Germany: Works Council Elections March Through May 2014 – Mistakes Can Be Costly For Employers

Keywords: Works Council elections,

Works council elections are generally held every four years, from March 1 through May 31. In 2010 more than 87,000 businesses elected works councils. The next election period will begin shortly. A faulty election process can be costly for the employer. Violations against election rules may render the election retrospectively void and hence trigger the necessity for a new election. All actions taken and agreements entered into by the works council elected in an invalid election are null and void. Therefore timely and informed intervention and monitoring of the election process can save unnecessary costs and at the same time open important doors to exercise influence

Works councils are the employees' representatives in charge of co-determination rights within the private sector. Generally, a works council may be elected in private sector businesses which reach a certain minimum size.

There is no obligation to elect a works council. The execution and procedure is left to the employees' initiative. If the employees, however, decide to elect a works council, the employer may not reject or hinder the election. An employer who hinders or influences a works council election e.g. by means of threatening to terminate employment relationships, may face imprisonment up to one year or a fine. In businesses with an existing works council, the initiative of a single employee can be sufficient to ensure the ongoing existence of a works council, even if the workforce has no interest in such representation body.

Costs of the Election

The employer bears all costs of the election. This includes all costs which are connected to the initiation and execution of the works council election as well as the revision of the election results – but only to the extent that they were necessary for the election.

Necessary costs may include e.g. the following:

• costs for providing rooms, information and communication technology as well as equipment, election documents, writing materials, voting boxes, telephone calls, postage, legal texts and commentaries;
• costs for necessary training on the election provisions for members of the election committee;
• legal costs for advice of the members of the election committee; and
• the costs of a legal dispute, which the election committee carries out in connection with the works council election.

The employer must also continue to pay salaries for the time that employees need to exercise their voting rights or other rights connected to the election. Members of the election committee who carry out tasks of their office outside their working hours are entitled to claim free time compensation or overtime compensation.

Before the Election

A so-called election committee, which consists of at least three employees who are eligible to vote, initiates and carries out the election. The election committee is appointed by the acting works council no later than ten weeks – in small businesses with not more than 50 employees who are eligible for election four weeks – before the end of the acting works council's term in office.

If no or no proper election committee has been established eight weeks – in small businesses with not more than 50 employees who are eligible for election three weeks – before the end of the acting works council's term in office, the competent labor court can appoint an election committee upon a respective motion by at least three employees who are eligible for election or by a union represented in the respective business. The labor court may also appoint union representatives who are not employees in the affected business.

If no works council has yet been established, the election committee is appointed by the general works council or the group works council in companies with more than one business. If none of these bodies exists or if those bodies remain inactive, a general staff meeting appoints the election committee. Either three of the business' employees who are eligible to vote or a union represented in the business may call such general staff meeting.

The appointed election committee issues an election invitation and establishes a voters' list.

The publication of the election invitation marks the start of the official election process. The election invitation informs the employees about the steps in the election process, their rights, date and time of casting of votes and many other aspects. It must be displayed in a well accessible place throughout the entire preparation phase of the election until the end of the last day of casting of votes.

The voters' list lists the names and dates of birth of all employees who are eligible to vote. The employer must provide to the election committee all information and all documents necessary to set up the voters' list. During this process the election committee shall ensure that only those employees who are eligible to vote are in fact included in the voters' list because this will influence the size of the works council which is to be elected. The reason for this is that the number of regular employees of the business determines the number of the members of the works council which is to be elected.

Only employees listed on the voters' list are eligible to vote and to be elected.

Mistakes in the voters' list can justify an appeal against the works council election and hence result in substantial additional costs for the employer.

Within two weeks after the election invitation and the set up of the voters' list the employees may submit election suggestions to the election committee, either in the form of candidate lists or – in small businesses – individual candidates. At the later works council election only those employees may be voted for who have been suggested for election.

This is an essential phase for the employer because it may at this point – within the framework of tighter legislative limits and ensuring the free decision-making process of the election – work towards getting "employer friendly" employees on the voters' list.

Temporary Employees

Temporary employees possess the right to vote if it is clear on the day of creation of the voters' list that the respective temporary employee will work in the business for more than three months.

Regularly deployed temporary employees are to be taken into account for the thresholds which are relevant for the size of the works council in the borrowing company.

The Election

Works councils may be elected by means of the normal or simplified election procedure. The following comparison shows the main differences between these two procedures.

The main difference between the two election procedures is that under the normal election procedure, which applies in businesses with more than 50 employees who are eligible to vote, votes are cast for candidate lists whereas in the simplified election procedure individual candidates are elected.

After the election

In practice a majority of election committees make mistakes. From experience, a works council election without mistakes is the absolute exception. Most works council elections remain undisputed and not all mistakes render the election void. A successful appeal, however, will lead to the invalidity of the election and a new works council is to be elected.

Every breach of material provisions of the right to vote, the eligibility to vote or of the election procedure are grounds for an appeal unless a correction has been made. Three employees acting together may file an appeal. The trade union which is represented within the business or the employer will also have the right to file appeals. The appeal has to be declared within two weeks after the announcement of the election results. If an appeal is not carried out within this time period, the works council is deemed to have been elected validly.

If an election suffers from particularly gross errors it may be invalid without an appeal.

Conclusion

Employers should observe the upcoming works council elections closely and should follow the election procedure in order to avoid the defeasibility of the election and to work towards, within the limits, a preferably favorable election result.

For the election in 2014 it must be ensured, for the first time, that the regularly deployed temporary employees are taken into account for the thresholds determining the size of the respective works council, which can lead to a significantly larger works council.

Originally published January 20, 2014

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.