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Germany’s Constitution is the bulwark for freedom of association rights. It guarantees the “right to form associations to safeguard and improve working and economic conditions.” Constitution (GG), Art. 9(3). Article 9 is relatively terse on freedom of association rights, but the Constitutional (BVerfG) and Labour (BAG) Courts have held that it has a wide scope, including the right to strike and collective bargaining rights. Germany does not have a unified labour statute, but several critical statutes also help bolster and institutionalize freedom of association rights. It ratified ILO Convention No. 87 in 1957 and No. 98 in 1956.

On a daily basis, German unions and works councils are the key players that enforce freedom of association rights. Unions lead collective bargaining at the sectoral level and also direct strikes. Works councils, often dominated by union members, have a narrower focus, including addressing plant co-determination issues and implementing collective agreements. Germany also has strong laws ensuring union representation on company boards. While the legal framework supporting this system is still intact, key measures of union strength – membership, density and collective bargaining coverage – all have plummeted.

As of 2005, there were 8.344 million German trade union members, a sharp fall from 11.9 million members in 1993. Likewise, union density has dropped from over 30% in 2000 to under 20% in 2004. Collective bargaining coverage also has fallen, but in 2005, 81% of workers still were either covered by an agreement or worked in a company aligned with an agreement. The leading union confederation is the German Federation of Trade Unions (DGB), which had 6.8 million members as of 2005. DGB’s two largest unions are Ver.di (the Unified Service Sector Union), and the German Metalworkers Union (IG Metall), both of which have about 2.4 million members. Two smaller confederations are the German Civil Servants' Association (DBB) and Federation of Christian Unions Germany (CGB).

Works councils are the second pillar in Germany’s labour framework, but their coverage varies greatly depending on the size of the company. About 80% of companies with over 200 employees have works councils. By contrast, more than 90% of all companies have fewer than 100 employees and about 75% of these do not have works councils. Overall, in 2005, just 13.8% of companies, representing 52.2% of the workforce, had works or public sector staff councils. Works councils steadily declined in number during the 1990s, but the Works Constitution Act was revised in 2001, making it easier to elect works councils.

In recent years, the social partners have intensely debated whether and how to reform labour laws. In particular, employer associations have claimed that the current system is strike-prone and too complicated, restrictive and costly. Despite such tensions, Germany had the lowest strike rate among 14 European countries from 1995 to 2004. In 2005, strikes involved only 17,097 employees who missed 18,633 working days. Meanwhile, both the ILO and Council of Europe have urged Germany to improve freedom of association rights. Despite these reform pressures, the basic statutory framework remains relatively unchanged.

RIGHT TO FORM AND JOIN TRADE UNIONS

There are no barriers to the formation of trade unions in Germany. The Constitution protects the right of unions to “form associations to safeguard and improve working and economic conditions.” An agreement that restricts this right is “null and void.” GG, Art. 9(3). Besides Article 9, no statute governs trade unions or their members. Unions are legally treated as voluntary associations, GG, Art. 9(1). They do not have to register with the state or pay any formation fees. The state does not interfere with unions’ internal organization and activities, selection of members or election of officers. BVerfGE, 84, 212. It is illegal for employers, even union employers, to restrict the right of employees to organize. BAG, 1 AZR 364/97.

German courts also have held that Art. 9 protects the freedom of workers to join or not to join unions. BVerfGE, 50, 290 (also upholding the constitutionality of the Works Constitution Act). Civil servants also have the statutory right to form and join unions, including members of the military, police and judiciary. Career Public Service Framework Act (BRRG), § 57; Federal Civil Service Act (BBG), § 91. There are no closed shops and collective agreements, for example, cannot be used negatively to withhold fringe benefits from non-union members.

In addition to free rights to form and join unions, workers rely on the Works Constitution Act (BetrVG), an influential co-determination law. (The equivalent public sector law is the Federal Staff Representation Act.) Since 1972, workers (in companies with five or more permanent workers) have the right to elect their own works council, only if they request to do so. The voter participation rate was about 75% in the 2006 elections. Works councils range in size from one member (for five to 20 employees) to 35 or higher (for more than 7,001 employees). There are about 40,000 works and public sector staff councils with more than 200,000 members, but they are unevenly distributed. Almost all large companies have works councils, while workers in companies with less than 20 workers are virtually unrepresented. Employers cannot interfere with works council elections or with works councils (or their members) once they have been created.

Works councils have extensive duties to ensure that company operations comply with statutory requirements and applicable collective bargaining or works council agreements. Id., §§ 75, 80. They wield specific and powerful co-determination rights on personnel (e.g., dismissal rights, discussed below), social welfare and economic issues. They also have information and consultation rights about a wide range of issues that arise in the workplace. Works councils cannot call strikes. If the parties cannot voluntarily resolve a co-determination issue in the “spirit of mutual trust,” and the works council objects to the employer’s course of conduct, then the works council may request a binding arbitration hearing. The committee is comprised of equal numbers of management and works council members and a neutral chair.

Works council members are entitled to paid time off to perform their duties and for training. Also, in companies with more than 200 workers, one or more (depending on the size) member may work, with pay, full-time on works council duties. Employers must provide office space and operating expenses for the works council, including equipment (e.g., computers and access to the Internet) and secretarial support. They also must bear costs of works council litigation expenses, even if the employer prevails.

In practice, work councils and unions are dependent partners and have close ties. As of 2006, about 73% of works council members also were trade union members, according to DGB. Works councils have a duty to cooperate with trade unions and elected trade union stewards at the worksite. And unions often train works council members. Union representatives also have Constitutional and statutory rights of access to worksites to consult with members and to recruit new members.   They also have the right to sue employers for BetrVG violations.

In addition to plant-level co-determination, union members have a key presence on corporate supervisory boards. The process allows for workers’ concerns to be raised at a high level and for the flow of information. The three laws that shape corporate co-determination have different voting rights for worker representatives: the Co-determination Act for the Coal, Iron and Steel Industries (in specified companies with more than 1,000 workers, representatives are split equally between employers and workers), the Co-Determination of Employees Act (in companies with more than 2,000 workers, board seats are divided between employer and employee members, with at least two seats for union representatives) and the Third Participation Act (in specified companies ranging from 500 to 2,000 workers, one-third of the seats are for employees). Most of the employee board representatives are union members.

RIGHT TO COLLECTIVE BARGAINING

The principle of freedom of association embedded in the Constitution includes the power of trade unions to conclude collective agreements without state interference. Under the Collective Agreements Act (TVG), trade unions in both the public and private sector and employers have wide leeway to negotiate and conclude their own collective agreements. In the absence of statutory guidance (e.g., there is no minimum wage), the social partners establish the terms and conditions of employment.

Only trade unions have the authority to enter into collective agreements with either an employer or employers’ associations. As of 2005, there were 64,341 registered collective agreements, of which 35,031 were multi-employer agreements and the remainder individual company agreements. Once signed, collective agreements are legally binding and a breach may result in damages. The scope is limited to the members of the trade union and employers’ association (or the sole employer) who sign them. An employer is bound to the terms of an agreement, even if it quits an employers’ association. The Labour Minister may declare a collective agreement generally binding beyond its signatories, but this rarely occurs.  

Collective bargaining has been increasingly decentralized (via single-employer agreements and opening clauses), but it still predominantly occurs at the regional or sectoral level. In 2005, 56% of German employees were covered by an industry-wide wage agreement, 8% of workers had company agreements, and another 17% of employees worked in a company that followed an industry-wide wage agreement. Generally, the larger the company, the more likely bargaining coverage will exist. Virtually all public sector employees are covered.

There is an ongoing concern about whether small unions can gain representation status to collectively bargain. No statute defines the term “union” or sets minimum criteria for representation status. The COE’s Committee on Social Rights contends that the multi-factored test created by German courts (see BVerfGE, 4, 96; BAG, 1 ABR 58/04) violates Article 6 of the European Social Charter because it sets too high a barrier. A union must:  be a permanent and independent association of a “substantial number” of workers; generally represent workers from more than one company; adhere to democratic principles; demonstrate that it has social power and can exert pressure; adhere to the principles of collective labour law; and ensure that its goal is to conclude collective agreements.

In a related representativeness issue, Germany’s 1.7 million career civil servants have no collective bargaining rights, although many, such as teachers, do not perform essential jobs. Public sector statutes only require that the government consult with unions before legislating. ILO and COE committees have found that this denial violates Convention No. 98 and Art. 6 of the Charter, respectively. And in 2000, the Federal Administrative Court held that Art. 9(3) guarantees “freedom of association rights” for those civil servants who work for privatized companies, such as the postal service or railways (and as of 2005, there were still about 200,000 such civil servants).

An emerging legal and practical freedom of association issue is tension between collective and works council agreements. A works council has authority to enter into local agreements with an employer. Works councils are barred from interfering with the terms of existing collective bargaining agreements, particularly on the subject of wages and hours. Thus, a collective agreement ordinarily should prevail over a works council agreement, but recently there has been a huge increase in the use of “opening clauses” in collective agreements. Even without authorization, some works councils have entered into agreements that undermine or violate collective agreements, for example, by cutting pay. In 1999, the Federal Labour Court ruled that unions have a Constitutional right to seek injunctive relief in cases where a works agreement has the effect of undermining the terms of an existing, applicable collective bargaining agreement.

RIGHT TO STRIKE

German courts have held that Art. 9’s freedom of association encompasses the right to strike. Germany does not have any statute that regulates collective actions Instead, the Constitutional and Labour courts have developed detailed and often narrow parameters of the right to strike.

Only unions have authority to call strikes and the only allowable purpose of a strike is to force an employer to enter in a collective agreement. No industrial action by either party is allowed during the course of an agreement. By extension, other types of strikes -- boycotts, blockades, (almost all) sympathy strikes and political strikes -- are illegal. The Constitution does not protect an individual right to strike, thus wildcat strikes are also illegal.  If a strike is legal, workers are protected against dismissal and damages, but an illegal strike may lead to claims for damages against a union and its employees and may result in dismissal. In practice, DBG and other confederations have set guidelines for strikes that include, among other provisions, a vote by members before issuing a strike notice.  While Germany generally has a low strike rate, it is noteworthy that unions also rely on the effective use of short warning strikes, which often are not included in strike statistics.

Courts have enshrined a fairness principle for industrial action. In theory, strikes must be “proportionate” and cannot aim to “destroy” an employer. Strikes only can be used as a last resort after the parties have exhausted voluntary negotiations.  BAG, 1 AZR 142/02.  However, Germany does not have any compulsory state-ordered arbitration or intervention process for strikes. Labour court injunctions prohibiting illegal strikes may be issued, under certain circumstances. A lockout also is constitutional, if used defensively and proportionately. In practice, lockouts are rare. After a strike, the parties must work to restore labour peace.

Both the ILO and COE have raised a number of long-standing concerns about the narrowness of the right to strike in Germany. Foremost, civil servants (including for example teachers, judges and soldiers) do not have the right to strike. The ILO’s Committee of Experts and its Committee on Freedom of Association have criticized that practice over a period of decades for violating the terms of Convention No. 87. (The COE’s Committee on Social Rights has raised similar concerns.) The ILO has urged Germany to take steps to guarantee that civil servants such as teachers, postal employees, clerks and telephone operators (all of whom do not act in a capacity as agents of the state) have the right to strike. Despite the ban on strikes in the civil service, public sector workers do sometimes hold work stoppages and demonstrations and workers have been disciplined for doing so.  

The Council of Europe also repeatedly has raised other concerns about restrictions on the right to strike that it contends violate the European Social Charter. First, it has argued that German courts have unduly restricted the right to strike by limiting it solely for the purpose of collective agreements, when the Charter provides for a much broader view that strikes may be used to challenge any decision which can be subject of collective negotiation. Second, it argues that court-ordered recognition rights for small unions are so high that this hurdle effectively limits their ability conduct a legal strike.

German courts have recently improved freedom of association rights for civil servants. For instance, a Government attempt to use civil servants as replacement workers to replace striking employees during a legal strike was found to violate the Constitution, barring any contrary statute. In 2000, the Federal Administrative Court rejected the Government’s argument that a civil servant who worked for the privatized postal service did not have the right to strike. Instead, basing its reasoning on Art. 9 freedom of association principles, it found that a civil servant in this position “is generally not subject to the prohibition to strike.”

PROTECTION OF TRADE UNION MEMBERS

The German Constitution, the Works Constitution Act and Protection Against Dismissal Act combine to offer varying degrees of protection to workers against discrimination based on their union status, participation in a strike or for having exercised their legal rights to challenge discrimination. Germany’s new anti-discrimination law, the 2006 Equal Treatment Act (AGG), does not apply to union-based discrimination.

The Constitution provides that a violation of a worker’s freedom of association rights is “illegal” and an agreement that restricts those rights is “void.” Likewise, the Civil Code states that a legal transaction that violates a statute or that is contrary to “public policy” is void.

Unions and workers can file Labour court claims against an employer for discriminatory conduct based on a violation of freedom of association rights, such as the right to strike. A court may order that the discriminatory conduct cease.

Section 75 of the Works Constitution Act bars employers and works councils from discriminating against workers on the basis of union activity. Section 75 has a limited reach. First, it only covers private enterprises with more than five workers that have a works council (52% of the workforce). Second, enterprises are exempt for political, religious, or cultural reasons. Third, Section 75 only applies to employees, not job applicants. Also, workers ordinarily cannot file court claims. Instead, they must pursue a grievance process with the employer or works council. Both parties have a duty to enforce the anti-discrimination clause and to remedy violations. If an employer refuses to correct a breach, a works council (not a worker) may appeal to a conciliation (arbitration) committee for a binding decision.  Employers pay the cost for this process. There is similar anti-discrimination protection for civil servants. Civil servants cannot be treated differently or disciplined based on their trade union status and applicants must be selected based on objective criteria.

As for dismissal, workers are protected by the Constitution, the Works Constitution Act or by the Protection Against Dismissal Act (KSchG). Under the Works Constitution Act, an employer must always first consult with the works council about the reason for a dismissal. As a rule, employers comply because failure to give notice means that the dismissal is “void. The works council can object to a dismissal on the grounds of discriminatory conduct, among other reasons. This objection will not prevent a dismissal, but it generally entitles a worker to continued employment during the course of any litigation. There is a similar process for dismissal of civil service employees.

Members of work councils (and staff councils) have extra security against dismissal and retaliation. Before firing a works council member, an employer must give an important reason and the works council must consent.   If a works council timely objects, then an employer must apply to the Labour Court for permission to terminate. It is significant that this protection begins when a worker becomes a candidate for election and extends for one year after the end of the term. Id. Works council members also have special transfer rights within the company if their department is closed. As noted above, a work council’s objection ordinarily entitles a worker to continued employment during the any litigation.

Only limited remedies are available under the Works Constitution Act. An employer can discipline the discriminator. Also, if the employer has “grossly violated” Section 75, then the local works council or trade union can seek a labour court injunction and employers may be subject to fines up to Euro 10,000. Also, in companies with more than twenty employees, a works council may reject an employer’s proposed personnel decision (but not a dismissal) that violates Section 75. If the employer proceeds over a works council’s rejection, the works council can file a labour court claim to rescind it. A court may impose fines up to Euro 250 per day for a continued violation.

The Protection Against Dismissal Act also protects eligible workers from unfair dismissals. As of January 1, 2004, workplaces with ten or more full-time employees are covered. Prior to that date, workplaces that had more than five full-time employees are covered. Employers must provide notice of a dismissal. The minimum statutory notice period ranges from one to seven months depending on length of service. If a worker challenges a dismissal in the Labour Court within a set time limit, then the Act requires the employer to provide just cause for its decision, which cannot be a discriminatory reason. At the outset, an employer need not continue to pay an employee if a dismissal is challenged in court. However, if the initial labour court finds that a dismissal is unlawful, then the employer must pay the worker until the litigation ends. If a worker is not on the payroll during the litigation but wins reinstatement, then court may order payment of lost wages and benefits. Punitive damages are not available.

As a practical matter, only about ten percent of court claims by fired workers result in their reinstatement. As of January 2004, employers may request that workers waive any legal claims in return for a severance payment based on one half of their monthly salary per year of service. Even if a court finds that a dismissal was unlawful, an employer can avoid reinstatement if it shows that the employment relationship has been irretrievably damaged. In that case, it must pay court-ordered compensation to the employee of up to 18 months pay, depending on the employee’s age and length of employment.

Workers generally are protected against retaliation for exercising their legal rights. Also, employees with a works council in place are protected against retaliation for making complaints of discrimination.   Penalties of up to one year imprisonment and a fine can be imposed for retaliation against a member of a works council, including interfering with a works council election. Only the works council and union have the right to initiate such proceedings.

PROTECTION FOR FREEDOM OF ASSOCIATION RIGHTS

Germany’s unions and works councils assume the most important daily role in protecting freedom of association rights. In the companies where unions and/or works councils have a presence, there is a tradition of settling workers’ complaints without resort to mediation or litigation. In fact, Germany does not have any labour inspection agency with overarching duties, except for heath and safety inspections. Likewise, there are no state-run mediation or arbitration institutions.

German courts also play a key enforcement role. Labour Courts have jurisdiction over individual employment disputes, including disputes about freedom of association rights, as well as collective disputes. Unions, works councils, and dismissed workers may sue an employer. Unions provide free legal counsel for members and can represent them in court. In 2005, attorneys provided by the DGB represented about 145,000 union workers. In Labour Courts, these workers won about Euro 324 million. About half of these were dismissal cases, of which 85% settled. Costs are low for workers who file in court and they are not required to pay employers’ litigation costs.

About 600,000 new labour cases are filed per year, most of which involve dismissals. For their part, the Labour Courts quickly and efficiently process these cases. Labour Court cases begin with a conciliation hearing, which results in the settlement of about 50 percent of cases at this stage. If conciliation fails, then the case proceeds to a hearing. Dismissal cases have priority and more than 90 percent of such cases settle within one year. Workers may request an appeal to the State Labour Courts and then the Federal Labour Court.  After exhausting all other legal avenues, a worker may appeal a constitutional complaint to the Constitutional Court. The Constitutional Court has the sole authority to declare statutes unconstitutional.

Analysis provided by Philip Simon, OSCE/ODIHR consultant.

Posted: April 2007

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