Can the works council act as an employer?

Pursuant to section 87(1), no. 6 of the German Works Constitution Act (Betriebsverfassungsgesetz, BetrVG), the works council has a right of co-determination when technical equipment intended to monitor the conduct or performance of employees is introduced. According to the established case law of the German Federal Labour Court (Bundesarbeitsgericht, BAG), it is sufficient – in deviation from the wording of the law – that the technical equipment is suitable for monitoring. According to the Federal Labour Court, this represents a right of defence of the works council: If the employer decides, for example, to introduce electronic time recording, the works council has a say in the form such time recording takes. However, the works council cannot demand the introduction of electronic time recording, i.e. it has no “right of initiative”.

This case law of the Federal Labour Court (Bundesarbeitsgericht - BAG) is contradicted by a decision of the Hamm Regional Labour Court (Landesarbeitsgericht – LAG Hamm), which granted the works council the right of initiative for the introduction of electronic time recording (decision of 27 July 2021 – Case 7 TaBV 79/20).

Background

In the case underlying the decision of the Hamm Regional Labour Court, the works council was seeking the introduction of an electronic time recording system, which the employer ultimately refused. The conciliation board, which had been appointed by the court at the works council’s behest, had the matter reviewed by the court as to whether it had jurisdiction at all. In this context, the following question arose: Can the employer be obliged under section 87(1) no. 6 of the Works Constitution Act to implement electronic time recording even against its will? The Hamm Regional Labour Court’s answer was yes.

Reasoning of the Hamm Regional Labour Court

The court simply based its decision on the fact that the legislator, in regulating the co-determination rights under section 87(1) of the Works Constitution Act, had for the most part deliberately made no distinction between those rights which established a purely defensive right of the works council and those rights for which the works council had a right of initiative. According to the court, since section 87 (1) no. 6 of the Works Constitution Act did not contain any restriction, the works council could already have a right of co-determination on the question of whether technical equipment is to be introduced.

Decision of the Federal Labour Court in 1989

With this decision, the Hamm Regional Labour Court is expressly opposing the decision of the Federal Labour Court of 28 November 1989 (Case 1 ABR 97/88). The Federal Labour Court had only granted the works council a right of defence with regard to section 87 (1) no. 6 of the Works Constitution Act:

“The purpose of the works council’s co-determination right pursuant to section 87(1) no. 6 of the Works Constitution Act when technical equipment intended to monitor the conduct or performance of employees is introduced and used is to only permit intrusion into the privacy of employees by using anonymous technical monitoring equipment if the works council has equal co-determination rights. […]. The works council’s right of co-determination therefore has a defensive function against the introduction of such technical monitoring equipment [...]. However, it contradicts this purpose of the right of co-determination if the works council itself – for whatever reasons – demands the introduction of such technical control equipment. [...].”

Practical outlook

If upheld, the Hamm Regional Labour Court’s decision will have far-reaching significance for corporate practice. The works council would not only have the right of initiative for the introduction of electronic time recording, but also with regard to all other technical equipment falling under section 87 (1) no. 6 of the Works Constitution Act. Its introduction could therefore be enforced by the conciliation board.

The decision of the Hamm Regional Labour Court is one of a number of other individual decisions of lower labour courts that deviate from the case law of the Federal Labour Court. However, no clear tendency can be derived from this, because other labour court decisions have followed the Federal Labour Court (cf. e.g. Lower Saxony Regional Labour Court, decision of 22 October 2013 – Case TaBV 53/13).

• As the Hamm Regional Labour Court has allowed an appeal to the Federal Labour Court, it is to be hoped that the Federal Labour Court will remain faithful to the line it has taken to date – for which there are good reasons: The decision of the Hamm Regional Labour Court does not adequately take into account the great importance of entrepreneurial freedom, which is protected by fundamental rights (Article 14 of the Basic Law for the Federal Republic of Germany (Grundgesetz, GG)). The recognition of a right of initiative would mean that not only a certain operational structure would be imposed on the company, but also the costs associated with its introduction and maintenance. This is obviously disproportionate, especially as it is not clear why electronic time recording should be necessary. In particular, it cannot be argued against this that the decision of the European Court of Justice (ECJ) of 14 May 2019 (C-55/18) requires corresponding documentation. According to the ECJ, documentation in paper form is sufficient if it is objective, reliable and accessible. Therefore, no right of initiative of the works council can be derived from this either.
  
  
• Moreover, the purpose of section 87(1) no. 6 of the Works Constitution Act as a right of defence and protection for employees would be counteracted if the works council as a protective body could itself decide on the introduction of technical equipment and thus on the restriction of employees’ privacy rights.