A ruling by the Federal Court of Justice caused uncertainty among many works councils in 2023. It concerned excessive salaries at VW. An amended law is now intended to close a legal loophole.
The Bundestag has unanimously approved a change to the law that provides clear rules for the remuneration of works councils. By amending the so-called Works Constitution Act, the federal government is eliminating legal uncertainties and strengthening the position of works councils in Germany, said Federal Labor Minister Hubertus Heil (SPD) in the concluding plenary debate.
The background to this is a ruling by the Federal Court of Justice (BGH) on January 10th of last year, which led to great uncertainty in some companies with regard to the pay of works council members. The BGH had overturned the acquittals of former human resources managers at the VW automobile group, which had previously been pronounced by the Braunschweig regional court. The question was whether VW managers had approved excessive salaries for senior staff representatives over the years. For example, former works council chairman Bernd Osterloh had received more than 700,000 euros in some years.
Unlike their colleagues in Braunschweig, the highest judges did not rule out the possibility that the four former decision-makers at Volkswagen could have been guilty of deliberate breach of trust by making large payments to works council members. The core argument of this assessment: Even for senior works council members, the only remuneration benchmark that can be used is the level at which employees with comparable tasks are paid – at the start of their respective employment.
More precise regulation aims to reduce risk of violations
Following the BGH ruling, several companies had reduced the remuneration of their works councils out of concern about legal consequences – which in turn led to several lawsuits by affected works councils before labor courts.
According to Labor Minister Heil, the change in the law should prevent such uncertainty from arising in the future. Members of the CDU/CSU also praised the change, but criticized, among other things, the fact that it took so long to pass the law.
FDP MP Carl-Julius Cronenberg called the question of pay for works councils “tricky”. The pay must be structured in such a way that they are neither tempted to side with the employer nor suffer disadvantages as a result of their work, explained Cronenberg. This balance will be strengthened by the change in the law.
The Works Constitution Act already stipulates that works councils may neither be disadvantaged nor favored because of their work. This also applies to their professional development and wages. The amendment to the law now also stipulates a minimum wage entitlement. In future, the wages of works councils may not be lower than the wages of employees with a comparable career in the company.
Source: Stern
