When a works council comes into being, how large it becomes and what it costs

An online shop with 38 staff learns on a Monday that three warehouse workers are inviting colleagues to an election meeting. The owner has the notice taken down because he "does not need a works council". The election takes place anyway, and in the end there is a criminal complaint on the table, two meetings held in paid working time and an invoice of €2,400 for the new council members' first seminar.

A right of the workforce, not a duty of the owner

The Works Constitution Act does not oblige any employer to set up a works council. It gives the workforce the right to elect one. The initiative therefore lies with the employees or with a trade union represented in the establishment, and the owner can neither prevent it nor attach conditions to it.

Where there is no works council yet, everything starts with an electoral board. Under section 17 BetrVG it is appointed by the group or central works council, if the company has one. In the typical small or mid-sized firm without such bodies, a meeting of the workforce elects the electoral board by a majority of those present.

Under section 17(3), as few as three employees entitled to vote, or a trade union represented in the establishment, may issue the invitation. If the meeting fails to take place despite the invitation, or elects nobody, the labour court appoints the electoral board on the application of at least three voters or of the union.

The employer has no role as organiser in this procedure, but does have duties. Section 20 forbids anyone to obstruct the election or to influence it through disadvantages, threats, advantages or promises. A notice torn down, time off refused for the meeting or a pay rise offered in return for giving up the idea all fall within it.

This is not only a question of employment law. Section 119 makes it an offence to obstruct or influence a works council election, punishable by imprisonment of up to one year or a fine. The offence is prosecuted only on application, for instance by the electoral board, the works council or a trade union represented in the establishment.

An owner who has reservations should therefore voice them openly and factually, for example at a staff meeting, and otherwise stay neutral. The special dismissal protection enjoyed by those who issue the invitation, by candidates and by elected members is described in the course on dismissal protection and is not repeated here.

The threshold of five and who counts

Section 1(1) BetrVG sets the floor. Works councils are elected in establishments that as a rule employ at least five permanent employees entitled to vote, three of whom are eligible for election. The rule also applies to an establishment run jointly by several companies, for example where two sister companies deploy staff and machinery together.

As a rule means here too that the usual workforce is what matters, not a chance reference date. A permanent employee holds a post intended to last; a seasonal helper hired for a few weeks does not carry the threshold. Unlike the Dismissal Protection Act, the Works Constitution Act does not weight part-timers by their hours.

Section 5 defines who is an employee for the purposes of the Act. That covers blue- and white-collar workers including apprentices, whether they work on site, in the field or remotely. Homeworkers count as well if they work mainly for the establishment.

Section 5(2) excludes, among others, the members of the body that legally represents a legal person. The managing director of a GmbH is therefore not an employee within the meaning of the Act. The same goes for spouses, civil partners and first-degree relatives who live in the same household as the employer.

Executive employees are also, as a rule, outside the Act under section 5(3). An executive is someone who may hire and dismiss independently, holds general power of attorney or a statutory commercial power of attorney that is not insignificant, or performs entrepreneurial tasks largely free of instructions. A title such as team leader does not make anyone an executive.

Under section 7 all employees of the establishment who have reached the age of 16 are entitled to vote. The 17-year-old apprentice therefore takes part. Temporary agency workers supplied by another employer may vote in the hiring establishment if they are deployed there for more than three months.

Under section 8, voters aged 18 or over who have belonged to the establishment for six months are eligible for election. Time spent immediately before in another establishment of the same company or group is credited. If the establishment itself is less than six months old, being employed there when the election is launched suffices.

Section 14(2) of the Temporary Agency Work Act adds a special rule. Agency workers cannot be elected in the hiring establishment. Where a provision of the Works Constitution Act requires a certain number of employees, however, they count there. The only exception is section 112a, on the enforceable social plan for pure staff reductions, covered in the second module.

How large the works council becomes

The number of members follows the scale in section 9. It starts at one person and rises with the workforce. For small and mid-sized establishments only the first steps matter; in the Act the scale runs up to establishments with more than 9,000 employees.

For the first two steps the Act counts employees entitled to vote. From the third step the wording changes: it starts at 51 employees entitled to vote and runs up to 100 employees, and every further step speaks only of employees. Young people under 16 therefore count above that line.

The size has practical consequences. A one-person works council is a single contact with whom much can be settled in conversation. From three members on, a body takes decisions, holds meetings and forms majorities. An owner planning to grow the workforce beyond 20 voters should be aware of this.

The number is set afresh at each election. If the establishment grows or shrinks sharply during the term of office, section 13(2) requires an early re-election under certain conditions. Smaller fluctuations do not change the size of a sitting works council.

The simplified election in smaller establishments

For most small and mid-sized firms the formal procedure with lists and long deadlines does not apply; section 14a does. In establishments that as a rule have five to 100 employees entitled to vote, the works council is elected in a two-stage procedure that can be completed within a few weeks.

At the first election meeting those present elect the electoral board. Nominations can be made until that meeting ends, and nominations that only arise at the meeting need not be in writing. The second meeting, where voting is secret and direct, takes place one week later.

If the labour court or a central works council has appointed the electoral board, the first stage falls away. A single election meeting then suffices, and nominations must be in one week before it. Anyone unable to attend the election meeting, for example because of leave or shift work, is given the opportunity to vote in writing.

In establishments with as a rule 101 to 200 employees entitled to vote the simplified procedure is not mandatory but may be agreed. Under section 14a(5) the electoral board and the employer conclude that agreement. For the employer it is one of the few points at which he helps shape how the election runs.

The meetings cost working time. Under section 44 the election meetings of section 14a and the staff meetings take place during working hours, and attendance, including additional travel time, is paid as working time. If the nature of the establishment forces a meeting outside working hours, it is still paid and travel costs are reimbursed.

Election period and term of office

Under section 13(1) regular works council elections are held every four years between 1 March and 31 May. An establishment that has no works council yet need not wait for that window, however: subsection 2 no. 6 allows an election outside that period if no works council exists in the establishment.

The regular term of office is four years under section 21. A works council elected outside the period is brought into the next regular period. If its term had lasted less than a year when that period began, it is re-elected only in the period after next, so that one election is not immediately followed by another.

For planning purposes this means that an employer who gets a new works council today will usually deal with the same people for several years. It pays to base the cooperation from the outset on fixed dates, clear responsibilities and written arrangements.

What the works council costs the establishment

Under section 37(1) works council duties are an unpaid honorary office. That does not mean they cost the employer nothing. Members receive no allowance for the office, but their pay continues while they perform it, and the establishment bears the material costs.

Under subsection 2 works council members are to be released from work without loss of pay to the extent that the size and nature of the establishment make it necessary for their duties. If council work must for operational reasons take place outside working hours, subsection 3 grants a right to corresponding time off in lieu.

That time off must be granted before a month has passed. If operational reasons prevent this, the time spent is paid like overtime. A shift operation whose council members work at different times should therefore include this item in its staff planning.

Training comes on top. Under subsection 6 the release also applies to seminars that teach knowledge required for works council work. Separately, subsection 7 gives each member, during the term of office, a right to paid release for a total of three weeks to attend events officially recognised as suitable.

Anyone taking up the office for the first time who has not previously been a youth and apprentice representative has a right to four weeks under the second sentence of subsection 7. The works council sets the timing but must take operational needs into account. If the employer considers them disregarded, he may call the conciliation committee.

Section 38 requires a member to be released from work entirely only in establishments with as a rule 200 employees. From 200 to 500 employees at least one member is to be released, from 501 to 900 two. The release can be split into several partial releases, which together may not exceed the same total.

The works council elects the members to be released after consulting the employer and gives him their names. If the employer considers a release objectively unjustifiable, he may call the conciliation committee within two weeks of being told. If he lets that period pass, his consent is deemed given.

Section 40 governs material costs. The employer bears the costs arising from the works council's activity and provides, to the extent necessary, rooms, material resources, information and communication technology and office staff. In a small establishment a lockable cabinet, a meeting room by arrangement and a laptop are often enough.

The election itself is also at the employer's expense under section 20(3). Working time lost in casting a vote, serving on the electoral board or acting as mediator does not entitle the employer to cut pay. Election costs include ballot papers, a ballot box, postage for written voting and the electoral board's working time.

Finally, the Act protects members' career development. Under section 37(4) their pay may not be set lower than that of comparable employees with the development usual in the establishment, up to one year after the end of the term. Section 78 at the same time forbids any disadvantage and any favour because of their activity.

The ban on favouring is easily overlooked. A generous allowance for the works council chair to keep cooperation smooth is just as unlawful as a promotion refused. Both can be offences under section 119, and the allowance also breaches the honorary office principle of section 37(1).