Brief Description of Employees’ and Employers’ Associations
In general, the main function of trade unions is to conclude collective bargaining agreements. Trade union representatives also support employees or the works council (e.g. by giving legal advice and representing employees before the court), but do not have participation rights within a company. Employers’ associations are mostly organised by industrial sectors as well as by region, with national and state boards. They are generally the counterpart of trade unions when negotiating and concluding collective bargaining agreements.
Rights and Importance of Trade Unions
Trade unions can conclude collective bargaining agreements with either a single employer or an employers’ association. Although the unionisation rate in Germany is low, with about 20 percent of the employees organised, the collective bargaining coverage is usually around 80 percent. In the event that several collective bargaining agreements apply in one establishment, the agreement concluded with the union that has the highest number of members among the employees in the establishment shall prevail. Smaller unions also represented in the establishment are only entitled to assume this same agreement for their members, so that only one collective bargaining agreement will be in place in an establishment. The Federal Constitutional Court held that these legal principles are only “largely” in line with the German constitution. Therefore, the German legislator implemented a regulation in 2018, according to which the agreement concluded with the smaller union shall also apply, if the interests of the respective union were not taken into account, seriously and effectively, at the time the agreement was reached with the union that has the highest number of members among the establishment’s employees. However, this new regulation has been criticised by organised labour as insufficient to protect smaller unions.
The main representation of employees in Germany is guaranteed by the works council. A works council however, is only established upon the initiative of the employees or a union, which is represented in the company. The works council represents all employees of a business site, except executive employees, and has initiative, participation and co-determination rights in personnel matters (recruitment, transfers, dismissal), social matters (working time, remuneration schemes, use of IT systems) and economic matters (operational changes). Furthermore, the works council can conclude works council agreements with the employer on matters such as, e.g. working conditions and remuneration schemes. Works council agreements have an immediate and binding effect on the individual employment in the same manner as statutory law.
Other Types of Employee Representative Bodies
In stock corporations, partnerships limited by shares and limited liability companies with more than 500 employees, one third of the members of the supervisory board must consist of employee representatives who are directly elected by the employees.
If a business site has at least 5 employees, who are below the age of 18 or are trainees below 25 years of age, a representation body for young employees and trainees can be established.
Furthermore, in companies with more than 100 employees, an economic committee will be established, if a works council exists,
In companies with more than 10 executives, an executive committee can be established; the committee is comparable to a works council, but with limited rights and possibilities.
In any company with more than 5 disabled persons or disabled persons with equivalent status on a long-term basis, a representation body for disabled employees can be established to support the integration of severely disabled persons, to represent their interests as well as to advise and help them.