Working End > Insolvency > Reconcilement of Interests

Reconcilement of Interests

Definition, Explanation

Tips, Checklist

Definition, Explanation

During a company change, e.g. the closedown of a company, a fusion with other companies or restructuring processes, there can be done a reconcilement of interests besides the statutory social programme. Both are to be negotiated with the works council. The reconcilement of interests defines kind and dimension of cuts and changes, in contrast to the social programme which regulates kind and dimension of compensations for the employees. Thereby, the reconcilement of interests answers questions like

• why is the company change necessary?
• how can economic drawbacks of the affected employees be kept as low as possible?
• what is meant to be changed?
• when is the change going to be made?
• in what subordinate steps will the change occur?

Contents of the reconcilement of interests can be:

• chronological order of the company change and dates of dismissals
• extent and content of the company change, like exemptions, dismissals, short time work
• additional payments to make employees stay until closure
• introduction of an up-front personnel planning, especially concerning criteria for which employees to dismiss
• extension of the works council’s codetermination
• regulations concerning employees’ retraining and qualification
• relocating of tasks, alternative employment possibilities, creation of a rescue company or transfer company
• regulations concerning transfers and dismissals
• number and names of the employees to be dismissed (the latter only in a “reconcilement of interests with a list of names”)

Tips, Checklist

• Generally, the employer is obliged to negotiate, for every company change, a reconcilement of interests and a social programme. In order to achieve an agreement, if necessary, the board of the labour agency resp. a conciliation authority can be called in. If then still no agreement is achieved, company directors are free to exert the company change as they plan to
• If employers neglect this procedure and do not try to seriously achieve a reconcilement of interests, employees can sue for compensation payment, within a so-called disadvantage compensation
• the reconcilement of interests has to be recorded in written, according to § 112 BetrVG
• the reconcilement of interests has to be signed by the owner-manager and by the works council, just like the social programme
• Previous to a company change, the works council has to be informed in time and completely. Works council is to be explicitly involved in planning discussions. In a company of more than 300 employees, the works council is entitled to an external counsellor. Pursuant to not involving the works council in the right way and time, the employer can be fined up to 10.000 Euros
• being the works council, always negotiate the social programme and the reconciliation of interests together and sign both at once
• being the owner-manager, seriously try negotiating a reconciliation of interests and do not deviate from the regulation without a compelling reason. Otherwise, affected employees can sue for disadvantage compensations

Last update: 01/07/2010