Friday, September 15, 2017

Summer Edition

Welcome to the summer edition of the International Employment Law Committee newsletter. Thanks as always to our contributors, and please let me know if you are interested in submitting an article on recent developments in your jurisdiction.

Helen Colquhoun
Withers, Hong Kong

Canada - Clash of Principles Leads to Sea Change in Union Rights During Insolvency Proceedings

By Theodore Goloff, Robinson Sheppard Shapiro, and Brian Sherman (law student)

In law as in life, where one begins determines where one ends, particularly where one’s starting point for legal analysis depends upon one’s choice between competing principles to champion. In a federal system such as Canada, where insolvency law lies within federal jurisdiction but where provincial competence in labour relations law is presumptive (indeed less than 10% of Canada’s working population falls under the jurisdiction of federal labour and employment law), conflict arises where the two intersect, as they represent divergent objectives.

Labour relations law provides employees the mechanism to advance their interests and redress the imbalance of economic power in their favour. Insolvency law is predicated upon the competing principle of maintaining the rights of all creditors within a predictable scheme and order, so that their claims are treated pari passu, and is designed to prohibit one group of aggressive creditors from gaining at the expense of others.

Unless varied by the Supreme Court of Canada, the recent decision of the Court of Appeal for Ontario in Romspen Investment Corporation v. Courtice Auto Wreckers Limited, 2017 ONCA 301, may well represent a sea change in the relationship between labour relations law and insolvency. Romspen appears to be the first instance where a Canadian appellate court was asked to consider whether, on principle and/or on the facts of the case, a union should or should not be allowed to pursue a certification application during receivership/bankruptcy, by lifting a stay of proceedings resulting from a receiving order issued in accordance with the Bankruptcy and Insolvency Act [BIA]. Considering the different vantage points of the majority and the dissent, it is not surprising that their analysis and their disposition of the case are diametrically opposed.


As Justice Lauwers, in dissent, wrote:

[60] The insolvency regime in Canada is intricate and the way it addresses the interests of debtors, creditors and others is carefully calibrated.

In the event of insolvency, legal structures are available in Canada for both restructuring and reorganization, i.e. the Companies’ Creditors Arrangement Act [CCAA], allowing companies to retain value as “going concerns”, while protecting against intangible losses, such as evaporation of the companies’ goodwill that, inter alia, result from liquidation. Reorganization serves the public interest by facilitating the survival of companies supplying goods or services crucial to the health of the economy while, hopefully, saving large numbers of jobs. As the CCAA does not specify what happens if reorganization fails, the BIA, supplies the backdrop for that unfortunate situation, i.e. the firms’ demise. The two statutes work in tandem, grouping all possible actions for recovery against the debtor into a single proceeding controlled in a single forum overseen by a single judicial officer, avoiding the chaos that would attend insolvency if each creditor initiated recovery proceedings individually in different forums, all the while placing all creditors on an equal footing, diminishing the risk that the most aggressive creditors would realize their claims against the debtor’s limited assets to the detriment of all the others.

The insolvency regime proceeds from the premise of a statutory freeze and standstill to allow for judicially supervised reorganization and rebirth, if possible, with the pain of the “haircut” required being shared amongst creditors and stakeholders, and the orderly and schematic disposition of assets if bankruptcy ultimately ensues.

The essential premise of labour relations law, in Canada, at least since the last Supreme Court pronouncements on Section 2(d) of the Canadian Charter of Rights and Freedoms [Charter], known as the “trilogy” of 2015, proceeds from a constitutionally recognized and protected right of the “working class” to better its economic position and redress the inequity of uneven bargaining power through (i) associational rights, i.e. certification; (ii) collective bargaining; and (iii) the use of the strike weapon. Clearly because its purpose is to redress imbalance through dynamic collective change, labour relations law challenges rather than preserves the status quo.

The issue raised in Romspen is different from the more classic case of a simple employee unfair labour practice charge, e.g. termination, given that the outcome of such proceedings might involve liquidating the amount of back pay (lost wages and interest), if any, owed, providing, in that sense, the data required to allow the receiver or trustee in bankruptcy to determine whether there even is a “claim provable in bankruptcy”. There seems therefore, in that circumstance, to be a more cogent argument for allowing such proceedings to go forward, because the interests of both the complainant and the receiver or trustee are, in that sense, advanced in tandem. Such was, in fact, the view of the Quebec Superior Court in Re, Engrenage P.Y.G. (Faillite de), 2003 CanLII 27983 and Société de gestion ltée (Syndic de), J.E. 98-155.

Salient Facts

In the Rompsen case, certification proceedings were filed almost two months after Courtice Auto Wreckers was put into receivership by Rompsen, one of Courtice’s secured creditors. A general stay of certification proceedings was imposed, pursuant to the provisions of the BIA by the receiver.

The issue of whether or not the general order to stay proceedings applied so as to block the certification was canvassed by the Ontario Labour Relations Board, which held that, indeed, the general stay applied. The Board proceeded to stay the union’s certification application pending before it. The union sought an order to quash the Receiver’s stay, and by ricochet the Board’s order, from a judge of the Ontario Superior Court of Justice, without success. That decision was appealed by the union allegedly “de plano”, i.e. as of right, without leave being sought. Both the majority and dissenting judges agreed that leave was required but, because the central issue raised in the appeal, as the majority put it, was “the relationship between, and intersection of, federal bankruptcy law and general provincial labour relations law” [para 26], leave to appeal was exceptionally granted on public interest grounds.

In the end, the majority allowed the appeal, set aside the order of the motion judge, and granted the union leave to proceed with its certification application.

A Clash of Principles – Dissent vs. Majority Decision: To Stay or not to Stay Certification Proceedings

As noted by the dissent, “[w]hatever the applicable test, ‘lifting the automatic stay is far from a routine matter’” and that “lifting of a stay is exceptional in view of the expectation that most creditors’ claims will be resolved through the summary procedure, and not through ongoing court or administrative law proceedings” [para 78].

Indeed, the lifting of a stay order is a matter that lies within the bankruptcy judge’s discretion. It has long been a tenet of higher courts that discretion given to trial court judges ought not to be disturbed or appeal, save on grounds of palpable error of law, or less than reasonable appreciation of the facts.

Certainly a bankruptcy court judge, in any of Canada’s provinces, would per force have a specialized expertise akin to that of any administrative tribunal created by statute whose decisions, in Canada, even when not protected by a privative or preclusive clause, are reviewable only under extremely narrow parameters.

In this regard, Justice Lauwers, in dissent, noted:

[84] As a commercial list judge with long experience in insolvency, the bankruptcy judge would be fully alive to the relevant and to the business realities faced by the debtor, the creditors and the receiver. Moreover, he would be intimately familiar with the particular facts of the case. That is why it is important for this court, from the viewpoint of the standard of review, to defer to the bankruptcy judge in the exercise of his discretion under s. 215 of the BIA or the terms of the receivership order: see e.g. Royal Crest Lifecare Group Inc. (Re) (2004) […] 181 O.A.C. 115 (C.A.), leave to appeal refused, [2004] S.C.C.A. No. 104, at para. 23; Grant Forest, at paras. 97–99.

To be sure, the majority decision took issue with a number of findings of fact of the receiver, and/or of the bankruptcy judge, terming them inter alia “speculative” [paras 34 and 41] or adding: “The Receiver’s statement in its first report that it has ‘serious concerns’ that certification could negatively impact a sale amounts to little more than self-serving speculation”. In this respect, the dissent countered:

[116] In my view, the bankruptcy judge’s statement that certification could negatively impact the sale of the Harmony Road depot is self-evidently true and falls well within the margin of appreciation that is his due, given his knowledge of the commercial realities. I would be most reluctant to disparage the advice of the court-appointed receiver as mere “self-serving speculation”. Such an officer has no self-interest and owes duties to all the parties and to the court. In my view, it was open to the bankruptcy judge to accept the receiver’s advice.

[117] If the union achieves certification and the Harmony Road depot is sold in such a way as to attract successor labour rights, then any prospective purchaser of the depot will be faced with the obligation to immediately embark on first collective agreement negotiations. This is not a small additional burden on what would otherwise be the terms and conditions of the depot’s sale. It will plainly discourage some potential bidders and therefore negatively affect the depot’s market price by reducing the number of buyers who would be willing to engage. Any cooling of the interests of potential purchasers in the debtor’s assets would reduce the proceeds of sale to the prejudice of all the creditors. With respect, this is more than a mere “inconvenience to the receivership process.”

[118] If the court were to permit the post-receivership certification process to continue, it would effectively hand one interested group of creditors, the newly unionized employees, a tool with which to increase their leverage over the other creditors.” (emphasis added)
At para 114, the dissent in Romspen referenced the “significant professional costs to the Receiver’s administration”, stating that “[t]he cost of a labour negotiation will, in effect, be a super-priority expense that will ultimately be absorbed by and materially prejudice other creditors through reduced realizations and distributions.”

Most respectfully, it certainly lies within the role of any court to draw factual inferences from statutory language. Apparently, that is what the dissent understood the bankruptcy trial court judge to have done. While before the bankruptcy judge, the receiver is and was a party ad-litem, in law at least, the latter is and was rightly to be viewed as a court-appointed judicial officer who has no separate personal and self-serving interests but those of the collectivity of creditors and the proper administration of the BIA.

In that respect, if the receiver’s “serious concerns” were speculative, in the absence of proof to the contrary aren’t they to be taken as having been raised in the best interests of the mass of creditors? Isn’t that the true role of the receiver?

Was Federal Paramountcy Triggered?

The next, more substantive, issue between the majority and dissent centered on how to reconcile federal insolvency and bankruptcy legislation with the provincial statutory labour relations scheme, itself a regime that is constitutionally grounded in human rights.

As insolvency is within the exclusive competence of the Parliament of Canada, the paramountcy of federal legislation, while engaged, is tempered by Section 72(1) of the BIA providing:

72(1) The provisions of this Act shall not be deemed to abrogate or supersede the substantive provisions of any other law or statute relating to property and civil rights that are not in conflict with this Act, and the trustee is entitled to avail himself of all rights and remedies provided by that law or statute as supplementary to and in addition to the rights and remedies provided by this Act. [Court’s emphasis]

In Rompsen, there is between majority and dissent a fundamental disagreement as to when federal paramountcy is or is not triggered.

The majority, on the basis of GMAC Commercial Credit Corporation – Canada v. T.C.T. Logistics Inc., [2006] 2 SCR 123 [GMAC], determined that for paramountcy to be triggered there must be an “operative conflict”, between one or more provisions of the statutes, defined in 407 ETR Concession Co. v. Canada (Superintendent of Bankruptcy), [2015] 3 SCR 397, as being an impossibility to comply with both the provincial law and the federal bankruptcy regime. For the dissent, this latter and more recent case suggested a second flexible more context- and fact-specific paramountcy trigger.

Apparently, the majority did not consider the second portion of the “conflicts” test suggested by ETR Concession, which, in the dissent’s view, is “the latest word from the Supreme Court on paramountcy” [para 98]. This second test posits that federal insolvency paramountcy is triggered where, although it is possible to comply with both laws, the operation of the provincial law “frustrates” the purpose of the federal regime. In such an event, pursuant to ETR Concession, “the provincial law remains valid, but will be read down so as to not conflict with the federal law, though only for as long as the conflict exists” [para 101].
The difference between the majority and dissent, in their approach, is telling. As the dissent put it:
[103] The court’s task here is not to reconcile statutory language, but to reconcile different policies. This is a nuanced, difficult and delicate task informed by the bankruptcy judge’s knowledge both of the law and the operation of the marketplace in the context of the specific matter before him, drawing also on his experience and wisdom, and his sense of what is commercially reasonable. The bankruptcy judge brought just that perspective to this case.

The dissent continued:

[107] In my view, the policy contest presented in this case is precisely the kind of conflict between provincial regulatory regime for labour relations and the federal insolvency regime that the paramountcy doctrine is intended to recognize and accommodate.

[108] My colleague relies on the Supreme Court’s decision in GMAC. In that case the issue was whether leave should be granted to the union under s. 215 of the BIA so that the Labour Relations Board could determine “successor employer” status.

[109] However, there is a crucial distinction between this case and GMAC. The union had long been certified in GMAC. By contrast, in this case, the certification effort followed the appointment of the receiver by several months. This distinction is important because it engages one of the fundamental policy principles in insolvency law, which is to preserve the status quo among the creditors as of the date the receiver was appointed. The bankruptcy judge accurately identified that this principle would be violated if the debtor could be forced to accept union certification post-bankruptcy. In my view, my colleague does not give due weight to this critical principle.

To Stay or Not To Stay – The Central Question

The majority took issue with the suggestion that the certification “would in effect increase the rights of the members of the proposed bargaining unit relative to other creditors” [para 31], adding:

[32] […] A successful certification application does not guarantee employees better wages; it simply allows employees to combine their bargaining power and rely on the union’s assistance in negotiating their terms and conditions of employment. While it is true that upon certification certain rights and obligations crystallize that would not otherwise (e.g. the employer’s duty to recognize the union and bargain with it in good faith), certification does not have the effect of automatically increasing the rights employees have as creditors, thereby prejudicing other creditors. It is simply conjecture at this point to assume that the union will be successful in negotiating a more financially favourable contract for bargaining unit employees. Moreover, at this juncture, allowing the union’s certification application to proceed merely entitles the union to a representation vote, not to certification.


[34] In my view, this line of reasoning is speculative. While some purchasers may be dissuaded by recognition of the proposed bargaining unit, it may also be that a set collective agreement, with its clarity of terms, would be attractive to a prospective purchaser. The union, on behalf of its members, has an interest in the business being sold as a going concern and therefore has an incentive to act in a manner that would promote such an outcome.

[35] More fundamentally, however, there is simply no concrete evidence that recognition of the proposed bargaining unit would negatively impact a sale.

From this writer’s perspective, is the opinion regarding the supposed incentive to act “in a manner that would promote such an outcome” any less speculative than the conclusion reached by the receiver, which the bankruptcy judge saw no reason to vary?

From this writer’s perspective, and with respect, the issue lies at the core of both (i) how one views the latitude of an appellate court to review the exercise of trial courts’ discretionary remedies and, more fundamentally, (ii) the validity of assumptions as to the harmony of the goals of labour and the mass of the creditors. Even if both see value in the sale of the business rather than its dismantling, it is certainly a more than reasonable and plausible, if not a more compelling assumption, that all things being equal, a prospective buyer would have to negatively factor the possibility, if not probability, of the cost of bargaining of first collective agreement into the mix. This would be doubly true in Quebec where first contract negotiation can lead to an agreement imposed by arbitrator, even without proving bad-faith bargaining.

In any case, with the greatest respect for the majority opinion, with more than 45 years as a management side labour relations lawyer in Quebec behind me, I would suggest that first collective agreements that do not alter the employer’s economic landscape through improvements in wages, benefits or other non-monetary conditions of employment, are as rare as hen’s teeth. I would doubt that my colleagues at the Bar of Ontario on either side would see matters differently.

In determining whether lifting a stay order is or is not appropriate, the bankruptcy court was required to weigh the relative “prejudices” that may result.
With respect, fairly predictable and logical results of certification, even if they cannot be calculated with precision, nonetheless constitute far more than speculative prejudice.

The Charter’s Place in All of This

While no direct mention is made of the Charter, this author clearly believes that the majority’s decision has as its leitmotif the constitutionalization of the right to certification. Clearly, the majority would have been influenced by the Union’s reference thereto writing:

[37] […] The right to form and join a union of one’s choosing is a fundamental right under the Labour Relations Act, 1995, S.O. 1995, c. 1, Sched. A (the “LRA”). While flexibility is required to address the challenges in any particular insolvency proceedings against the legitimate exercise of labour rights simply because the assertion of those rights represents an inconvenience to the receivership process: GMAC, at paras. 50-51.


[44] […] I am simply not persuaded that allowing the union’s certification application to proceed would cause any more than de minimis prejudice to Ambrose Group creditors.

[45] On the other hand, a lot is at stake for the union and the employees. Maintaining the stay prejudices the important objectives “quick votes” are designed to serve, unduly interferes with employees’ ability to exercise their statutory labour rights, and, particularly where employees have allegedly been dismissed for exercising those rights, undermines employee confidence in the efficacy of core labour rights and protections.

[46] Labour rights do not end when insolvency proceedings begin.

To be sure, as the majority points out, obliquely referring, I believe, the above-mentioned Supreme Court trilogy, “the right to form and join a union of one’s choice is a fundamental right” [para 37], it is the dissent that deals with this issue more directly.

Justice Lauwers writes:

[88] The appellant’s factum simply asserts that: “Given the constitutional protection afforded to this process, the court should be wary of allowing the existence of a receivership to frustrate the certification application.” Fair enough, but the union had the entire life of the business before insolvency within which to pursue certification.

[89] In oral argument, counsel for the union expanded on this brief allusion. He asserted that the MPAO decision constitutionalized bargaining rights, and argued that the right of employees to unionize should “supersede” any concern in relation to the sale of the business. He added that there is no empirical evidence that unionization will reduce the sale value of the asset, but even if that were to be the outcome of the employees’ exercise of their rights under the labour legislation: “So be it”.

[90] However, counsel for the union did not take the position that the constitutionalization of labour rights takes away entirely the bankruptcy court’s discretion under s. 215 of the BIA or the order appointing the receiver to refuse to lift the stay where labour rights are in issue.


Romspen represents a clash of principles and a significant shift in the law on many different levels, the fallout of which is as yet not fully known. And if my point of view differs from those of my betters, I differ with deference.

In the end, given that there is an application for leave to appeal to the Supreme Court of Canada, pending it remains to be seen whether the dissent’s apocalyptic vision to the effect that:

[93] In my view, giving unions carte blanche to begin certification efforts for insolvent enterprises after the date of the appointment of a trustee or receiver or the date of an order under the CCAA would effect a sea change in insolvency law; it would profoundly alter the economic dynamics of insolvency, and whether the CCAA route is preferable to outright bankruptcy.

will be stillborn as a result of judicial scrutiny at a higher level and further clarification of the law on this issue by Canada’s highest court. Certainly, though, folks doing business in Canada on either side of the labour-management divide should be keenly interested in this case.

France - The Macron Labor Reform for France

By Roselyn Sands, EY Societe d'Avocats

President Emmanuel Macron of France won the May 2017 election promising to significantly reform the French labor & employment laws as a priority by September 2017. As we stated in our article in May 2017, the purpose of this Reform is to increase flexibility and reduce unemployment. While the new legislation will not have the force of law until later in the Fall, below we summarize the key features of the Macron labor law reform.

Use of Special Procedures to Achieve Speed

In order to achieve such accelerated timing, the French Government will enact the contemplated reform by way of ordinance (“ordonnance”). In French law, this statutory instrument allows the Council of Ministers (“Conseil des Ministres”) to enact laws in areas of law that are usually reserved for legislative enactment. In order to allow such abbreviated process, the Parliament adopted a law (“loi d ’habilitation”) on August 2, 2017 allowing this procedure. Draft ordinances were made public on August 31, 2017 and should be adopted by the Council of Ministers September 22, 2017. The legislative process, is targeted to end in October/November 2017, with the ratification of the ordinances by the Parliament which will give force of law to the Macron Labor Law Reform.

A part of the French opposition to this reform is gaining some momentum and they are trying to slow this process down. Indeed, a demonstration on September 12 was the first and another one is planned in late September. However, it is not believed that the demonstrations or strikes will weigh heavily enough to change the current state of affairs.

General philosophy of the Macron labor law reform

There are 3 main general themes of paramount importance:

• Ability to customize applicable labor rules within a company through negotiation
• Streamlining of employee representatives
• Predictability of damages and further simplification of the termination process

1) Ability to customize applicable labor rules within a company through negotiation

The traditional architecture of French labor law is a pyramidal structure starting at the top with the French Labor Code, then the industry-wide collective bargaining agreements, and then the company-wide collective bargaining agreements. Each additional layer traditionally could only enhance employee protections, never taking any rights away.

This new Macron Labor Law Reform reverses this hierarchy of norms and allows collective bargaining at the company-wide level to achieve greater flexibility even if employee protections are reduced.

There are exceptions and many details on how to collectively bargain, but overall the important message of the reform is that companies are now more able to negotiate at the company level in order to create custom-made rules.

2) Streamlining of employee representatives

One of the most important measures of the Reform is the merger of all employee representative bodies. As of January 1, 2019, all companies will only have one representative body replacing the existing Works council, “délégués du personnel”, and health & safety committees. The new Social and Economic Committee (“Comité Social et Economique”) will exist in all companies with 11 or more employees. The scope of the CSE will increase depending on the number of employees within a company.

In certain circumstances, the new CSE will have the power to negotiate and collectively bargain with the employer, traditionally reserved to unions in the past. Under certain conditions, employee referendum will be required to confirm the agreement.

3) Predictability of damages and further simplification of the termination process

As promised by Macron during the French election campaign, a minimum floor and maximum ceiling will be applicable in the award of damages for wrongful termination by the French Labor Courts. To illustrate, the maximum ceiling for damages for an employee with 10 years of service is 10 months; and for 30 years of service, 20 months of salary. (This is in addition to the legal termination indemnities, which do not change.) This will apply to unlawful terminations with the exception of matters involving the violation of fundamental rights like harassment or discrimination cases, for example.

Moreover, to minimize the risk of form over substance, a “template” for termination letters will be available for employers, and the termination letter itself will no longer be the only proof possible to demonstrate the legal grounds for the termination. Both the employer and the employee will have the availability to give or ask for complementary information on the termination grounds, after formal notification of the termination letter.

As to the substance itself of legal grounds, in economic redundancies, a significant effort has been made to simplify the legal economic grounds: only economic difficulties in France will be taken into account, not the economic situation of the group in the world. The redeployment offer process will be also be significantly simplified in the context of economic termination.


The key take-away is that we have a new ballgame in France on labor law with a fundamentally different philosophy!

Germany - The 2018 Works Council Election is Approaching: Conducting the Election and Contesting an Election

By Bernd Weller and Dr Johan-Michel Menke, Heuking Kühn Lüer Wojtek PartGmbB

The upcoming works council election is approaching. In the first article (AuA 2017, 338), we made observations on preparations before the actual election. In this article, we want to discuss the conducting of the actual election, typical stumbling blocks, and possible contestation scenarios. In particular, due to the complexity of the regulations of the Works Constitution Act and the election rules adopted, the conducting of the election is prone to errors. Without optimal preparation (and monitoring during the election), the risk is therefore great that errors will occur during the election. But even in the event that errors should occur during the election, not every error leads to legal consequences.


The regular election of the works council is held every four years in accordance with Section 13(1) Works Constitution Act. Since works council elections have not occurred for the first time in every company in the same calendar year, the question arises why the vast majority of companies nevertheless conduct works council elections in 2018. This is due to the statutory provision in the Works Constitution Act (Section 13(3)), which transfers all works council elections as rapidly as possible into the four-year regular cycle. Only when the last works council election is held less than one year from the beginning of the regular date for elections within the meaning of Section 13(1) Works Constitution Act is the term of office of the works council extended so that it is moved to the usual 4-year cycle only in the next immediately following period for regular elections. By focusing the elections on individual years, it is supposed to make it easier for among others trade unions and courts to be prepared administratively for the elections and possible contestation proceedings. For soccer fans, this at least has the advantage that the regular date for elections can easily be determined – it always occurs in the year of the Soccer World Cup.

Elections may be held outside of the 4-year time period only under the strict requirements of Section 13(2) Works Constitution Act.

2. Election preparation in the strict sense

In principle, the works council can decide for itself with what lead time it initiates the election of the new works council. It is legally determined that the works council is obligated to undertake the initiation of the election by appointing the electoral board no later than ten weeks before the expiry of its term of office, Section 16(1) Works Constitution Act. In view of the fact that both the electoral board and the candidates enjoy the special protection against dismissal of Section 15 Protection Against Dismissal Act until the announcement of the election results, the possibility exists that works councils – in the case of imminent staff cutbacks – provide protection against dismissal for a large part of the work-force by initiating the election an as early as possible, since then suddenly everyone will stand as candidate for election. This special protection against dismissal is only excluded when the early appointment of the electoral board can be qualified as an abuse of legal rights. Abuse of legal rights is only accepted in absolutely exceptional cases. Thus, for example, the appointment of the electoral board 36 weeks before the start of the statutory election period was not deemed to be an abuse of legal rights (cf. Lower Saxony State Labor Court, October 13, 2010 – 17 Sa 569/10).

Practical tip: Companies should initiate personnel restructuring measures regardless of the particularities of Section 15(4) Protection Against Dismissal Act in the case of a plant closure significantly before the regular works council election, in order to avoid the special protection against dismissal of the electoral board and the electoral candidates.


The active right to vote is accorded to all employees of the establishment, who have reached the age of 18. All employees who have been a member of the relevant establishment for six months are eligible to be candidates (passive voting right). The determination of the active and passive voting right is of decisive importance for the specific implementation of the election – and for avoiding later contestability.

Misunderstandings can frequently easily arise in respect to the right to vote particularly in the case of the following groups of persons:

• Executive staff have neither active nor passive voting rights.
• Temporary workers already have active voting rights if they have been employed for longer than three months in the establishment. They only have passive voting rights if they gain employment with the hiring company subsequent to their temporary employment. In this case, the time spent working as part of the temporary employment counts towards the required minimum time working at the establishment of six months.
• Parental leave: Employees on parental leave are entitled to the active and the passive right to vote during the entire parental leave period.
• Laid-off employees: Until the expiry of the period of notice, they have active and passive voting rights. A properly laid-off employee is entitled to the active right to vote after expiry of the period of notice only when filing a protection against dismissal action and continuing to be employed during the protection against dismissal proceedings. An employee laid off without notice is entitled to the passive right to vote, if filing a protection against dismissal action (in due time). The reason for this is that the employer could otherwise effectively prevent the election of electoral candidates that the employer disagrees of by issuing (ineffective) extraordinary dismissals (cf. Federal Labor Court, November 10, 2004 – 7 ABR 12/04).
• Employees who are ill or on leave and inactive work contracts: Employees who are ill, on leave or those whose work contract is temporarily inactive have active and passive voting rights.
• Partial retirement: Employees who are in partial retirement have no voting rights, as soon as the release phase has begun.
• Employees abroad / another establishment: Due to the ever-closer interconnection of work flows, more and more situations arise in which the assignment of employees is questionable, for example, if
o an employee is temporarily sent abroad,
o an employee (of another group company), who belongs to an establishment abroad, has authority to give orders to employees in the German establishment or
o an employee, who – whether regularly working in several establishments on-site or whether entitled to issue instructions to employees in several establishments – could be assigned to several German establishments.

In all of the aforementioned cases, the election participation depends on whether and in which establishment(s) the employee is "integrated." Integration in this sense means factual circumstances, according to which an employee is part of an operational organization and also chain of command. Thus, a supervisor is, for example, already integrated into an establishment (in which he is never physically present), when exercising leadership and management functions in respect to employees in this establishment and the leadership function serves the operational purpose of this establishment (cf. Baden-Württemberg State Labor Court, May 28, 2014 – 4 TaBV 7/13). Conversely, sales representatives in the field are also integrated into an establishment in that they are subject to the instructions of the organization there (in other words: supervisors):

o In the case of posted workers, the integration into the "home establishment" is as a rule maintained if they are not integrated into an operational organization abroad (e.g., in the case of assembly workers). But even an integration into a foreign establishment is not contrary to the continued integration and thus eligibility to vote in the home establishment when the posting is only of a limited temporal nature.
o According to recent case law, the supervisor of employees of a German establishment who is based abroad – frequently in the matrix structure – is also to be regarded as an employee of the German establishment. The question as to whether such supervisor is "executive staff," is thereby not to be assessed ac-cording to the supervisor’s role in the overall group, but rather only in respect to the respective company. It may therefore well be that a "big shot" from abroad is considered a normal employee in the German establishment – with full active and passive voting rights.
o Finally, it is also conceivable that an employee belongs to several German establishments and thus has the right to vote in several German establishments. For this purpose, it must only be checked, according to the aforementioned criteria for each individual establishment, whether an "integration" into the respective establishment exists.


According to Section 5(3) Works Constitution Act, executive staff are employees who under their contract of employment and the status in the company/establishment
• are entitled on their own responsibility to engage and dismiss employees employed in the establishment / operation department (Section 5(3)(1) Works Constitution Act)
• have general authority or power of procuration and the power of procuration is also not unimportant in relation to the employer (Section 5(3)(2) Works Constitution Act) or
• regularly carry out other duties, which are important for the existence and development of the company or an establishment and fulfilment of which requires particular experience and knowledge, if, in doing so, they either essentially make decisions on their own responsibility or substantially influence these decisions; this may also be the case with stipulated procedures, particularly those based on legal provisions, plans or guidelines and when cooperating with other executive staff (Section 5(3)(3) Works Constitution Act).

Specifically, the first-mentioned criterion, the entitlement to engage and dismiss employees on one's own responsibility, is satisfied for employees in Germany only in the rarest cases. In contrast to Section 14(2) sentence 1 Protection Against Dismissal Act, both entitlements, therefore the right to engage and dismiss employees, must be met cumulatively (cf. Munich State Labor Court, June 06/2012 – 5 TaBV 51/10). Through the introduction of the dual control principle, an employee is only rarely authorized to engage and to dismiss employees on his own responsibility – without having to obtain the consent of a third party. Since a company will not be able to assert that the second signature is provided only "formally" without any decision-making power, this case group is almost never used.

Also, the "formal" granting of general authority or power of procuration in relation to third parties does not automatically qualify an employee as executive staff within the meaning of Section 5(3)(2) Works Constitution Act. Rather, the general authority/power of procuration must also be designed in the internal relationship such that not only unessential du-ties to be executed on one's own authority are allocated to chief representatives/authorized representatives. The chief representative/authorized representative must – at least in his (not unimportant) area of responsibility – perform entrepreneurial duties. An employee furnished with power of attorney does not fall under this second group of the executive staff. He may meet the requirements of the third case group, however.

Executive staff of the third group according to Section 5(3)(3) Works Constitution Act fulfil duties according to their contract of employment, which

• have particular meaning for the company / the establishment,
• require special knowledge and experience and
• which the employee can essentially carry out himself without instructions.

This covers therefore employees, who due to their position are particularly close to company management and are able to handle entrepreneurial duties at least in some areas. The employee must thereby not make the decisions on his own responsibility and alone. Rather, it suffices if he at least decisively influences decisions of company management (cf. Federal Labor Court, March 25, 2009 – 7 ABR 2/08). Thus, in particular "staff employees" for the third group are considered for these case groups.
Section 5(4) Works Constitution Act also has some interpretative rules, the fulfillment of which is very relevant for the characterization of an employee as executive staff within the meaning of Section 5(3)(3) Works Constitution Act.


The normal election procedure can be divided into five main sections:
• appointment of the electoral board,
• drawing up the electoral list,
• publication of the election notice,
• submission, review and publication of the proposed lists, and
• holding the actual election process as well as counting the votes and publication of the election result.

When appointing the electoral board, as the central constitutional electoral body, it de-pends on whether a works council already exists or not. The works council has the statutory duty to appoint the electoral board, Section 16 Works Constitution Act. If the works council does not fulfil this duty or does not do so within the ten-week period, the electoral board may be appointed either by the general works council or the group works council or by the labor court. In establishments, in which a works council does not exist, the electoral board may be directly elected by the general works council or the group works council, alternatively in an establishment meeting, or may be appointed by the labor court, Section 17 Works Constitution Act. Once the electoral board has been elected or appointed, it has the duty to initiate the election immediately, to carry it out and to determine the election result.

At the beginning of the works council election, the electoral board has to create a list of the eligible voters, the electoral list, Section 2 Election Regulations. The electoral list must be kept separately by gender and must contain last names, first names, and dates of birth in alphabetical order. Furthermore, it is necessary to identify who has only active voting rights, therefore, who lacks the passive right to vote (e.g., temporary workers). In the later election, only those employees are – actively as well as passively – eligible to vote, who are listed on the electoral list. Consequently, the accuracy of the list is of particular importance for the further progress of the election. After the electoral list has been drawn up, the electoral board has to display the electoral list from the day of the initiation of the election until the completion of the voting at a suitable place for inspection in the establishment. Alternatively or cumulatively, making it available for public display in the Intranet or by email is also considered. Opposition to the electoral list may be submitted in writing to the electoral board within two weeks after issuing the election notice. Every employee of the establishment is entitled to do so – not, however, the employer or a trade union represented in the establishment, Section 4 Election Regulations.

Practical tip: Election contestations are frequently successfully based on the inaccuracy of the electoral list. In case of doubt, the employer should therefore fully support the electoral board in drawing up the list.

The electoral board then releases the election notice, which with a view to the extent of the minimum details in practice is very prone to error and therefore in practice frequently provides grounds for contesting the election. In particular, the information on the mini-mum seats for the minority gender in the establishment can frequently lead to errors. Section 15(2) Works Constitution Act requires that the gender, which is in the minority in the staff, must at least be represented in the works council according to its relative numerical strength, if the works council consists of three or more members. Therefore, the electoral board must determine how many employees belong to the respective gender at the time of issuing the election notice.
The election notice must also contain the number of the supporting signatures necessary for the individual proposed lists. Each employee may only run as a candidate for a pro-posed list and also only support one proposed list.

Practical tip: In practice, it can make sense to offer the electoral board a final (legal) re-view of the electoral list and the election notice, in order to avoid contestable errors.

As soon as the election notice is posted, proposed lists may be submitted, Section 6 Election Regulations.

The mandatory contents of a proposed list are:

• list of the individual candidates giving last names, first names, dates of birth and type of employment in the establishment,
• designation of the candidates in a recognizable sequence with a consecutive number,
• written consent of each individual candidate for inclusion in the proposed list,
• designation of a list representative, who is entitled and obligated to submit and receive declarations to and from the electoral board, and
• adding the necessary supporting signatures as specified in the election notice.
If only one proposed list is submitted, a majority vote, therefore, a personal vote between the candidates of this list occurs. In the case of several competing proposed lists, however, a proportional voting takes place.

In the subsequent (actual) casting of votes, it must be guaranteed that the voting rights principles are complied with. Each eligible voter must be able to decide freely whether and how he votes. Furthermore, the election must be secret. This can be guaranteed in particular by a privacy screen during the election (e.g., by polling booths) and a sealed ballot box. There must also be a guarantee that each eligible voter votes only once and that both the ballot as well as the election locality and voting time do not influence the election.

The counting of the votes takes place in public. The seats in the works council must be determined, where the minimum quorum for the minority gender must be taken into consideration. The result of the election must then be recorded in an election register and be signed by the chairman of the electoral board and one further member of the board. Following this, those elected must be informed of their election, the election results must be announced, and the works council is to be invited to the inaugural meeting.


The simplified electoral procedure may be carried out in one or two stages. Which procedure is used, depends decisively on how the works council election was initiated, Section 14a Works Constitution Act:

• The electoral procedure is a one-stage procedure if the electoral board was appointed by the group, general or works council or the labor court.
• The electoral procedure is a two-stage procedure if the election was initiated either by a trade union represented in the establishment or else by three employees of the establishment who are eligible to vote.

The initiation of the two-stage election procedure takes place by invitation of the listed initiators. The invitation letter must be made public and contain information on who is invited to the election meeting, when and where the meeting will be held, that proposals must be submitted by the end of the election meeting and what number of supporting sig-natures is required. The election meeting may occur at the earliest seven days after the first day of the publication of the invitation. In the election meeting, the electoral board must then be elected, which must draw up the electoral list and has to issue the election notice. The actual casting of votes occurs only in the second election meeting. In the simplified procedure, only the majority, therefore personal vote, takes place. Vote counting occurs publicly immediately following the casting of votes. Subsequent voting must be requested by no later than three days before the election meeting. Otherwise, the principles of secrecy and freedom of choice already set out as part of the normal election procedure apply.

In the one-stage election procedure, the electoral board has to draw up the electoral list after its appointment and to issue the election notice as well as to make both known. The law does not provide a minimum period for the time span between the appointment of the electoral board and conducting the election meeting. It is recommended, however, to observe the minimum period according to Section 28(1) sentence 2 Election Regulations, i.e., seven days, because otherwise hardly any time remains for the employees to submit the proposed lists.


The representation of the implementation and course of the works council election shows that the procedure is prone to error in many areas. A distinction must thereby be drawn between errors, which are "only" contestable and those, which can lead to the nullification of the election.

The contesting of an election is governed by Section 19 Works Constitution Act.

(1) An election may be contested before the labor court, if any of the essential rules respecting the right to vote, eligibility or electoral procedure have been infringed and no subsequent correction has been made, unless the infringement could not have altered or influenced the election results.
(2) Such contestation may be made by any three or more persons with voting rights, a trade union represented in the establishment or the employer. To be receivable the action must be brought within two weeks of the announcement of the election results.

But what are the essential provisions with regard to the right to vote, eligibility or election procedures? And what violation can at least potentially influence the election result? Does any hypothetical possibility of an interference in an election suffice or must the election result actually have been influenced?

An election provision, which is considered a "must" in contrast to a purely regulatory standard ("target") is essential. Violations of target provisions do not in principle justify the contestability of the election due to their clearly less binding nature than must provisions. An exception exists only if the target provision contains elementary basic principles of the works council election or supporting principles of the Works Constitution Act (cf. Federal Labor Court, October13/2004 – 7 ABR 5/04).

The following violations have already led to the contestation of a works council election:

• misjudgment of the concept of an establishment (cf. Bielefeld Labor Court, January 24, 2017 – 2 BV 128/16),
• authorization of persons not eligible to vote or non-authorization of persons eligible to vote (cf. Federal Labor Court, June 25, 1974 – 1 ABR 68/73; Federal Labor Court, March 20, 1996 – 7 ABR 34/95).
• incorrect determination of the number of members of the work council (cf. Federal Labor Court, March 13, 2013 – 7 ABR 69/11),
• appointment of the electoral board by a works council no longer in office (cf. Federal Labor Court, March 01, 1976 – 1 ABR 19/54),
• authorization of improper election proposals and non-authorization of proper election proposals (for example, due to lack of supporting signatures),
• incorrect allocation of seats for the minority gender,
• violations of the secrecy of the election (cf. Düsseldorf State Labor Court, December 13.12.2016 – 9 TaBV 85/16),
• use of the simplified election procedure without the existence of the statutory requirements,
• violation of the principle of free choice and equality of opportunity for the candidates (cf. Federal Labor Court, December 06, 2000 – 7 ABR 34/99),
• non-public counting of the votes.


The successful contestation of a works council election requires an at least hypothetical impact of the error in the election procedure on the election result; consequently, the greatest pitfalls exist where the right to vote itself, the candidacy, and the casting of the vote/counting of the vote are affected. In this connection, attention should be paid in particular to the following aspects:

• Foreign-language employees: According to Section 2(5) Election Regulations, the electoral board is obligated to inform foreign-language employees, who do not have (sufficient) command of the German language, in their foreign language (or at least a language sufficiently well understood by them) before the initiation of the works council election about the election procedure, drawing up of the electoral and proposed lists, election process and casting of votes in a suitable manner (Federal Labor Court, October 13, 2004 7 ABR 5/04). Here, for example, the trade unions are helping, which offer relevant explanations in a large number of languages for download on their websites free of charge.
• Numbers, dates, addresses: The electoral board has to pay attention to a large number of deadlines, numbers, and calculations and must communicate dates and addresses (for example, for the election) unmistakably. All of this is error-prone – all the more so if the members of the electoral board do not have any-thing to do with such formalities in their professional everyday life.
• Electoral list, candidates, supporting signatures: The precise review of the electoral list (active and passive eligibility to vote) as well as proposed lists is urgently advised. Here, employees are too easily forgotten, double-counted, or taken into consideration even though they no longer have the right to vote at all.
• No incompatibility of offices: It is inconceivable that the leading candidates for the federal parliament are at the same time their election official. In an establishment, this is different – not least due to the scarce resources in small establishments: Here, members of the works council who are active and running as candidates can also be a member of the electoral board and thus make decisions about the eligibility to vote / proposed list of the "opposition." Not everyone can resist the associated temptation. In larger establishments, it has therefore proven to be a good idea, if one or two employees (also from the Human Resources Department) exercise the function of the electoral board – and only the latter – over several election periods.
• Ballot box: The security of and the exclusion of opportunities for manipulation at the ballot box are a core area of election protection. Therefore, not only in elections in remote countries is there a focus on monitoring ballot boxes. In establishments, the elections are carried out too trustingly sometimes. An electoral board member may take the ballot box (alone) home, before the election is continued on the next day in another establishment site (branch of the establishment) or the ballot box is brought at night, before the count, into a room, to which many employees have unchecked access. It is necessary to consider not only these issues in advance, but rather also their monitoring afterwards.
• Vote casting, postal voting and -counting: Finally, the vote casting itself is also subject to many errors. This pertains not only to the issue of how it is ensured that an employee only casts his vote once (not in an Excel list, Federal Labor Court, June 12, 2013 – 7 ABR 77/11). An electoral interference or violation of the election procedure provisions may also already exist when the electoral board – with the intention of increasing the voter participation in this way – is too generous in inviting postal voting (Frankfurt State Labor Court, April 17, 2009 – 9 TaBV 163/07). Finally, vote counting is also error-prone. Both the evaluation of the individual ballots (is a ballot filled with "dashes" still valid?) as well as place and time of the vote count (how freely accessible is the room for the vote counting?, cf. Federal Labor Court, February 15, 2006 – 7 ABN 75/05) involve risks.


The nullification of the election must be strictly distinguished from the contestability of the election. Errors in the election, which lead to the nullification of the election, may still be challenged long after publication of the election result and by everyone. A works council election is nullified, if there is gross and obvious violation of essential principles of the statutory right to vote such that there is not even the appearance of an election corresponding to the law. The nullification of the election must be accepted in extremely exceptional situations and was accepted to date, for example, in the following cases:

• works council election without electoral board (cf. Munich State Labor Court, June 16, 2002 – 11 TaBV 50/08),
• falsification of postal vote documents,
• terrorizing the workforce during voting (cf. State Labor Court, March 08, 1957 – 1 ABR 5/55),
• holding a works council election in an establishment, which is obviously not subject to the Works Constitution Act (ct. State Labor Court, February 09, 1982 – 1 ABR 36/80).

If there is a case of nullification of the works council election, this has far-reaching con-sequences. Decisions must then be made in all issues as if a works council had never existed.


The statutory requirements for the conducting and course of the works council election are highly complex. Whether a standard or simplified election procedure: A "no brainer" will not suffice. Particularly due to the many small pitfalls and the risks resulting therefrom of an election contestation and expensive repetition of the works council election, often an active support of the electoral board – also by legal expertise – must be recommended to the employer. In any case, the employer has to bear the cost of the election, Section 20(3 Works Constitution Act. This does, of course, not include all "desired expenses" of the electoral board (such as certain office equipment, cf. Berlin Labor Court March 16, 2017 – 63 BV 11412/16), but all required cost. This includes, in addition to the actual election papers (ballots, ballot box, etc.,), also the cost of training of the electoral board, if necessary, its legal support during the election, and the expenditures associated with the election (for example, travel expenses to the branches of the establishment). Such cooperation of the employer and the electoral board during the election can save not only cost for the employer, but rather at the same time can build trust capital for the collaboration with the works council.

Monday, June 5, 2017

France - The Anticipated Labor & Employment Reforms of the New French President

By Roselyn Sands, EY Société d’Avocats

Emmanuel Macron was elected President of the French Republic on May 7, 2017.
His first order of business is reforming French labor & employment laws.

He seeks to trim the Labor Code by taking out hurdles that help no one while protecting employee rights. This requires, in part, moving from a one-size-fits-all legislative architecture to a customized approach by strengthening collective bargaining within companies.
Below are some of the key features of Mr. Macron’s reform:

A new manner of achieving flexibility

The new President wants to ensure that decision are taken “on the ground” through company-wide collective agreements which would prevail over industry-wide collective agreements, or by employee referendum. Industry-wide sectors would be reduced from 100 to 50. Yet, fundamental safeguards would remain in the Labor Code.

Simplification of a Staff representative bodies and strengthening of their role
President Macron seeks the implementation of a single body which would replace the personal delegates, the works council and the Health and Safety committee, in all companies and groups regardless of headcount threshold.

By exception, a company could negotiate an agreement with the unions whereby bodies would remain separated.

Staff representatives would have access to training notably on labor law, and specific tasks on company management. The government would also encourage union involvement and employees presence at the Board of companies so that their involvement can be more useful and pragmatic.

Predictability of Labor Court judgements

In case of litigation, President Macron would like the law to cap damages for wrongful termination. This would allow companies to better anticipate costs and risks of employee litigation.

This rule would not be applicable to dismissals based on discrimination or harassment.
All judgements would be immediately enforceable even pending appeal, subject to some exceptions, in order to prevent delaying tactics.

Tax-free incentive in particular tax free overtime compensation

President Macron would like to reinstate tax free treatment for overtime work to encourage employees to work more: a deduction of 0.50€ per hour on employer contribution for company with less than 20 employees; and full tax exemption of employee contribution on overtime.
Increased purchasing power for employees
President Macron would also like to remove employee contributions for health and unemployment insurance. This measure would be financed by an increase of the generalized CSG contribution of 1.7 point (contribution not only paid by employees). Employer contributions to social security would also be reduced.

Unemployment insurance for everyone

In order to encourage persons to take risks, change careers, try new ones, President Macron would like to make unemployment protection available to everyone, even those that resign.
Employees would have the possibility to benefit from unemployment allowance in case of resignation, once every five years.

Training employees and unemployed

Training will be reinforced by the conversion of employer training contributions to individual training rights for all workers.

Unemployed people would have access to additional training measures but could lose unemployment protection if 2 “decent” job offers are refused or insufficient efforts to search for work.

Maternity leave for all women who work

President Macron would like to create a universal maternity leave for all women whatever their status (employee, independent worker, non-employee…) to further create equality between men and women who work.

Improve access to the independent worker status (gig economy)

President Macron wants to improve independent worker status by removing heavy barriers notably by substantial decrease of their social security contributions and tax, in particular for small businesses that are struggling to survive.

Fighting against social dumping

President Macron would like France to influence Europe by the way of harmonization and creation of a European labor law common base notably by creating minimum standards on training, health and safety, unemployment insurance and minimum wage. Posting of workers in France would be limited to 1 year and European posting of workers rules would be redefined.

It will be interesting to see if these proposed reforms actually become legislation and how that might influence the French economy.

Summer edition

Dear all

Welcome to the Summer edition of the International Employment Committee Newsletter. Thanks as always to our contributors, and please let me know if you are interested in submitting an article for consideration for future editions.

Helen Colquhoun
(qualified in England & Wales, New York, Hong Kong)

Canada - New Developments in Federal Labour Relations and Labour Standards Legislation: Towards a 'Super' Federal Labour Tribunal

By Theodore Goloff, Robinson Sheppard Shapiro, Montreal

Those who follow legislative developments regarding the Canada Labour Code, will remember that important changes came into effect in June 2015 – notably the “abandonment” of a purely “card counting” based system for federal union certification, and the requirement of a “certification election” to obtain union certification pursuant to that Code. Shortly after the election of the present Liberal government, in October 2015, the new administration tabled Bill C-4 whose purpose is to re-establish the old system without an obligatory certification vote. This Bill has not yet been adopted by the Parliament of Canada because of amendments by the Canadian Senate. This Bill is surely a matter to be closely followed!


Recently, following the Budget of March 22, 2017, the Federal Government tabled Bill C-44, very substantially changing the Canada Labour Code. Inter alia, the Bill amends Part III of the Code to increase parental leave from 37 to 63 weeks, allowing employees to take such leave within a period of 78 weeks following the birth or “due date”, instead of within 52 weeks as was the case previously. The changes allow as well for maternity leave to begin 13 weeks prior to the birth or “due date”, instead of 11 weeks as was the case previously. The Bill also provides for a new leave for an employee who is obliged to provide care to a gravely ill adult. Simple but significant changes in what may be their possible effects!


However important, the above changes are simply the tip of the iceberg, as other sections of Bill C-44 radically transforms the labour relations landscape for all employers falling within the federal jurisdiction in Canada.

In a nutshell, the Canada Industrial Relations Board [CIRB], now becomes the primary jurisdiction to hear all recourses under the Code whether pursuant to Part I, II and/or III that deal respectively with labour relations, health and safety and labour standards. There are, of course, clear parallels between the recent creation of the Quebec Administrative Labour Tribunal but as seen below, this proposed federal legislation goes further than its provincial counterpart.

The CIRB, which previously had jurisdiction to hear only recourses provided for violation of Part I, would now inherit the responsibilities previously given over to “appeal officers” provided for in Part II, in matters of health and safety.

With respect to Part III, the CIRB would now also have jurisdiction to hear complaints for alleged unjust dismissal filed pursuant to Section 240 – replacing outside arbitrators named by the Minister. It would still be possible for the CIRB to name an outside arbitrator to hear files both under Part II or Part III, depending upon the anticipated volume of complaints and the somewhat limited resources of the CIRB. This latter change could certainly impact on consistency of decisions.


A new and fundamental change introduced by this Bill is the creation of a regime of administrative fines for infractions of Parts II and III. It would now be the CIRB that would hear appeals from penalties imposed by the Ministerial order. Furthermore, alleged violations of Parts II and III would no longer be treated by the common law courts. While this may be the harbinger of a more efficient system of redress than recourse to penal complaints that have not been frequently used in the past, because decisions of the CIRB are without appeal, unlike decisions of the common law courts. This too represents a significant change.


Another substantive modification to the Code is a new Section dealing with claims for “reprisal” – the equivalent of what Quebec practitioners know as complaints for illegal practices pursuant to Section 122 and the following of the Quebec Labour Standards Act. But there is a twist. The Bill, as tabled, prohibits the joinder of a claim of reprisal with a complaint for unjust dismissal pursuant to Section 240 of the Federal Code. This joinder is allowed under the equivalent provisions of the Quebec Labour Standards Act.


Another substantive change to the Code deals with the recovery of sums allegedly due by an employer to an employee pursuant to Part III of the Code.

Firstly, the powers of inspectors are enlarged substantially because they now can decide whether or not a discharge has in fact taken place so as to bring into play Sections 230 and 235, that deal with notice of termination and severance. These same inspectors can order the end to practices that they deem violations of Part III, all this in addition to issuance of Ministerial (administrative) orders for investigation to assure compliance with the law.

In line with these changes, the CIRB (or an outside arbitrator that it assigns a case to) now may hear appeals from payment orders made by inspectors pursuant to Sections 251 et seq. of the Federal Code. The CIRB will as well now have the power to order costs in such cases, as well as extrajudicial costs incurred by the parties.

It is clear that the federal government’s intent is to reduce the number of violations of Part III, and to more effectively prosecute and penalize those who fail to respect the law, bearing in mind that these are minimum labour standards for employees falling under federal jurisdiction. In other words, legislation with teeth!

Will the creation of this “Super Tribunal”, with its attendant new powers, really shorten delays, lighten the load of common law courts and promote faster and better industrial justice? The federal government seems to think so! Effective or not, given this new landscape – employers beware!

Canada - Canadian Labor Department Issues its First Report on Petition Filed Under the Canada-Colombia Agreement on Labour Cooperation

By Tequila J. Brooks

On January 27, 2017, Canada’s labor ministry Employment and Social Development Canada (ESDC) released its first report on a petition filed under the Canada-Colombia Agreement on Labour Cooperation (CCALC). The CCALC is the labor side accord to the Canada-Colombia Free Trade Agreement (CCOFTA) which was signed in November 2008 and went into effect on August 15, 2011. The underlying petition was filed by the Canadian Labour Congress (CLC) and five Colombian trade unions in May 2016. The Canadian National Administrative Office (NAO – the department within ESDC empowered to respond to petitions under labor side accords to Canada’s free trade agreements) accepted the petition for review on July 15, 2016. The petition was based on the same labor issues and events occurring in the petroleum and sugar producing and processing industries as those in a petition filed and accepted by the U.S. Department of Labor under the U.S.-Colombia Trade Promotion Agreement (TPA) in July 2016. USDOL issued its report on January 11, 2017. Based on their assessment of the allegations and evidence in the petitions, the labor departments of Canada and the U.S. both recommended ministerial consultations with the Government of Colombia to address serious shortcomings in its compliance with labor provisions of its free trade agreements (FTAs) with Canada and the U.S.

The main issues addressed by the Canadian NAO in its report were (1) the misuse of subcontracting arrangements by employers in the petroleum and sugar producing industries in Colombia to avoid compliance with labor laws; (2) shortcomings in administrative and legal processes for workplace inspections resulting in the failure to levy and collect fines and remedy labor law violations in a timely manner; and (3) ongoing failure by the Government of Colombia to protect trade unionists from violence and threats of violence.

Under Articles 1 and 3 of the CCALC, the Governments of Colombia and Canada committed to ensure protection of internationally recognized labor principles and rights including freedom of association and the right to collective bargaining. Based on its review of evidence and interviews with government officials, trade unions and employer representatives in Colombia, the Canadian NAO found that a number of subcontracting arrangements utilized by employers created situations where it was difficult for workers to effectively and freely exercise their rights to freedom of association and collective bargaining. As part of the process of improving labor standards to accede to FTAs with the U.S. and Canada, Colombia made it unlawful for employers to utilize “Associated Work Cooperatives” to subcontract out permanent core functions in order to avoid labor law compliance.

Lack of clarity in the law led to the utilization of subcontracting in different legal forms – Simplified Stock Companies (Sociedad por Acciones Simplificada or SAS) or “union contracts” (agreements whereby a union provides employees to employers and operates as a subcontracting entity – not to be confused with independently negotiated collective bargaining agreements) – with the same effect as work cooperatives. Acknowledging that subcontracting can be a legitimate business mechanism, the Canadian NAO observed a significant amount of interference by de facto employers in the management of subcontractors – an indication that labor intermediaries were being used to avoid compliance with labor law obligations. The Canadian NAO found that misuse of subcontracting by de facto employers chilled workers’ exercise of freedom of association due to the fear of non-renewal of short-term contracts and blacklisting as well as legal obstacles to recognition of representative trade unions by the primary employer.

Article 3 of the CCALC requires Canada and Colombia to effectively enforce labor laws through labor inspections and other mechanisms and to ensure that labor law violations are appropriately sanctioned in a timely manner. In its discussion of the adequacy of the operation of Colombia’s labor inspectorate, the Canadian NAO observed that labor inspectors are hired on a provisional basis subject to budgetary constraints. While noting that there have been improvements in the functioning of Colombia’s labor inspectorate in recent years, the Canadian NAO found that the labor inspectorate’s administrative processes are still burdensome and not completely effective – and that sufficient funding and resources are required to ensure that inspectors are adequately trained and experienced. Even in cases where inspectors find labor law violations and levy fines against employers, bureaucratic delays occur due to of lack of coordination between Colombia’s labor inspectorate and the government agency empowered to collect fines (Central de Inversiones S.A. or CISA). As a result, fines and remediation may not occur in an efficient and timely manner and thus do not have a sufficient deterrent effect.

The Canadian NAO observed that a climate of violence and anti-union culture have posed significant challenges to the advancement of trade unionism in Colombia. Between 1986 and 2014, more than 3,000 trade unionists were murdered, 230 disappeared and thousands of others suffered threats, kidnapping and other types of violence. Despite recent legislative and executive progress in recent years, there were 18 labor-related homicides in Colombia in 2015. Noting that the strengthening of Colombia’s National Protection Unit (NPU) in recent years is essential to tackling impunity and violence against trade unionists, the Canadian NAO observed that the progress achieved will be compromised if the Government of Colombia does not allocate sufficient resources to support the NPU’s work to protect trade unionists. Similarly, the Canadian NAO observed that the Office of the Attorney General of Colombia is critical to prosecuting perpetrators of violence and murder against trade unionists – but “note[d] with concern that no case of trial and subsequent conviction under Article 200 of the Criminal Code has been reported by the Colombian Government.” Other shortcomings highlighted by the Canadian NAO of Colombia’s procedures and lack of results in protection of trade unionists from violence and threats include: failure to respond to calls for investigation of excessive force by police authorities against trade unionists; the closing of files without criminal prosecution; and the number of files stuck at the pre-investigative phase. The Canadian NAO pointed specifically to the mandatory conciliation phase of the process for investigating and prosecuting violence against trade unionists as being a sticking point in the timeliness and efficiency of the process.

The Canadian NAO’s report contains a number of substantive, administrative and policy recommendations to the Government of Colombia to address shortcomings in its protection of the fundamental rights to freedom of association and collective bargaining. On the issue of the use of labor intermediaries to avoid compliance with labor laws, the Canadian NAO recommended the elimination of union contracts and collective pacts as well as the elimination of the misuse of short-term contracts. It also recommended the implementation of measures to reduce widespread and systemic misuse of subcontracting. The Canadian NAO noted that 2016 regulations issued by the Government of Colombia seem to make it lawful to use certain forms of subcontracting to avoid labor law compliance and that this may be in violation of the CCALC’s non-derogation provision.

On the issue of strengthening the enforcement of labor laws through the labor inspectorate, the Canadian NAO recommended a number of reforms, including: ensuring reinstatement or severance as remedies for labor law violations; streamlining administrative processes; improving coordination between government agencies to enhance collection of fines for labor law violations; and providing labor inspectors with adequate training and resources to perform preventive and proactive labor inspections.

Finally, the Canadian NAO recommended that the Government of Colombia strengthen its efforts to fight impunity and violence and bring perpetrators to justice by: evaluating the effectiveness of the mandatory conciliation phase; reviewing and acting on pending criminal investigations to ensure that justice is administered before legal time limits expire; providing the NPU with sufficient resources to effect its mandate; critically examining the actions of police authorities in cases where excess violence is alleged in actions involving trade unions; and effectively prosecuting acts of violence against trade unionists.

On April 27, 2017, the Minister of Labor of Colombia Clara López Obregón, and the Minister of Labor and Workforce Development of Canada Patty Hajdu agreed to negotiate a Work Plan to implement the Canadian NAO’s recommendations. On May 23, 2017, Minister Hajdu released a public statement indicating that she and López Obregón’s successor, Minister Griselda Janeth Restrepo, will continue ministerial consultations to develop a multi-year work plan to address issues raised by Colombian and Canadian trade unions under the CCALC. Under Article 12 of the CCALC, the Government of Colombia had 60 days to respond to Canada’s request in writing for ministerial consultations to address the issues raised in the Canadian NAO’s report. The parties are required to make every effort to reach a mutually satisfactory agreement on resolving the issues raised in the petition. Unlike similar provisions in NAFTA’s labor side agreement (North American Agreement on Labor Cooperation – NAALC), Article 12(5) requires that ministerial consultations shall conclude no later than 180 days after they are initiated.

If the Governments of Canada and Colombia are unable to reach agreement on resolution of the issues raised in the Canadian NAO’s report through ministerial consultations, the Government of Canada may call for the establishment of a Review Panel under Articles 13 and 14 of the CCALC. The matters in the report must be trade-related for the Review Panel to be established. The Review Panel would consist of three recognized experts in labor law matters and issue an independent report according to rules set forth in the CCALC. The states parties, members of the public and the petitioners are able to provide information to the Review Panel. If in its final report the Review Panel finds that Colombia is not in compliance with the CCALC, under Article 20 the Review Panel may levy monetary assessments against the Government of Colombia.

The existence of two simultaneous reviews of the same labor issues in Colombia by Canadian and U.S. labor authorities provides a unique opportunity for comparison of the U.S. and Canadian models for incorporating and implementing labor provisions in FTAs. This has not happened since the 2003 Puebla Garment Workers case was filed simultaneously with the Canadian and U.S. NAOs under the NAALC. While the procedures under the CCALC and Chapter 17 of the U.S.-Colombia Trade Promotion Agreement (TPA) are fairly similar at the beginning stages (acceptance and review of the petition, issuance of report, request for ministerial consultations), the rules diverge after the ministerial consultations phase. If ministerial consultations between the U.S. and Colombia fail to result in a satisfactory outcome, under Article 17.7.6 of the U.S.-Colombia TPA, the U.S. may call for formal dispute resolution under Chapter 21 of the agreement, leading to a potential request for the establishment of an Article 21.6 trade arbitration panel.

Germany - The 2018 Works Council Election is Getting Closer - what next?

By Bernd Weller, Frankfurt office of Heuking Kühn Lüer Wojtek PartGmbB
Dr. Johan-Michel Menke Hamburg office of Heuking Kühn Lüer Wojtek PartGmbB

In 2017, Germany will be electing a new parliament. There is a lot of talk of political disenchantment and new political parties and movements. The composition of the German Bundestag could change dramatically.

The next important elections will be held in 2018 – the next regular works council elections. And here, too, there will be something new. According to the observations of the undersigned, there were already a lot of changes in the composition of works council bodies in the last elections in 2014; in 2018, this change is set to become stronger and more rapid.
In addition to the change of generation, with many long-serving works council members taking (early) retirement during the last period of office and many others planning to do so during the upcoming period of office, it is above all social changes that will affect the works council bodies.

The rates of union membership have been decreasing for years; many younger employees no longer feel that the traditional unions (with their more traditional distinction between the “oppressed workers” and the “capitalist employers”) represent them. They do not want rules based on a “one size fits all” scheme, but rather, they want to express and implement their individual needs and wishes more strongly, independently and without a “muzzle.” The system of values has changed, company cars and salaries are no longer the main attractions of employment; equalizing and rigid working time systems are often considered a hindrance by younger employees. Many young employees – including works council members – want to focus on designing rather than preventing.

So, more candidates, more lists, and therefore also a fiercer election campaign are to be expected. All of this is more than enough reason for employers to prepare themselves for the elections. In this first article before the upcoming election, we therefore want to raise the following questions and give some recommendations:

• preparation for the elections themselves
• cost and support of the election
• tactical considerations on the employer’s side
• sanctions for attempts to influence the elections
• key points of the election

1. Preparation for the elections themselves

The works council election is a vote by the staff; it is led by the election committee. The employer’s obligations are only supporting ones – it must provide information and offer time and money to support the elections.

So why should employers and company management consider the topic and prepare themselves in advance?

First of all, every election costs money. During the election meetings and the election itself, every employee has a claim to free time off work, costing time and productivity. In addition, the employer must finance the election preparations and must also accept that members of the election committee will have to meet, undergo training, and if necessary obtain consultation weeks or even months prior to the election, which will result in further expenses.

In addition, as a result of and during the election campaign, productivity will decrease. Employees are involved in organization and discussions. Discussions that are sometimes controversial will take place in the workplace. In addition to the short-term effects on productivity, this can also have a long-term effect on the mood of the workforce. Employers will and should be concerned if their staff disintegrates into “political fractions.”

Taking all of this into account, each company should consider working through or examining the following checklist:

• training of executive staff and managers on key issues
• training of all other managers on dos and don’ts
• definition of the employer’s role in the election (preparations) (see item 3.)
• tactical considerations (see item 3.)
• human resources planning (see item 3.)
• handling of key topics (see item 3.)
• preparation by the employer for the election process (see item 3.)

Executive staff and general managers should be trained on key topics before each election. This includes, in particular, being sensitive to the fact that your statements on the election and particularly about individual election candidates can easily exceed the threshold of impermissible influence on elections. In addition, you should develop a fundamental understanding of what the works council elections are and what the basic procedure is. This will prevent unnecessary disputes in case of impairments to company activity as a result of the works council election (preparations). Not least, the top management group should be committed to the shared company line about how the company/management views the election (deliberately distanced/neutral or rather deliberately supportive/neutral). Finally, the executive staff should be prepared for the fact that in works council elections (as a result of imminent thresholds for the size of the body or the number of releases from work duties), there may be repeated operational discussions or even court disputes about its status.

All other executives should also be trained prior to an election and before the beginning of preparations for it. They are not executive staff and therefore also participate in the works council elections like all other employees – as voters or candidates. At the same time, they also represent the employer’s side for the workforce – and often also for labor courts and unions – and therefore the employer’s intents. This means that executives have to make a strict distinction between their supervisor roles and the role as voter/candidate. They must always also ensure that they do not give the impression that they:

1) are speaking for the employer,
2) are participating in the political discussion and election “as a representative” of the employer or
3) would take advantage of their supervisor role in connection with the elections (promising advantages, threatening disadvantages for incorrect political attitudes).

Although this sounds easy in theory, it sometimes ends up being difficult in practice. Of course, a supervisor may not promote himself or herself or another candidate during team meetings that he/she has scheduled (as the supervisor) (and that are paid for as working time). But is any critical confrontation already considered use of the supervisor position? While in many cases the courts consider even a strongly polarizing or confrontational election campaign to be legal and promote the give and take of political discussion by each employee, they nevertheless often impose a higher level of restraint on executives than on “normal” employees during election campaigns. Executives should be prepared for the traditional election argument in particular from unions that they are “working undercover” for the employer’s side, simply because they have a supervisory role.

2. Cost of the election

The law makes it very easy – the employer is responsible for the cost of the election, Section 20 German Works Constitution Act.

Traditional cost items of the Works Council Election are:
- election documentation (ballot, if applicable also in other languages)
- ballot box(es)
- working time (for voters, candidates, election committee, human resources department (for researching information))
- shipping (for postal votes)
- journey/transportation cost (in case of multiple operating sites for the transportation of ballot boxes and journeys by the election committee, etc.)
- equipment of the election committee (paper, etc.)
- training cost (election committee, if applicable also record keepers)
- consultant cost (election committee, if applicable also record keepers)
- cost for election advertising (printers, paper, etc.)
- cost for the removal of election advertising (cleaning, etc.)
- any court cost (declaratory proceedings in accordance with Section 18a Works Constitution Act)
space cost (meetings of the election committee, election meetings, election, determination of the election result)

Most stated cost factors will be expenses that are incurred “anyhow” in a works council election. The employer, however, does have a certain influence, for example, on expenses used for the election. The employer does not have to hold an (even extensive and colorful) election campaign. The employer is not obligated to finance:

• election gifts,
• election materials (brochures, posters, stickers, etc.), or even
• “election parties.”

The employer must do one thing above all before and during an election: it must treat all election candidates/lists equally. It must therefore not give support to one list and skimp on others. It the employee therefore prohibits – prior to the election – any use of its company resources (printers, paper, ink, etc.), this will mean of course that it saves cost. At the same time, this may also send a signal to the workforce that the employer is against the actual works council election. If, on the other hand, it grants all candidates/lists the right to use its resources (to a limited extent) for election advertising, the election unavoidably becomes more expensive. At the same time, it sends a signal to the workforce that the employer is supporting the election.

With regard to the training and consultant cost, the employer also – in any case effectively – to have an opportunity for influence. The employer can defend itself here traditionally because then many election committees can waive training and/or involvement of a consultant in case of doubt. At the same time, this increases the probability that the election procedure becomes more prone to error and there will have to be new (more expensive) elections – as a result of successful election challenges) or if the election committee comes to decisions that are based more on the result (exclusion of unwelcome applicant lists) than on a neutral election.

3. Tactical considerations from the employer’s point of view

Even the brief statements about the cost of the works council election show clearly that employers would do better not to make decisions during the works council elections “off the hip,” but rather should consider them strategically in advance. This initially involves a status analysis:

• Is the works council about to reach certain threshold values (number of employees and releases from work duties)?
• Is a “quiet” election emerging or is there a reason for the assumption that the election campaign will be harder than usual (change in generation, occurrence of a new group in the operation, participation of the union with own list, pending/completed/ongoing upheaval in the operation (redundancies, restructuring, new owners, etc.), division/polarization of the works council body, etc.)?
• Are measures/changes pending, about which the works council body does not know/anticipate anything?
• Does the works council doubt the status of the executive staff?
• How is the relationship between the employer and the works council/majority fraction? Would the company prefer to preserve the body or a new composition?
• How is the workforce expected to develop over the next few years?

On the basis of this status analysis, the employer should make a decision at an early stage:

3.1 Pending measures

In particular if the employer is considering drastic measures, i.e., there are signs of an operational change as defined under Section 111 Works Constitution Act, the employer has the potential to maneuver. Should it announce the measure during the election preparations and during an election campaign?

The result is then not infrequently a large number of employees who take advantage of promises of advantages under unfair dismissal law in accordance with Section 15(3) German Unfair Dismissal Act by becoming a candidate for the works council election. There is a threat of a collective glut of candidates. In addition, in such scenarios the struggle for the places in the future works council body is particularly fierce. Not least, the employer is then subject to the threat of having to negotiate again with new works council members (elected for the first time), who:

• have not found an internal balance of power yet and are therefore unpredictable,
• are uncertain in their role and their options because of their lack of knowledge and experience and are therefore unpredictable, reluctant, and unreliable negotiation partners.
In contrast, the negotiations with a “settled” and experienced body after an election can have many advantages with regard to the negotiations and implementation of the operational change.
Of course, the aforementioned considerations will also apply if not the whole operation but an individual department is affected by the measure.

3.2 Human resources planning

On the contrary, a reduction in the staff after the election does not lead (directly) to a reduction in the size of the body; at most a reduction in the number of optional works council members takes place immediately when the number of members of the workforce decreases. If the employer is aware that operations will decrease significantly (shortly) after the election, this should be taken into account. The options here are as follows:

• not to say anything,
• to announce the reduction before the election so that it can be taken into account in the election
• or to perform the reduction in the first half of the period of office in order to force a new election ahead of schedule in accordance with Section 13 Works Constitution Act.

In the first case, the problems mentioned under 3.1 in the election campaign are avoided, but a body that is too large, i.e., that has too many members, will be accepted (at least for a term of 2 years).

In the second case, the topics mentioned under item 3.1 must of course be dealt with.
In the last case, things may be peaceful prior to the election, but even just after the election and when the staff cuts are implemented, there will probably have to be another election. The staff cuts will often be a feature of this, the works council will be exposed to significant accusations (of not having negotiated hard enough, etc.). The fear of this may become apparent even during the negotiations on the reduction in staff.

Irrespective of these major topics, human resources planning must be performed before the election with a cool head. There are many questions to be answered:

• What number of employees should be indicated to the works council (and the likely members of the election committee)? Should the number of (likely) employees be kept below important threshold values in order to reduce the size of the body? Doing so would provoke critical questions among executive staff…
• When do limited term contracts/trial periods expire? Are employees being given incentives to be a candidate unnecessarily as a result of this?
• How many temporary agency workers are being included in the plans? These will also count (and vote).
• Are there more female employees? This can influence the guarantee of the minimum representation of the minority sex in the works council body – there can be a significant influence on the chances of success of individual applicants and candidate lists.

3.3 Tactical considerations with regard to the election itself

In view of the significance of the works council body and its composition for operations and cooperation with the employer, it is appropriate for the employer to consider the election, the election campaign, and possible outcomes of the election. In this process, employers are rightly attempting – contrary to what is repeatedly conjectured by some employee representatives –to have their own "preferred candidate" in the election in rare cases only. This is not advisable in view of sanctions (see item 4).

Irrespective thereof, attempts of this kind are also not advisable for another reason: employers who wish to push “agreeable" works council members into the body are often not doing themselves any favors. Again and again, they look for "yes men" hoping to avoid conflicts with the works council body in this way. This has repeatedly turned out to be a big mistake. “Yes men” are extremely unsuited as members of works councils. Irrespective of the fact that they are often unable to attract any votes, they are also unable to perform the office. They lack the standing and presence in order to represent their own point of view to employers, the workforce, and other works council members. They regularly become less important in the body during the term of office and also usually vote along with the more ideological representatives in the body.

When employers consider the works council elections, other topics are often more important for them:

• cost savings,
• proper election process (without election challenges),
• avoidance of splits in the workforce,
• avoiding becoming a victim of the election campaign (the works council shows its “muscles” and blocks important projects in order to gain votes) and
• maintenance/creation of a good relationship with the works council body.
Often, employers are therefore more interested in maintaining the status quo rather than putting it at risk by means of reckless maneuvers. If that is the case, the employer can and should be prepared:
• The employer supports a “due and (predominantly) error-free election” by means of training and granting of external legal counsel for the election committee.
• By training supervisors, the employer prevents them from trying to influence the election campaign in an uncoordinated and awkward (or even punishable) manner.
• If the employer restricts the opportunities of the election campaign, it tends to support the status quo; the opening up of election campaign resources makes it possible, on the other hand, for an “opposition” to be formed.
• The employer may be able to influence the mood in the workforce – to the advantage or disadvantage of the members of the works council in office by means of holding negotiations and through its demeanor during the term of office.
• Finally, the employer can procure the most important election items itself – through its own purchasing – and in this way possibly achieve significant cost savings.
• The analysis of the workforce (how many employees cannot speak German or cannot speak German sufficiently well and must be informed of the election and the election process in their native language or in another language?) can help to arrange the election process more smoothly later.

3.4 Handling of key topics

Another part of the tactical consideration is approaching important topics with the works council in a timely manner prior to the election so that they can be negotiated before the election and therefore before any risk of politicizing or the risk of a delay as a result of a lack of time by members of the works council when it comes to dealing with practical issues during the election campaign.

In this respect, too, company policy is not a lot different from governmental politics. When the election campaign is announced, only the most urgent factual issues will be processed. And in this process, the assessment of what is urgent can differ significantly between the employer and the works council …

4. The threat of sanctions for attempts at influence

In everything that the employer does, it must be aware of the consequences of its actions:

4.1 Criminal liability

The employer – and each individual employee (including executive staff!) – may be subject to criminal liability or a fine in accordance with Sections 20, 119 Works Constitution Act.
Each intervention in the democratic process of forming opinion is subject to punishment. While it is often said during disputes between employees that such disputes are part of a democratic process and have to be “put up with,” the situation is quite different regarding the (apparent) conduct of the employer. The sensitivity of labor courts, unions, public prosecutors, and above all the press is entirely different.

Each statement by an executive staff member is weighed up and can easily be understood as an (attempt at) influencing the election. Some courts go so far here as to accusing employers of the fact that a general information event about the election and the election process could only be associated with the intention to influence the election; otherwise, an employer would not hold such an event. The worldview of some judges imparted in this way sometimes leaves a deep impression.

With things as they are, it is a good idea to be careful. Under no circumstances should there be a risk of mixing the supervisor’s function with the function of a “normal” employee who is entitled to vote.

4.2 Disavowal of candidates

In addition to the legal sanctions, there is a risk of another sanction – at the ballot box. If the employer/supervisor creates the impression that they would particularly prefer/fight against a candidate/candidate list, there is a risk of a sanction at the ballot box, a “protest or solidarizing vote.” In many companies – and to some extent, in society overall – it is still presumed that there are two diametrically opposed poles, the employer and the employees. Every employee representative, to whom too employer-friendly conduct and/or support from the employer is attributed, is vulnerable. Such candidates are easily disavowed. They lose authenticity, credibility, and therefore the support of parts of the workforce. Praising the employer for many employees is praising the wrong side. It does more harm than good.
Employees could also get the impression (or such an impression could be imparted by competing candidates) that the employer wishes to influence the election and then consciously vote for the other side.

Restraint is therefore also appropriate on the employer’s part from a tactical point of view with regard to elections.

5. Key points of the election

Finally, we should mention a few more key points of the election, as a brief overview. A differentiation is made between:

• normal election procedures (in companies with more than 100 employees entitled to vote) and
• simplified election procedures (in companies with up to 50 employees entitled to vote).
• In companies with 51-100 employees entitled to vote, employees and the election committee can agree on the simplified election procedure, but if one of the two does not agree, the normal procedure is to be applied.

The normal election procedure can be divided into five main sections:

a) appointment of the election committee,
b) preparation of the list of voters,
c) announcement of the election notice,
d) submission, review, and announcement of the proposal lists, as well as
e) performance of the actual election procedure, as well as the counting of votes and notification of the election result.

The election committee is of central importance in the election procedure - it:

• prepares the list of voters, so it decides who can vote and who can be elected,
• checks and decides on the validity of candidate/list proposals submitted,
• controls the entire election procedure (publishes the election notice and controls the scheduling).

It is even more surprising at first glance that employees of the election committee are also allowed to be candidates. In a federal/state election this would (correctly) be unimaginable. In companies, this “propriety” can, however, not simply be granted because of a lack of people; elections would then only be possible in companies with significantly more than 5 employees.

If only one candidate list is permitted in an election, the election of a person (majority vote) will take place; if there are several lists, the election will take place in accordance with the principles of proportional representation. The distribution according to d’Hondt will be applied here – with one modification. The election committee must state what proportion of each gender the workforce is composed of. The minority gender is guaranteed a minority share of the seats in the body – in legal breach of the principles of voting equality. Irrespective of the number of votes achieved – as long as there is a sufficient number of candidates of the minority gender.

In contrast, the simplified procedure is significantly trimmed down and rapid.

• After the election committee has been elected (by the works council in office),
• it issues this election notice and voter list and issues an invitation to an election meeting,
• during which the voting proposals (submitted in the meantime) are voted on.