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10. Trade Unions and Employers Associations
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10. Trade Unions and Employers Associations

Brief Description of Employees’ and Employers’ Associations

In general, the main function of trade unions is to conclude collective bargaining agreements. Trade union representatives also support employees or the works council (e.g. by giving legal advice and representing employees before the court), but do not have participation rights within a company. Employers’ associations are mostly organised by industrial sectors as well as by region, with national and state boards. They are generally the counterpart of trade unions when negotiating and concluding collective bargaining agreements.

Rights and Importance of Trade Unions

The formation, function and the internal democratic structures of trade unions are protected by constitutional law. Trade unions can conclude collective bargaining agreements with either a single employer or an employers’ association. Collective bargaining agreements are contracts that have immediate and binding effect on the individual employment relationship in the same manner as statutory law, if one of the following requirements is met:

  • the employee is a member of the relevant trade union and the employer is a member of the relevant employers’ association/concluded the collective bargaining agreement itself;
  • the Federal Ministry of Labour and Social Affairs has declared the collective bargaining agreement to be generally binding; or
  • the employment contract provides for the contractual application of a particular collective bargaining agreement.

Although the unionisation rate in Germany is low, with about 20 percent of the employees organised, the collective bargaining coverage is usually around 80 percent. In the event that several collective bargaining agreements apply in one establishment, the agreement concluded with the union that has the highest number of members among the employees in the establishment shall prevail. Smaller unions also represented in the establishment are only entitled to assume this same agreement for their members, so that only one collective bargaining agreement will be in place in an establishment. The Federal Constitutional Court held that these legal principles are only “largely” in line with the German constitution.

Therefore, the German legislator implemented a regulation in 2018, according to which the agreement concluded with the smaller union shall also apply, if the interests of the respective union were not taken into account, seriously and effectively, at the time the agreement was reached with the union that has the highest number of members among the establishment’s employees. However, this new regulation has been criticised by organised labour as insufficient to protect smaller unions.

Types of Representation

The main representation of employees in Germany is guaranteed by the works council. A works council however, is only established upon the initiative of the employees or a union, which is represented in the company. If a company has more than 100 employees and a works council exists, an economic committee for the works council must be formed. Generally, if there are more than 10 executives in a company, a representative body for executive staff can be established.

Number of Representatives

The size of the works council depends on the regular number of employees in the business site and ranges from one up to 35 works council members for companies with over 7,000 regular employees and may be even larger in companies with over 9,000 regular employees.

Appointment of Representatives

In any company, generally employing at least 5 employees entitled to vote for a works council (i.e., all employees over 18 years of age, including temporary workers if they have been with the company for more than 3 months) and at least 3 employees eligible for election to a works council (i.e. employees with the entitlement to vote and a seniority of at least 6 months), a works council can – by election – be established by the employees.

The works council election is initiated and carried out by an electoral board. Where no works council exists, a union represented within the company or three employees eligible to vote have the right to call an employees’ meeting at which an electoral board is elected.

Tasks and Obligations of Representatives

The works council represents all employees of a business site, except executive employees, and has initiative, participation and co-determination rights in personnel matters (recruitment, transfers, dismissal), social matters (working time, remuneration schemes, use of IT systems) and economic matters (operational changes).

Furthermore, the works council can conclude works council agreements with the employer on matters such as, e.g. working conditions and remuneration schemes. Works council agreements have an immediate and binding effect on the individual employment in the same manner as statutory law.

Employees’ Representation in Management

In stock corporations, partnerships limited by shares and limited liability companies with more than 500 employees, one third of the members of the supervisory board must consist of employee representatives who are directly elected by the employees. If such companies employ more than 2,000 employees, the Co-determination Act applies. With very few exceptions, these companies must install a supervisory board consisting of an equal number of representatives of employees and shareholders and the deputy chairperson must be a representative of the employees.

Other Types of Employee Representative Bodies

If a business site has at least five employees, who are below the age of 18 or are trainees below 25 years of age, a representation body for young employees and trainees can be established.

Similarly, in companies with more than 100 employees, an economic committee will be established, if a works council exists. The economic committee will discuss economic issues with the employer and inform the works council.

In companies with more than 10 executives, an executive committee can be established; an executive committee is comparable to a works council, but with limited rights and possibilities.

In any company with more than five disabled persons or disabled persons with equivalent status on a long-term basis, a representation body for disabled employees can be established. The function of this body is to support the integration of severely disabled persons, to represent their interests as well as to advise and help them. Moreover, the representation body for disabled persons has the right to information and consultation in matters with impact on disabled persons. This especially applies to a termination of a severely disabled person. Without appropriate participation of the representative body for severely disabled persons, if one exists at the company, the termination is null and void.

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