Frankfurt – The United Services Union (ver.di) and IG Metall welcome today’s positive ruling by the European Court of Justice (ECJ) on the composition of supervisory boards. According to the ruling, the participation of union representatives on supervisory boards remains subject to national law even after a change in legal form. The European Court of Justice has thus confirmed the position of the unions and the Federal Labor Court (BAG), which had referred the matter for a preliminary ruling.
Christiane Benner, Second Chair of IG Metall, explains: “Co-determination is a valuable asset. It is good that European case law has now also confirmed that there are limits to circumventing corporate co-determination when a company changes its legal form to an SE. The decision underscores the importance of union representation on supervisory boards. Companies should heed these signals and work with the unions—not against them—for the benefit of all.”
Christoph Meister, member of the ver.di Federal Executive Board: “Today’s decision sends a clear signal against ongoing strategies of abuse through formal corporate conversions. The Court of Justice makes it clear that the seats and voting rights of employees and their unions on the supervisory board must be preserved even when companies change their legal form.”
The background to the case brought by the German unions IG Metall and ver.di against the software company SAP SE is that the company converted from a stock corporation under German law to an SE in 2014. In such cases, a special negotiating body of employees (BVG) negotiates with management to determine how employee participation will be structured in the future company, i.e., the SE. At SAP, the BVG and the company had agreed, among other things, that in the future, the separate election process for union representatives—and thus the guarantee of union representation on the supervisory board—could be eliminated.
ver.di and IG Metall considered the relevant provisions in the agreement to be null and void. The Federal Labor Court had essentially concurred with the arguments of the two unions. In its view, the employee representatives on the supervisory board nominated by the unions in a separate election procedure are, under the German SE Participation Act (SEBG), are among the defining elements of corporate co-determination in Germany; therefore, guaranteed seats and separate elections for union representatives on the supervisory board must also be ensured in an SE established through conversion. It is a matter for the national law of the member states to define the essential components of co-determination. The European Court of Justice (ECJ) confirmed precisely this view in its decision.
This is also an important signal to policymakers. An SE must not be misused to deprive employees of their participation rights or to withhold them. However, this is increasingly the case. The consequences arising from the conversion of corporate legal forms have therefore rightly been identified as an area for action in the “Traffic Light” coalition agreement. IG Metall and ver.di view corresponding amendments to the SEBG as a decisive factor in preventing the undermining of co-determination.
