Employees on supervisory boards European Court of Justice Strengthens Co-determination

The unions are breathing a sigh of relief: The European Court of Justice (ECJ) has ruled that German corporate co-determination is compatible with EU law. Had the plaintiff—a minority shareholder of the tourism group TUI—succeeded with his lawsuit, employee representatives would have been removed from the supervisory boards of German companies. Then, only the representatives of management would have had the final say.

The plaintiff had argued that the German Co-Determination Act excludes foreign employees of German corporations. This, he claimed, violates the free movement of workers within the EU, as employees lose their right to vote and stand for election on supervisory boards when they move to another European country.

Co-determination Strengthened in Europe

The ECJ saw it differently. The right to free movement within the EU does not guarantee an employee that a move will be “socially neutral.” An employee cannot demand the same working conditions in the new country as in their country of origin. For example, a German employee who moves to Romania cannot demand that German protection against dismissal and the German minimum wage apply to them there.

In doing so, the ECJ also made it clear in principle that co-determination is part of labor law.

“We are very relieved by this ruling,” explains Rudolf Luz, head of the Labor Policy and Co-determination Division at IG Metall. “Six months ago, this was by no means certain. If the ECJ had ruled against the German corporate co-determination system, we would soon have had no employee representatives left on supervisory boards. Now, however, the ECJ has actually strengthened co-determination.”