the codified and simplified electoral procedure is available to more establishments. This may cause the risk that operational changes in local operating units with up to 200 employees cannot be implemented until a social plan has been concluded.
In addition, the right to challenge the election result due to the electoral register’s inaccuracy is restricted if the electoral register was not challenged previously. The right to challenge for employers is also restricted if the electoral register’s inaccuracy is based on the employer’s statements. However, the Act does not regulate whether the absence of fault precludes the restriction of the right to challenge. The regulation is nevertheless useful, as it provides legal certainty and avoids unnecessary proceedings.
Protection against dismissal
There is, among other things, new protection against ordinary dismissal for reasons related to the person or conduct. This relates to employees who undertake preparatory acts for the establishment of a works council and declare the intention to establish a works council in a publicly certified statement.
Thus, the dismissal is invalid from the time the certified statement is made until the time of the invitation to a works council or election meeting, but for a maximum of three months. However, ordinary dismissals for operational reasons and terminations for cause remain unaffected.
Unfortunately, the Act lacks a provision requiring the employee to inform the employer of the special protection when giving notice of termination. Therefore, it is questionable how the employer is supposed to become aware of the special protection against dismissal.
Even though the Act reduces formal requirements by allowing the qualified electronic signature for works council agreements instead of the written form, this is only a small step towards digitalisation.
This is also true in terms of virtual works council meetings. Generally, these meetings must be held in person. However, the Act stipulates that holding virtual works council meetings may be permissible if certain requirements are met including that the works council’s internal rules of procedure regulate the conditions of participation and ensure the precedence of face-to-face meetings.
Unfortunately, the Act does not explain under what circumstances the precedence of face-to-face meetings is properly ensured. Are virtual meetings permissible only in particularly urgent matters or is virtual participation subject to the discretion of each works council member? It is also still unclear not only how works councils are supposed to meet their obligations of ensuring through technical measures that third parties are unable to participate in a virtual meeting, but the Act also does not regulate what consequences the possible access of third parties to virtual meetings has (e.g. invalidity of resolutions).
Particularly in case of important declarations by the works council (e.g. amendment of a pension scheme), the prerequisites for an effective resolution must therefore be examined carefully. Another downside is that the Act does not seem to allow works council elections to be carried out digitally.
If the employer plans to use artificial intelligence (AI), it is now required to inform the works council. Additionally, if the works council needs to assess the implementation and use of AI, the consultation of an expert is considered necessary by law. Even if it is likely that this notion also relates to the person of the expert, the parties still need to agree on the costs and the extent of the expert’s involvement.
Since AI as a software component is increasing continuously, the new regulation has considerable relevance. It will increase the costs of introducing and using new IT systems and must also be taken into account when scheduling the implementation.
In terms of data protection, the Act stipulates that the employer is the data controller within the meaning of the data protection regulations also insofar as the works council processes personal data in order to fulfil its tasks.
Although the works council’s obligation of complying with data protection regulations when processing personal data remains unchanged, there is no regulation on how the employer may fulfil its obligations as the data controller and at the same time reduce its risk of damages and fines according to the GDPR. This is particularly unfortunate as the employer has no authority to issue instructions to the works council on how data protection is to be maintained by it.
In any case, it will be necessary to ascertain which data is processed for which purposes within the works council in order to include this in data directories and information provided to employees. However, as far as works councils are concerned, it is unclear to what extent they remain responsible.
Furthermore, the legislator has implemented a new but unnecessary codetermination right for the execution of mobile work that is performed by means of information and communication technology. This is not necessary, as there are already several codetermination rights covering the execution of mobile work in Germany. The Act does not reveal how this overlap should be dealt with, though. The legislator’s statement that the new codetermination right does not affect existing ones is surely insufficient.
A consequence of the new regulation is that companies need their works council’s consent if remote work (e.g. home office) is to be introduced. In this context, the works council may, among other things, codetermine the proportion of mobile work, the working hours, and other occupational health and safety regulations as well as the technical equipment for remote workers.
Practical experience with comparable codetermination rights in the past shows that it is extremely important for employers to prepare agreements regarding remote work covering those topics at an early stage and thus, initiate negotiations. If the negotiations fail, an internal arbitration procedure will decide on the introduction of mobile working.
Although the new legislation does not involve any real modernisation, it does extend the works councils’ rights of participation. It is important to analyse the significance of these changes and to take them into account in good time in the day-to-day cooperation with the works council in order to avoid delays in the implementation of corporate measures.