Balance of interests (Works Constitution Act)

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The reconciliation of interests is an instrument of company co-determination according to the Works Constitution Act (BetrVG) in German labor law . This participation right belongs to the group of participation rights of the works council in economic matters ( § 106 to § 113 BetrVG). The participation of the works council in economic matters goes beyond the traditional area of ​​work of the works councils (regulatory power in internal matters). Rather, participation law has thematic similarities to employee participation rights in corporate matters under the Third Participation Act or the Codetermination Act . Due to this peculiarity, the interlocutor of the works council is referred to in the law as an entrepreneur and not as an employer as in other works constitution law.

Concept and purpose

The balance of interests within the meaning of § 112 WCA is the agreement between the entrepreneur and the Works Council about the nature and extent of desired by entrepreneurs operating change . A company change is subject to co-determination if the functioning of the company will fundamentally change and a works council exists. There must be more than 20 employees who are entitled to vote in the company. In addition, at least 5–10% of employees must be affected by the changes. Changes in operations generally have a negative impact on the workforce. By balancing interests, the works council has an opportunity to influence the entrepreneur's decision-making process, which he should use in the interests of the possible winners and to protect the possible losers of an operational change. In this sense, a reconciliation of interests could lead to the complete prevention of any current economic disadvantages, namely if the entrepreneur is convinced to refrain from changing the company altogether.

The balance of interests is closely related to the social plan , because if the employer plans a company change that requires participation, this triggers both participation rights at the same time ( Section 112 BetrVG). However, the two participation rights differ fundamentally in their aim. While the reconciliation of interests defines the type and extent of operational cuts, the social plan regulates the type and extent of compensation for employees who lose their jobs as a result of the change in the company or who can only keep it under worsened conditions.

Participation of the works council

While the social plan (for the exceptions see here ) can be issued by the arbitration board in case of doubt against the declared will of the employer, the conclusion of a reconciliation of interests cannot be forced. However, the employer must negotiate "seriously" with the works council, which, according to established case law, also includes at least calling the conciliation body. If he does not do this, many labor and regional labor courts will grant the works council an enforceable claim to refrain from changing the company by means of an injunction. In addition, economic pressure is exerted on the employer because he has to fear compensation claims if he carries out a change in the company "without having tried" ( Section 113 (3) BetrVG) to reach an agreement with the works council by reconciling interests (so-called disadvantage compensation within the meaning of § 113 BetrVG).

Commitment

The balance of interests must be put down in writing and signed by the entrepreneur and works council , Section 112 (1) BetrVG. According to case law, the balance of interests is not a contract that regulates rights and obligations and to which both sides must adhere. Rather, the employer is considered to be justified in deviating from the reconciliation of interests and, for example, dismissing more employees than originally agreed with the works council. Here, too, he is only indirectly urged to stick to the negotiated balance of interests through threatened economic disadvantages. This is because employees who suffer economic disadvantages as a result of the employer making changes beyond a negotiated balance of interests can have a statutory right to compensation in the form of disadvantage compensation according to Section 113 (1) BetrVG.

This lack of obligation to balance interests is often viewed as unsatisfactory. The Works Constitution Act does not clarify the question. Since section 112 (1) sentence 3 BetrVG only expressly regulates that the social plan is a company agreement and is therefore binding (see section 77 (4) BetrVG), it is generally assumed that the balance of interests will be based on the will of the Legislator is not intended to represent a company agreement. Out of embarrassment, one formulates that the balance of interests is a collective agreement "of its own" (also: sui generis ). The consequence of this is that the works council has no way of enforcing compliance. An alternative strategy of works councils is to expressly conclude the reconciliation of interests as a works agreement within the meaning of Section 77 BetrVG.

Differentiation from the social plan

In operational practice, the social plan and the balance of interests are often not properly separated. Under the heading of social plan, regulations are agreed that, from a legal point of view, actually belong to the reconciliation of interests, or the company parties call their document reconciliation of interests and regulate compensation for the "losers" of the reconciliation of interests, which would be a typical regulation from a social plan. That in itself is harmless. Only when a dispute arises about the binding nature of the agreements does a legal assessment have to be made as to whether individual regulations pertain to the topic of reconciliation of interests or the topic of social plans. In any case, the choice of words of the operating parties is not important for the evaluation of the regulations. The only decisive factor is the type or subject of the regulation made. If it is about the design of the operational change (what should change? When should the change take place? What intermediate steps should the goal be achieved?) Is a regulation of the balance of interests. When it comes to compensating the "losers" of all the planned changes, it is a social plan regulation.

This delimitation of the two instruments is clear from the point of view and also plausible. But there are borderline cases in which one can argue about the correct classification of the agreed measure. According to the case law of the Federal Labor Court, the principle applies that what is the subject of a balance of interests cannot be the subject of a social plan ; both regulatory instruments are strictly mutually exclusive. This legal rule can also be expressed colloquially: All agreed regulations on the type and extent of the operational change (whether? When? How?) Belong to the reconciliation of interests and are therefore ultimately non-binding.

Content of a balance of interests

Typical contents that can be included in a balance of interests are for example

The participation process

The participation process begins with internal negotiations. If this fails, the board of the Federal Employment Agency can be called in to mediate. The arbitration board can also be called.

Internal attempted agreement

The participation procedure in the reconciliation of interests begins with the entrepreneur informing the works council about his plans to change the business. The information must be given in good time and the entrepreneur must present his plans in full ( Section 111 BetrVG). In addition, the entrepreneur must ask the works council to discuss the planned changes; if he does not, the works council can of course also push for negotiations on its own initiative. Due to a change in the law from 2001 in companies with more than 300 employees, the works council can call in an external (fee-entitled) consultant for these negotiations ( Section 111 sentence 2 BetrVG).

After the failure of an internal agreement

If no internal agreement can be reached, either the works council or the entrepreneur can ask the board of the Federal Employment Agency to mediate. If this is also unsuccessful or if there is no attempt at all, the arbitration board can (must) be called. If there is no agreement here either, the negotiations have finally failed and the employer can implement the intended company change without having to fear the statutory compensation claims of the losers of the company change within the scope of the compensation for disadvantages according to Section 113 (1) BetrVG. If the employer wants to finally prevent the compensation claims in the context of the compensation for disadvantages according to § 113 Abs. 1 BetrVG, he is forced to call the arbitration board according to the case law of the BAG. It is said that before the chairman of the arbitration board has determined that the efforts to reach an agreement have failed, the employer has not (sufficiently) tried to reach an agreement on the type and extent of the operational change.

Operational changes prior to the conclusion of negotiations

The law does not expressly regulate which rights the works council is entitled to if the employer starts implementing a change in the company before negotiations with the works council on the reconciliation of interests have been concluded.

Example: The entrepreneur wants to close one of his businesses because his main customer is now buying from the competition, and the entrepreneur therefore fears that he will be left with his products and may even have to dispose of them expensively. The works council does not want to believe that. First a consultant is brought in, then the works council demands a business report on the company's pricing; as a result, several weeks go by without any progress in negotiations being discernible. The entrepreneur only sees his costs running away and takes the emergency brake: He wants to stop production immediately and sell the production machines to his competitors, because he is sure that the arbitration board, which has also been called in the meantime, will ultimately not come to a different conclusion could. The works council gets wind of this plan and wants to prevent its implementation in court.

In such and similar situations, the works council can apply to the labor court for an injunction against the entrepreneur to prohibit the employer from implementing individual measures of the planned company change before negotiations with the works council have been concluded. To date, there is no uniform case law on this question, some courts issue such orders, others regularly reject them. If the employer is forbidden by a court to implement the operational change, the works council has a bargaining chip in hand, because the employer is forced to think and act economically. In such a situation, he will be more inclined to provide the social plan with proper financial resources in order to indirectly promote the willingness of the works council to agree to the reconciliation of interests, so that he can finally carry out what he sees as unavoidable measures to reduce costs.

Balance of interests with a list of names

If the idea of ​​balancing interests is carried through to the end, the agreement between the entrepreneur and the works council can even be formulated in such detail that one agrees not only on the number, but also specifically on the names of the employees who are to be implemented must be dismissed after the change in operations. For this purpose, the term “balance of interests with a list of names” has become established in operational practice. In the meantime, the legislature has taken up this term and provided in Section 1 (5) KSchG that , in colloquial terms, the presumption of correctness applies to an operational dismissal that is based on a reconciliation of interests with a list of names. If the terminated employee still wants to win his dismissal protection process, he must first refute this assumption, which he will not be able to do because of his lack of information about the background to the change in company.

From the employer's point of view, this makes the economic costs of a change of company easier to calculate. This is one reason why the “balance of interests with a list of names” is now very common in operational practice.

Special features of companies with a tendency

In companies with a tendency to conclude a reconciliation of interests is excluded. This results from Section 118 (1) sentence 3 of the BetrVG. In companies with a tendency to participate, the works council's right to participate in company changes is limited to the agreement of a social plan .

literature

Nikolai Laßmann, Hans Riegel (2017): Balance of interests and social plan - practical knowledge of company agreements . 3rd, updated edition. Düsseldorf: Hans-Böckler-Foundation 2017 (MF Co-determination Funding, No. 360 (May 2017)). Available online at http://hdl.handle.net/10419/162128

Web links

  • Text of the Works Constitution Act (current version): BetrVG
  • Text of the Dismissal Protection Act (current version): KSchG

Individual evidence

  1. ↑ Federal Labor Court of November 20, 2004 AP No. 39, 49 on Section 113 BetrVG 1972
  2. ↑ Federal Labor Court of October 20, 1983, Az. 2 AZR 211/82 - BAGE 43, 357 = DB 1984, 563 = NJW 1984, 1648 = SAE 1985, 215 = AP No. 13 to § 1 KSchG 1969 Termination for operational reasons.
  3. ↑ Federal Labor Court of November 20, 2001, Az. 1 AZR 97/01 - AP No. 39 to § 113 BetrVG 1972 = DB 2002, 950 = NZA 2002, 992.