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German Works Council – What you Need to Know

By February 21, 2017 October 18th, 2017 No Comments
German Works Council - What you Need to Know

Entering a new market always comes with hurdles, and if your company is considering a move into Europe, you may run into the nuances of the German works council. These union-like organizations give employees a voice and connect team members with management.

While there are many benefits to these groups, there are also disadvantages. We’ll help you understand the German works council so you can enter the new market prepared.

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Defining a German Works Council

European countries encourage collaboration through work councils. It’s defined as an organization representing workers that function at the local level and complements national labor negotiations.

In particular, a German Works Council is set up as follows:

  • General Labor Agreements Defined at the National Level by German Unions & Employer Associations
  • Next, Local Firms Meet with Work Councils to Adjust National Agreements to Local Circumstances

Also, the process for electing work council members is very official. Members are elected by their company and serve a four-year term. Businesses can create their German works councils without being members of an official union.

Purpose of German Works Council

Works councils serve many purposes for German companies. First, these organizations advocate for employees and act similar to unions. With the recent decline in union membership, the German works council fills the gap.

In addition, councils create improved relationships management and employees, which leads to a low strike rate. As a result of the positive relationships, employers can negotiate schedules like reduced hours without resulting in layoffs.

Workers in Germany also accept reduced hours thanks to the Kurzarbeit, which is a fund that supplements employees’ pay from working fewer hours.

Positives & Negatives of the German Works Council

The German works council have many benefits for employers and employees. These benefits include:

  • Increased Wages
  • Increased Productivity
  • Equal Employment Opportunities

As for the disadvantages, firms may experience lower profitability due to the higher wages. If you’re a smaller company, you may not see the benefits that larger companies experience from these organizations.

In addition, work councils lead to increased difficulty terminating German employees.

It’s important to know that in most foreign countries, “at will” employment doesn’t exist. In fact, German employers are generally required to consult with the German works council, or Betriebsrat, for all termination proceedings and severance obligations. This process makes terminating employees very difficult. Results vary greatly leading to potential severance payments and long notice periods.

If your company is getting ready to enter the German market, give us a call. We can answer any questions you may have about the German works council and also provide you with options to help you navigate international employment.