Pursuant to Sec. 111 sentence 1 BetrVG, in the event of changes in the operational business of an enterprise which regularly has more than 20 employees with voting rights, employers must consult with the works council on a compromise of interests. When determining this threshold value, temporary agency workers working at the enterprise for longer than three months must be taken into consideration even though they do not have an employment relationship with the hiring enterprise.

This was decided by the Federal Labour Court by judgement of 18 October 2011 (docket no.: 1 AZR 335/10) and therewith confirms the opinion previously already held in legal literature. If no consultation takes place, then employees terminated during the course of the change in business operations have a claim under Sec. 113 para. 3 BetrVG to compensation for the disadvantage incurred by them. In the factual situation to be decided by the Federal Labour Court, the employer regularly employed 20 own employees as well as - since the beginning of November 2008 - one temporary agency worker. At the end of May 2009 the employer terminated the employment contracts of 11 industrial workers. It refused to negotiate with the works council on a compromise of interests. The claimant, who had been dismissed during the course of this change in business operations, sued the employer for compensation of the disadvantage incurred by him. The reduction of jobs represented a change in business operations that was subject to an obligation to agree on a compromise of interests, because – taking into consideration the temporary agency worker - the employer employed 21 employees – and thus more than 20 - with voting rights. The Federal Labour Court affirmed this.

For this reason, in case of envisaged changes in business operations in smaller enterprises attention must be paid to the number and term of employment of the temporary agency workers employed there, in order to avoid any claims to compensation for disadvantages suffered or a forbearance claim of the work council regarding the implementation of the planned measure without the observation of its co-determination rights.

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