Co-determination of the works council pursuant to Section 87 (1) No. 1 BetrVG in the design and use of internal reporting offices under the Whistleblower Protection Act

Zwickau Labour Court, decision of 20.03.2025 - 9 BV 12/24

In connection with the still relatively new Whistleblower Protection Act (HinSchG), many questions continue to arise regarding the works council's right of co-determination in the implementation and concrete design of the internal reporting office. Whether the establishment and design of the internal reporting office affects the order of the company and the conduct of employees in the company, for example, is disputed in the literature. To date, there has been no case law on this issue, as far as can be seen from the published decisions on the HinSchG, , so that employers have had to wait for clarification from the labor courts.

The present decision of the Zwickau Labor Court of March 20, 2025 is a first step towards more certainty for the parties involved and should therefore be examined more closely  in light of ist significance.

Facts of the case

In the present labor court proceedings, the parties disputed the existence of a right of co-determination pursuant to Section 87 (1) No. 1 BetrVG. The employer operates retirement and nursing homes with a total of more than 480 employees. The application in the proceedings came from the works council formed for one of the retirement and nursing homes. There is also a Group works council for all retirement and nursing homes.

The internal reporting office in accordance with the HinSchG was "outsourced" to a third party for all retirement and nursing homes by decision of the employer. At the end of October 2023, the employer also published a procedural instruction on the HinSchG on the internal "QM drive", which has been in force since December 1, 2023.

Even before this procedural instruction came into force, the works council involved asserted a right of co-determination vis-à-vis the employer regarding the introduction of an internal whistleblower system. The employer rejected this with reference to the lack of relevant co-determination rights. After the procedural instruction came into force and the internal whistleblowing system was introduced, the works council again asserted a now more specific right of co-determination under Section 87 (1) No. 1 BetrVG through its attorney. The employer again rejected this.

As part of the labor court proceedings, the works council argued that it wanted to have a say in the design of the internal reporting office. The HinSchG would provide scope for this. Accordingly, the works council applied for a declaration that it had a right of co-determination pursuant to Section 87 (1) No. 1 BetrVG in the use and design of the internal reporting office in accordance with the HinSchG.

The employer applied for this application to be rejected on the grounds that the works council did not have a right of co-determination. There was no obligation for employees to report violations. The formation of the internal reporting office only concerned the organization and not the order of the company within the meaning of § 87 (1) No. 1 BetrVG.

Decision of the Zwickau Labor Court

The labor court rejected the works council's application; however, this was based on the works council ‘s lack of jurisdiction. Fortunalety, the labor court made some clear statements regarding the scope of the right of co-determination pursuant to Section 87 (1) No. 1 BetrVG.

First of all, the Zwickau Labour Court emphasizes that the right of co-determination under Sec. 87 (1) No. 1 BetrVG is not already excluded under Sec. 87 (1) introductory sentence 1. var. BetrVG. There is no binding and conclusive statutory regulation and thus no legal reservation. The provisions of §§ 12 to 18 HinSchG do not constitute such statutory regulations in this respect that would exclude the right of co-determination. The subject matter of the application is the use and design of the internal reporting office, which is not subject to any mandatory statutory provisions. Rather, the legislator has left the employers scope for action, for example in § 14 para. 1 sentence 1 (organizational form of the internal reporting office), § 15 (further performance of tasks in addition to the activity for the internal reporting office), § 16 para. 1 sentences 3, 4, 5, para. 2 (design of the reporting channels of the internal reporting office) HinSchG.

With regard to the scope of the co-determination right under Section 87 (1) No. 1 BetrVG, the Zwickau Labor Court differentiates between the design and use of the reporting office:

In the case of the design in the sense of an organizational establishment of the registration office, a right of co-determination was to be denied. With reference to the case law of the BAG on the complaints office pursuant to § 13 AGG (see BAG decision of 21.07.2009 - 1 ABR 42/08, BeckRS 2009, 69481), in the understanding of the chamber, the term "organization" also includes organizational decisions of the employer that are not subject to co-determination. It could not merely be based on the fact that work behavior was not affected. Just because work conduct is not affected does not mean that organizational conduct must necessarily be affected. Not every measure taken by the employer that does not relate to work conduct automatically constitutes a measure relating to conduct.

The employer's decision to "outsource" the internal reporting office pursuant to Section 14 para. 1 sentence 1 Alt. 2 HinSchG is therefore not subject to co-determination pursuant to Section 87 (1) No. 1 BetrVG. The same applies to the employer's decision on the specific office that is to be used as a third party within the meaning of Section 14 (1) sentence 1 alt. 2 HinSchG as an internal reporting office.

However, a right of co-determination pursuant to Section 87 (1) No. 1 BetrVG was to be affirmed with regard to the use of the internal reporting office. This does not concern the organization of the company, but the conduct of the employees. In the opinion of the Zwickau Labor Court, it does not matter whether the employees have an obligation to report. The only decisive factor was that the employees' conduct was to be controlled. In this respect, the instructions given in the code of conduct for the use of the internal reporting office are suitable for controlling the behavior of the employees, as they contain a number of "should" provisions (e.g. which cases should be reported).

The works council ultimately also has a right of initiative in this context. Even if the employer does not issue any procedural instructions, the works council can demand regulations on the use of the internal reporting office on its own initiative.

Apart from this, however, the present procedure must fail due to the competence of the works council. The right of co-determination pursuant to Sec. 87 (1) No. 1 BetrVG is vested in the group works council pursuant to Sec. 58 (1) BetrVG, as the internal reporting office for all companies in the group of companies was outsourced centrally to a third party. The decision to set up an internal reporting office centrally for the entire group is in turn an organizational decision of the employer that is not subject to co-determination, which merely results in a change in responsibility.

Practical note

The decision makes it clear that, in the case of co-determination pursuant to Section 87 (1) No. 1 BetrVG, the use of the company subject to co-determination remains a significant area for co-determination by the works council.

It is true that the employer's organizational decisions cannot be influenced. Nevertheless, following these decisions, influential modalities of the reporting office and the reporting procedure in the company can be influenced. This includes, in particular, the establishment of rules of conduct in connection with the internal reporting office. Employers should not underestimate the aforementioned right of initiative of the works council.

From the employer's point of view, it is to be welcomed that the Zwickau Labour Court has positioned itself so clearly with regard to the freedom of co-determination of organizational decisions in connection with the introduction of internal reporting offices - such as the "outsourcing" of the internal reporting office. This means that the works council's demand for co-determination in corresponding upstream organizational decisions can be quickly withdrawn and discussions significantly shortened.

Moreover, it remains to be seen how further labor court decisions will define the scope of works council co-determination in connection with the HinSchG.