Proposed amendments on the Work Constitution Act (update)

9 July 2024 2 min read

By Barbara Angene

At a glance

  • The German government presented a draft bill which would amend the Works Constitution Act (Act).
  • The provisions of the Act are to be clarified to reduce the risk of employers violating discrimination regulations in situations where they are acting in good faith.
  • Should the law be amended, determining the appropriate compensation for works councils will continue to pose a challenge.
  • Once the new law has been issued, employers must continue to act with caution in the area of works council remuneration and observe the interpretation of the amended provisions by the labour courts.
  • Although the exact duration of the legislative process cannot yet be predicted, it is expected that the law will pass this year.

Update: 9 July 2024

After the Committee on Labour and Social Affairs had voted in favour of a new regulation on the payment of works councils, the Bundestag adopted the draft bill (20/9469) in an unamended version on 28 June 2024.

The bill was forwarded to the Bundesrat and discussed at its meeting on 5 July 2024.

The Bundesrat is not expected to object to the bill.

On 27 November 2023, the German government introduced a draft bill aimed at modifying the Works Constitution Act, prompted by a decision from the Federal Court of Justice regarding works council remuneration.

The proposed amendments seek to provide clarity to section 37 paragraph 4 and section 78 of the Act. The purpose of this is to reduce the risk of employers violating discrimination regulations in situations where they are acting in good faith.

Should the law be amended, determining the appropriate compensation for works councils will continue to pose a challenge. Specifically, establishing the parameters for employers to consider knowledge acquired during the term of office when calculating works council remuneration in individual cases will need to be defined through case law.

Employers must continue to exercise caution when determining works council remuneration and they should check their understanding on the interpretation of the new section 78 sentence 3 of the Act by the labour courts following the amendment of the Act. It is anticipated that this amendment is to take place soon, as the draft bill has been marked as urgent.

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