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Remuneration: Groups are examining the BGH ruling on works council salaries

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A controversial judgment on the remuneration of works councils harbors the potential for unrest for many a company. Official reactions are still muted. But the question will continue to simmer.

The attitude of the highest German criminal court on the payment of works councils has scared only a few large companies noticeably – behind the scenes, however, specialist lawyers are already preparing for some additional work. The reason for this is a controversial appeal judgment, the reasoning of which was recently presented by the Federal Court of Justice (BGH). In the specific case, the question was whether ex-HR managers at VW had approved excessive salaries for high-ranking employee representatives for years.

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Unlike their colleagues from the Braunschweig regional court, the top judges did not rule out that the four previous decision-makers at Volkswagen could have been guilty of willful breach of trust. The core argument of this assessment: Even for leading works councils, only the level at which employees with comparable tasks stand should be used as a remuneration standard – and that at the beginning of the respective activity.

“We will carefully examine the grounds for the BGH’s decision and assess its relevance for the works council’s remuneration in the group,” said the energy supplier Eon. Confusion among some observers was caused above all by the BGH’s interpretation that HR managers should not base their salary classifications even on higher works councils on “hypothetical” assumptions about the otherwise possible career development of the person concerned.

What do big companies say about the verdict?

Eon made it clear for itself: “Works councils are remunerated in accordance with the legal requirements and taking into account case law.” There are also no special advantages or benefits for them, “in particular no company car privilege”. Volkswagen fears that the criminal judgment – with its interpretation that differs from that of labor courts – could lead to great uncertainty. “Far-reaching effects on operational co-determination in the Federal Republic and thus on Germany’s competitiveness as a business location” are conceivable.

Competitor Mercedes-Benz initially referred to ongoing tests: “We are now analyzing the written reasoning in detail.” In doing so, the current BGH case law as well as the labor law framework must be taken into account and evaluated for the individual case, the Stuttgart-based company explained. “This process is ongoing.”

What’s the concern?

In some companies there is concern that decisions on the payment of works councils made according to different standards could now be declared illegal and prosecuted under criminal law. However, it is also said that the provisions of the Works Constitution Act are outdated and, in return, often do not offer any clear guidelines. Trade unionists in the DGB and IG Metall also criticize this.

Thyssenkrupp emphasized that since 2014 there has been a guideline on the remuneration of works councils “which ensures the legally compliant application of the provisions of the Works Constitution Act and current case law”. This is confirmed annually by HR departments. The basis of the payment is the “original scope of activity of the respective employee”. An adjustment is possible, for example, if the person has active further training and additional qualifications – “if it is regulated by the company or it is usual for these qualifications to lead to a higher salary for the majority of employees”. The BGH thus confirmed its own regulation.

The Bavarian car manufacturer BMW was deliberately left on request. “BMW AG sees no reason in the current BGH ruling to review the remuneration system for its works councils.” Works council members are paid in accordance with the Works Constitution Act and the relevant case law of the Federal Labor Court.

Source: Stern

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