How do I determine the “correct” remuneration? Must it be adjusted during the term of office?

This article addresses how employers determine the “correct” remuneration for works council members and how it must be adjusted over time. 

I. Determining the “correct” remuneration

Under section 37 (1) Works Constitution Act (BetrVG), works council activity is an unpaid honorary office. There must therefore be no remuneration for holding office (the “honorary office principle”). 

At the same time, works council members must neither be disadvantaged nor favored by their activity (prohibitions under section 78 sentence 2 BetrVG), a rule now expressly encompassing professional development. 

Under section 37 (2) BetrVG, members receive for the time they are released from regular duties exactly the remuneration they would have earned absent council activity (the “loss‑of‑earnings principle”). This includes not only base pay but all components that would hypothetically have accrued had the member worked, including overtime, night, Sunday and holiday premiums, shift allowances, hardship and social supplements, and other perquisites (cf. BAG, judgment of 23 June 2004 – 7 AZR 514/03). 

In practice, whether an employee performs contractual duties or works on council matters should generally not affect the payroll outcome. 

Challenges arise in particular when accounting for performance‑based bonuses or when council work necessitates overtime outside individual working hours, for example evening council meetings. We address these topics in depth in parts three and four of this series. 

II. Adjusting remuneration during the term of office

A necessary corollary of the prohibition on disadvantage is the employer’s duty to adjust remuneration during the term. Two bases of claim must be distinguished:

1. Section 37 (4) sentence 1 BetrVG – minimum remuneration guarantee
   The works council member must not be worse off than comparable employees with typical in‑company development. The individual’s personal career trajectory does not matter.
2. Section 78 sentence 2 BetrVG in conjunction with section 611a (2) Civil Code (“BGB”) – fictitious promotion
   There is a distinct claim for adjustment based on the member’s individual hypothetical career path rather than a comparator group (BAG judgment of 20 March 2025 – 7 AZR 159/24).

1. Adjustment under section 37 (4) sentence 1 BetrVG – minimum remuneration guarantee

The provision ensures the member is not worse off than comparable employees with customary development. 

It grants a claim to increases in the (relative) amount by which remuneration in the comparator group increases. For small comparator groups, average or median values may be used (BAG judgment of 20 March 2025 – 7 AZR 46/24 para. 60). 

If, for example, the group receives an annual increase, the member is generally entitled to the same. The assessment relies on the comparator group formed at the time the office was assumed (see the first article in this series of 15 May 2025: How do I form legally compliant comparison groups for works councils?). 

Burden of proof

As a rule, the member must substantiate the claim by naming specific comparators. If the employer has already granted an adjustment and later seeks to correct it, the employer bears the burden of showing the adjustment was objectively wrong (BAG judgment of 20 March 2025 – 7 AZR 159/24).

2. Adjustment under section 78 sentence 2 BetrVG in conjunction with section 611a (2) BGB – fictitious promotion

The more complex practical issue is when the member, independent of comparators, claims a higher position and pay. Section 78 sentence 2 BetrVG in conjunction with section 611a (2) BGB provides an independent right to adjustment (the “fictitious promotion” claim). 

Unlike the minimum guarantee under section 37 (4) sentence 1 BetrVG, this claim is anchored in the individual’s hypothetical career.

It requires that a specific vacancy exists in the business that the member would have obtained absent office. A formal application is not required. 

Employers must disregard the office for the hypothetical moment and make a fact‑based promotion decision: whether the member would have prevailed in a (hypothetical) selection process depends primarily on their individual qualifications and competencies for the role and pay level. How those were acquired – through council work or private study – is irrelevant. What matters is only that the qualifications and competencies are relevant to the role and remuneration. The decision should be reasoned and documented. 

Burden of proof

The member bears the burden of pleading and proof (e. g., by pointing to a specific vacancy not pursued due to council duties and by evidencing the requisite qualifications and competencies).

III. Conclusion

Remuneration for works council members follows clear legal principles but contains practical pitfalls. Violations may trigger civil and criminal consequences. 

In practice, employers must regularly review whether the member’s remuneration still complies with statutory requirements. It should be continuously monitored and adjusted as needed, considering both developments in the comparator group and the filling of vacancies in the company. The latter requires that employers take works council members into account even if they did not participate in the application process. 

Legal risks can be mitigated through careful, transparent documentation. Changes, new determinations, and pay developments in the comparator group as well as job postings should be recorded in a traceable manner.