The retroactive remedy of an invalid works council’s resolution on short time work

Perhaps you, too, have been negotiating a works agreement on short-time work or measures in connection with Covid-19 in your company over the last few days under great time pressure and, as it were, great willingness to cooperate on the part of all those involved. In many companies the company partners had already arrived in their home offices in the last few weeks. The first routine in using Teams, Webex or Zoom came up and often one was positively surprised how everyone was able to pull together operationally in times of crisis – also via remote communication means.

The effort of the negotiations was often accompanied by the excitement of having negotiated a works agreement that could make a real contribution to the continued existence of the company in record time. If only there hadn’t still been doubts whether, despite all the rescue efforts, a serious mistake had not been made, or whether the approval given during the video conference might not have been enough to reach the goal.

According to the current requirements of the Works Constitution Act (Betriebsverfassungsgesetz – BetrVG) and the Staff Representation Act (Personalvertretungsgesetz – PersVG), the works and staff councils have to make their decisions in a joint meeting which, according to traditional understanding, requires the works or staff council members to come together physically. The vast majority of experts in legal literature assume that resolutions passed by video or telephone conference are invalid.

Today, on April 9 2020, the German government passed a resolution that aims at enabling staff and works councils to pass effective resolutions by video or telephone conference in the future, at least temporarily. The BetrVG and the PersVG shall be amended accordingly. This resolution follows an announcement by the Federal Minister of Labor published on March 20, 2020, which suggested for resolutions to be passed by video and telephone conference in the interests of a pragmatic approach to co-determination. Furthermore, the Federal Ministry of Labour expressed the legal opinion that the resolutions were already effective under the current legal regime.

In the labour law community, this initiative met with approval in terms of its content in many cases, but at the same time also considerable skepticism regarding the validity of resolutions which were passed in contravention of the legal requirements of the current Sec 33 BetrVG and Sec 37 PersVG. Invalid resolutions give rise to problems of validity not only under Works Constitution Act but also under individual law. Legal certainty is indispensable, particularly in the area of short-time work, where the existence of a legal basis for the introduction of short-time work is, as it were, a prerequisite for the granting of short-time work as well as for the encroachment on the claim to remuneration under the employment contract.

It is to be appreciated that the Federal Government has recognized the problem and prioritized it sufficiently to ensure that co-determination functions properly in the present special situation. 

In order to ensure that resolutions already adopted via this form of communication remain legally valid, the regulations shall enter into force retroactively as of March 1 2020.

By Dr. Tobias Brors, LL.M. and Maren Sievert