LAWYER SPECIALISING IN WORKS COUNCILS AND ORGANISATIONAL CHANGES IN MUNICH

Section 111 of the Works Constitution Act (BetrVG) applies when a company plans fundamental changes that affect a significant proportion of the workforce. Typical examples include:

• staff reductions or mass redundancies
• Closure or relocation of parts of the business
• Mergers or demergers
• fundamental restructuring 

Once this threshold is reached, there is an obligation to negotiate a reconciliation of interests and a social plan.

A redundancy plan comes into play when employees suffer financial hardship as a result of operational changes. This primarily applies to:

• redundancies
• Loss of income
• Transfers or relocations 

The social plan is intended to compensate for or mitigate these disadvantages. It is not automatically in place – it must be negotiated.

Formally, yes – but in practice, there is a risk. If the employer acts without reaching a compromise, this can have significant consequences, in particular the need to compensate affected employees for any disadvantages. For the works council, the key point is this: as soon as a change to operations is on the cards, active negotiations must be initiated. Those who react too late lose influence.

As early as possible. The biggest mistake is to wait until measures have already been implemented before taking action. As soon as the first indications of a planned change emerge, you should have it checked to see whether Section 111 of the Works Constitution Act (BetrVG) applies. Bargaining power is not established at the end, but at the beginning.

In that case, the conciliation committee will make the final decision. It will issue a binding ruling on the redundancy plan. The reconciliation of interests, however, cannot be enforced; it remains a matter for negotiation. This means that the outcome depends heavily on how well you have established your position beforehand.

The reconciliation of interests determines the ‘whether’ and ‘how’ of operational changes. The social plan addresses the financial and social consequences for the workforce. The two go hand in hand, but serve different purposes. Those who fail to distinguish clearly between them often end up negotiating on the wrong basis.

The biggest mistakes are:

• rushing into accepting proposed measures
• relying on the employer’s account
• reacting too late
• classifying measures as ‘normal restructuring’ 

As soon as a change in the workplace is not recognised as such, a large part of the bargaining power is lost.

The key is to assess the situation correctly. Once it is clear that a change in business operations is taking place, stronger rights are immediately granted. Everything else builds on this – negotiations, the redundancy plan, leverage. If you do not establish this basis clearly, you will be negotiating from a weaker position right from the start.

First, establish whether there has actually been a change in operations. Then:

• Classify the measures
• Check your obligations to negotiate
• Determine a strategy 

The initial steps determine whether genuine bargaining power exists or not.