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Federal Court of Justice: According to the judgment of the Federal Court of Justice, the remuneration models are not only in question by Volkswagen.
Unionists expect a wave of lawsuits.
Photo: Uli Deck / dpa
The written judgment of the highest German criminal court had been awaited for weeks after the oral hearing on January 10 had already announced something spectacular.
Now the 6th Criminal Division of the Federal Court of Justice (BGH) has confirmed it on 18 pages: If a board member or authorized officer pays an excessive salary to a works council, the objective facts of infidelity can be fulfilled.
Management would therefore be liable to prosecution.
What's more, according to the judges of the Federal Court of Justice, a "strict standard must be applied" to the payment of a long-term exempted works council.
It is not permissible to refer to a "hypothetical salary development" by the works council (Az 6 StR 133/22).
The verdict shook the German business world.
In the specific case, it is only about four former VW managers who were initially acquitted and whose acquittals have now been overturned by the BGH;
the allegations of infidelity against her are now being heard again by the Braunschweig Regional Court.
But in principle there is much more at stake: According to the judgment of the Federal Court of Justice, hundreds of large companies and corporations have to ask themselves whether their long-standing remuneration practices for their works councils are still compatible with German law - or whether they themselves risk being accused of breach of trust if they do not rush to cut the pay of their works councils.
"The risk of criminal liability for companies has increased significantly as a result of this judgment,"
Gregor Thüsing
, director of the Institute for Labor Law at the University of Bonn, told manager magazin.
He can only advise companies to be "radically cautious" when it comes to remuneration for works councils in the future.
According to Thüsing, the BGH has explained in detail which criteria for the payment of long-standing works council members may not be used.
Conversely, those affected lack a clear specification as to which payment model is legally correct.
Many lawyers in Germany see the judgment as a conflict between criminal law and labor law: The Federal Court of Justice is questioning a remuneration practice that has been confirmed by the Federal Labor Court in various judgments for years.
Dispute over salary increase over the years
The problem: If employees are released for the works council, they continue to earn a salary.
The only question is how much – especially if the people have been works council members for many years.
When it comes to the question of how much money a long-standing member of a works council may earn, the Works Constitution Act (BetrVG) hardly makes any specific provisions.
"The members of the works council carry out their office free of charge as honorary posts," says Section 37 of the BetrVG.
At the same time, employees who work full-time as part-time works council members may not be disadvantaged or favored because of this activity (§78 BetrVG).
Numerous companies in Germany therefore pay their works council members according to a model that has also been confirmed in principle by the Federal Labor Court.
They form a comparison group that is comparable to the newly elected works council in terms of training, salary and qualifications.
These comparison persons form the benchmark for a "customary development": If a member of this comparison group receives a salary increase in the course of their career, the exempted member of the works council also receives this.
This means: The salary of the works council is not frozen according to the principle "once a locksmith, always a locksmith" to the salary group in which the employee representative was at the time of his election.
The remuneration models used in the majority of companies allow the salary of an exempt works council member to increase – in individual cases even beyond the limits of their original tariff group.
If a works council acquires additional qualifications during its many years of activity on the committee, these are also considered favorably in some companies when it comes to payment.
However: The BGH contradicts this practice in its judgment, as well as payment outside the original tariff group.
In addition, some corporations also pay certain lump sums to their works council chairmen - for example, if they are involved in decisions in the case of collective bargaining or as a member of the supervisory board at the weekend or outside of regular working hours.
This also contradicts the strict reading of the BGH that works council work as such may not be remunerated.
Remuneration models questioned, wave of lawsuits feared
Personnel managers at Telekom, BASF, Siemens and BMW have so far considered their remuneration models to be in line with the current case law of the Federal Labor Court, the highest instance of labor law.
After the judgment of the Federal Court of Justice, however, a gap between labor law and criminal law has now become apparent: The in-house lawyers in German corporations must now check whether their remuneration models are still compatible with the "strict standards" of the BGH - or whether their HR managers are liable to prosecution if they continue to pay their works councils as before.
All works council members whose careers have been "hypothetically" continued must now be identified and their remuneration reversed, so the fear is.
In this case, trade unionists fear a wave of lawsuits from those affected who are defending themselves against the salary cuts in the labor court.
Legal uncertainty is growing
The anger at the trade unions is correspondingly large.
The BGH did not create any clarity, but on the contrary caused uncertainty.
"The judgment of the BGH does not bring any clarity, but rather widens the gap between the labor law assessment and the criminal law assessment, which differs from it," said a spokesman for the IG Metall trade union.
"For companies as well as for works councils, this leads to enormous legal uncertainty."
Almost 50 years after the most recent reform of the Works Constitution Act, the legislature must "finally ensure legal clarity."
A reform of the Works Constitution Act is overdue because the dispute over the remuneration of works councils, which has been going on for years, is damaging co-determination in Germany.
Co-determination lives from committed and qualified employees who are committed to the works council and receive further qualifications over the long term.
However, the office of a works council becomes unattractive, especially for young employees, if working as a full-time works council also means that the salary is practically frozen.
For this reason, HR managers and trade unions are demanding clearer government guidelines on how works council work is to be paid appropriately.
Outrage at Volkswagen
The criticism from the works council of the Volkswagen Group, which is directly affected by the BGH ruling and now has to face the revision procedure in Braunschweig, is even sharper.
"The BGH brushes aside the years of supreme court practice of the Federal Labor Court - and that on a core labor law issue," said a spokesman for the VW works council when asked by manager magazin.
As a result, "labor law allows what is parallelly prohibited under criminal law".