Employees Have a Say How co-determination works in the workplace—and what it achieves

In Germany,democraticemployeeparticipationis enshrined in law. This gives employees a voice in their workplaces and companies. Employees can participate in decision-making at two levels: at the workplace through their works council, and atthe corporate level through their representatives on the supervisory board.

One of the most important laws on co-determination is now turning 50: theCo-Determination Act of 1976(see below).

IG Metall says: It’s high time for an update. Becauseco-determinationhas developed loopholes over time.

One problem, for example, is certain European Union (EU) legislation, such as the“European Company.” This legal form allows companies to circumvent co-determination.

A new proposal from the European Commission could further erode co-determination: According to the proposal, a new legal form called “EU-Inc.” would be introduced for companies in the future. The consequences would be: new ways to circumvent German corporate co-determination and major risks for employees.

Dare to embrace more democracy

Businesses and companies where employees have a say in decision-making offer better working conditions: They provide higher and fairer wages, more training and continuing education, are more family-friendly, and offer more secure jobs.

But co-determination also benefits companies. Employees contribute their ideas and knowledge. As a result, companies are more productive, innovative, and sustainable. They invest more and often generate better returns. This is shown by a recent research overview from the Böckler Foundation.

Expand rather than erode—this is the course IG Metall is fighting for when it comes to co-determination.

Alongside collective bargaining agreements, democratic employee participation is the most effective tool for ensuring decent work and fair employee involvement.

This is what IG Metall demands regarding co-determination

1. Extend Co-determination to Companies Organized Under Foreign Legal Forms
   More and more companies in Germany are using foreign and European legal forms to circumvent German co-determination requirements. The following must apply: Any company operating in Germany is also subject to German co-determination rules—regardless of its registered office or legal form.
2. Prevent circumvention by resorting to other legal forms
   The European Company (SE) is frequently used to freeze or avoid co-determination. A reform of SE law is necessary to prevent abuse and ensure dynamic co-determination.
3. Closing the “gap in the one-third participation rule”
   Certain groups of employees have so far been excluded from the calculation of employee numbers. This gap must be closed so that the statutory one-third representation includes all employees.
4. Introducing an effective sanctions regime and improving the right to file motions
   A sanctions regime for cases of unlawful failure to apply co-determination; a right for unions to file motions in status proceedings, including in the area of one-third representation.
5. Active advocacy by the federal government for an EU directive on co-determination
   Europe needs binding minimum standards rather than new corporate structures. The federal government must advocate for an EU directive on corporate co-determination.
6. Lowering the threshold for equal co-determination to 1,000 employees
   Democratic participation must also be ensured in modern corporate structures. The reality of companies in 1976 is outdated; co-determination must take this fact into account.
7. Abolish double voting rights
   All too often in recent years, we as a union have observed that votes on the supervisory board are no longer the result of dialogue, but rather that the employee side is outvoted due to the double voting right. This is not how social partnership works.

How Co-determination Works

Workplace co-determination through the works council:

In companies with five or more employees, works councils are elected. This is stipulated in the Works Constitution Act. This law governs employees’ rights to information and co-determination, as well as cooperation between their elected representatives and their employer. The Works Constitution Act was enacted in 1952 and amended in 1972 and most recently in 2001.

The works council has established rights that it can enforce before a labor court if necessary. For example, the works council has a say in determining the start and end times of the workday, overtime, occupational safety and health measures, training and continuing education, and the design of workstations. The works council must be informed about personnel planning and consulted on terminations.

Learn more about employee participation in the workplace here

Corporate co-determination through the supervisory board:

Employees at corporations with more than 500 employees elect their own employee representatives to their company’s supervisory board. The supervisory board appoints, advises, and oversees the executive board and reviews the annual financial statements.

The proportion of employee seats on the supervisory board depends on the number of employees at the company. In corporations with up to 2,000 employees, one-third of the supervisory board members are employee representatives; in corporations with more than 2,000 employees, half are employee representatives (equal co-determination)—with the management side appointing the chair of the supervisory board, who has double voting rights and thereby secures a majority for the management side. Equal co-determination also applies in companies in the mining and steel industry with more than 1,000 employees.

Learn more about co-determination on the supervisory board here