Why should I, as an employer, concern myself with the issue of works council remuneration?
Series of articles on how employers can deal with the issue of works council remuneration in a legally compliant manner
Works council remuneration is not only a topic that has always been the subject of intense debate between employers and works councils, but also one that is becoming increasingly relevant in practice.
In recent years, both case law (the so-called VW rulings) and changes in legislation have led to works council remuneration becoming an increasingly important topic of public debate and, in particular, a priority issue for many employers.
In its ruling of January 10, 2023 (Ref. 6 StR 133/22), the Federal Court of Justice had to deal with the criminal liability of excessive remuneration for works council members and found that this could be considered embezzlement by organs and authorized signatories of the employer. The decision was based, among other things, on the payment of very high bonuses to works council members. However, such obvious circumstances are not necessary: unlawful preferential treatment can already result from the granting of an (excessive) allowance. This decision and the subsequent reactions of decision-makers, some of whom abruptly reduced works council remuneration, clearly show that there is a fine line between favoring and disadvantaging works councils.
The legislature did not remain inactive either and tightened the regulations on works council remuneration in the summer of 2024. The amendments to the Works Constitution Act offer new options for creating legal certainty, but also raise a number of questions that employers should address with a view to ensuring that works council remuneration is structured in a legally compliant manner. This concerns not only compliance with labor law requirements, but also questions of criminal liability and compliance with compliance rules. In the worst case, violations of the requirements for works council remuneration can lead not only to substantial additional payments or claims for repayment, but also to fines or even criminal investigations against decision-makers in the company.
It is therefore crucial to take a close look at the current legal requirements and the latest case law. This series of publications deals with various aspects of works council remuneration. It provides a well-founded and practical overview and gives you, as an employer, valuable guidance on how to develop or further develop a legally compliant and fair remuneration structure for your works councils.
The first article is about how to form comparison groups of works council members and whether or under what conditions this needs to be done again.
Once the comparison groups have been formed, the question arises as to how the "correct" remuneration for works council members can be determined and adjusted over the years. We will address this question in the second article in our series.
Part three of our series then turns to a special case of works council remuneration: performance-related bonuses. Here, we answer the question of how such payments can be structured in a legally compliant and practical manner.
The treatment of overtime for works council members and, in particular, the question of how this overtime should be compensated are the topics of the fourth part of our series of publications.
Finally, we turn to best practices in works council remuneration and would like to present solutions that are both legally compliant and practical, based not least on our consulting experience.
We are delighted that you are following our series of publications on works council remuneration and will be happy to answer any questions you may have on specific issues at any time!
