Working Life > Codetermination

Codetermination in the Company

Definition, Explanation

Codetermination is generally defined as the employees' or their representatives' institutional participating in the decision-making process in companies. It yields a means of influence of employees and their representatives on decisions of owners, managers, bosses in companies (according to Industrial Constitution law) and enterprises (Employees Co-determination Act). Employees' representatives are elected to be members of the works council and members of the board of directors.

Purpose of codetermination:

• Employees' opportunity to influence directors' decisions such as on working conditions, general objectives and job security
• Democratizing economy, i.e. compensate for disadvantages and loads of employees
• Circumventing frictional losses
• Increasing company performance by constructive collaboration of employers and employees or their representatives
• Controlling powerful positions
• Equality of work and capital
• Humaneifying working life
• Motivating employees

Ways of codetermination

• Co-determination of the employee in workplace
  • Ideal of transparency about activity and responsibility
  • Health and safety, hazard assessment
  • Suggestion system
  • Right of accessing records
• Company-codetermination
  via works council in private sector companies, respective staff council in public service and employees representatives in church
  • Design of workplaces, processes, technical facilities and framework conditions such as working hours
  • Staff planning
  • Time recording
  • Performance control, quality management and evaluation schemes
  • Balancing of interests and social programmes
  • Introducing IT-systems
  • Motivation matters and incentives
  • Recruiting, transfers, dismissals
  • Educational and qualifying measures
  • Negotiating company agreements
• Company codetermination via employees representatives in directors' board
  • Constituting the board
  • Controlling the board

Legislation:

• Industrial Constitution law
  applies to all private businesses of more than 5 permanent employees. Exceptions: religious communities, charitable, educational, political, confessional, scientific, artistic, reporting institutions
• Montanmitbestimmungsgesetz since 1951 (montane industry codetermination act)
  for coal and steel companies
• Bundespersonalvertretungsgesetz BPersVG (employee representation act)
  regulates codetermination of employees in public service
• Codetermination act
  applies to companies with more than 2,000 employees (parity of seats in the board of directors)
• Drittelbeteiligungsgesetz
  applies in companies with more than 500 employees
• Amendment of codetermination act and Fortgeltungsgesetz
  applies to companies of mining, iron ad steel production industry as well as in corporate situations, i.e. when legally independent companies are grouped e.g. in a holding
• Sprecherausschussgesetz since 1988
  applies to companies with normally at least 10 executive employees
• Limited codetermination rights of the works council in the so-called “Tendenzbetriebe” (companies that pursue goals other than economic goals, e.g. newspaper publishers)

Also, there are regulations on codetermination e.g.

• in the Arbeitsschutzgesetz ArbSchG (health and safety act)
• in the Bildschirmarbeitsverordnung (screen work decree)
• in the decree on working facilities, Verordnung über Arbeitsstätten, ArbStättV

Procedure for codetermination in the directors board of a capital company or a cooperative:

• With more than 500 employees, 1/3 of the directors board seats are held by employees
• With more than 2,000 employees, ½ of the directors board seats are held by employees
• The representatives are elected by the staff. In which the represented labour unions in the company have a special “Vorschlagsrecht” (right to make the first recommendation) which they mostly use for getting external labour union officials into the board
• The employees representatives have the same rights as the other directors board members

Procedure for codetermination by works council resp. staff council:

• Employees elect representatives into a works council
• If a business consists of several companies, there is an additional overall works council being composed of representatives from the single works councils

Last update: 03/08/2010