Works Council and Employee Consultation: Allowed or Not?

Information and confidentiality

The works council can only perform its duties properly if it receives complete information in a timely manner. In advice and consent procedures, this often involves far-reaching data: financial analyses, reorganisation plans, investments, mergers and acquisitions, or even closures. The employer must provide all information that the works council reasonably needs to perform its duties.

At the same time, the works council may not disclose that information. The confidentiality obligation under section 20 WOR applies to all information received in the capacity of works council member and to all information for which the employer has expressly imposed confidentiality. Breach of this confidentiality obligation may lead to dismissal, even summary dismissal.

Consultation with the employee constituency

Set against this confidentiality obligation is section 17 WOR: the right of the works council to consult employees where this is reasonably necessary. The legislature considered it important that employees know what the works council is doing and that the works council understands what is going on among employees. The form of employee consultation has deliberately been left open, as every organisation is different. The works council may not allow itself to be guided entirely by the outcome of such consultation and must continue to make its own independent assessment.

As long as confidentiality applies, the works council may not share information that falls under it. Nevertheless, not every form of employee consultation can simply be prohibited. The employer must assess whether full confidentiality is truly necessary, or whether there is scope to allow some form of consultation. The employer is expected to think along and consider workable alternatives. Sharing limited information, using an agreed presentation, or organising a joint meeting with management and the works council may sometimes be possible without harming the organisation.

The works council is also expected to act reasonably. Employee consultation is not an end in itself. The works council must be able to explain why consultation is necessary and in what form it can take without harming the organisation. A works council that insists only on full transparency does not act reasonably. Nor may the works council present only the potential disadvantages of the proposed decision to employees; it must also honestly and fully explain the employer’s reasoning. After all, the works council represents both the employees and the interests of the undertaking.

Balancing interests depending on the subject of the proposed decision

The scope for employee consultation largely depends on the subject of the proposed decision. In the case of major strategic decisions—such as investments, mergers, divestments, closures, or other decisions under section 25 WOR—the employer may generally bind the works council to confidentiality. In such cases, the works council may not share confidential information with employees, even where the consequences for employees may be far-reaching. The situation is different for decisions relating to employment conditions and arrangements covered by section 27 WOR. These subjects affect employees more directly and are less likely to have external consequences, making a prohibition on employee consultation less readily justified.

Good agreements for a workable practice

At the start of an advice or consent procedure, the works council and the employer can agree on how they will deal with information and employee consultation. This requires a case-by-case assessment and a reasonable attitude on both sides. In most cases, a solution emerges that does justice to everyone’s interests: informing where necessary and protecting what must be protected. Through careful consideration and a reasonable approach, the works council and the employer can together ensure a successful employee participation process.

Want to know more? Please contact our Employment Law team.

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