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.
1. TIME OF THE ELECTIONS
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.
3. THE RIGHT TO VOTE
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.
4. SPECIAL CASE: EXECUTIVE STAFF
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.
5. THE IMPLEMENTATION AND CONDUCT OF THE "NORMAL" WORKS COUNCIL ELECTION
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.
6. SIMPLIFIED ELECTORAL PROCEDURE
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.
7. CONTESTING AN ELECTION
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.
9. ELECTION NULLIFICATION
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.