Works agreement

A Works Agreement (German: Betriebsvereinbarung; plural: Betriebsvereinbarungen; BV) is a special type of agreement in German labour law between a Works Council and its employer, described in §77 of the Works Constitution Act. It is distinct from trade union collective agreements.

Parties

The Works Agreement must be recorded in writing and signed with a wet-ink signature by both parties, the employer representative and the Works Council chair. Alternatively, the chair of the conciliation committee appointed by both parties may sign the document in the event of a failed negotiation. The employer and the Works Council can unilaterally terminate a Works Agreement unless otherwise specified.

Central or Group Works Agreements are not defined in the Works Constitution Act. Rather, they are a popular naming convention to describe regular Works Agreements concluded by the Central Works Council or the Group Works Council.

The employer is usually responsible for implementing the Works Agreement, and the relevant Works Council and individual employees can enforce the terms of the agreement rights, for example going to labour court if the employer does not implement it.

Scope

§77 of the Works Constitution Act specifies that Works Agreements cannot deal with matters, primarily dealt through collective bargaining, i.e., pay increases. Section §87(1) outlines 14 different areas of enforceable co-determination, insofar as they are not already regulated in existing collective agreements specific to that company, unless such collective agreements explicitly permit supplementary Works Agreements.

Works Agreements can be concluded for topics internal to the Works Council itself, for example a Central Works Agreement on the size of a Central Works Council.

Types of agreements

The Works Constitution Act distinguishes between enforceable and voluntary Works Agreements.

§87(2) specifies in the event of a failed negotiation for the 14 fully enforceable topics covered in §87(1), a conciliation committee can provide an award in the form of a Works Agreement. For matters covered in §88, the employer and Works Council can only conclude a Works Agreement on a voluntary basis, with no possibility of escalating to a conciliation committee.

Duration and expiration

A Works Agreement can be valid for an unlimited period of time or be scoped to a specific time period or action. If a "short time work" Works Agreement was introduced for the year 2021, that would expire in 2022, while a Works Agreement on regular working hours would be valid for an unlimited time period, unless otherwise specified.

The notice period for terminating a Works Agreement is typically 3 months and can be terminated unilaterally by either the employer or the Works Council per §77(5). In the case of enforceable Works Agreements, there is an after-effect, which means even if the Works Agreement expires or is terminated, the agreement remains valid until a new one is concluded. This after-effect does not apply to voluntary Works Agreements.

In practice

The Hans Boeckler Foundation has a non public database of 17,000 Works Agreements (Im Archiv Betriebliche Vereinbarungen), the largest such collection.

In a 2017 survey by the Economic and Social Research Institute (WSI) of the Hans Boeckler Foundation, they interviewed members of 2,000 Works Councils and found that each Works Council had on average 22 Works Agreements. Small Works Councils (representing 50 employees or less) had an average of 12 Works Agreements, while larger Works Councils (representing 500+ employees) had an average of 44 Works Agreements.

Companies covered by collective agreements were more likely to also have Works Agreements. Collective agreements can be complementary and contain opening clauses that expand Works Agreements.

Around 15 percent of all companies with at least one Works Agreement, have a Works Agreement that was awarded through the conciliation committee. In larger companies, this ratio increases to 25 percent.

The Works Constitution Act specifies that local Works Councils are not subordinate to Central and Group Works Councils, however in practice, Central Works Councils are increasingly given more responsibility and influence in the workplace. A 2006 survey commissioned by the Economic and Social Research Institute (WSI) interviewed members of 2,000 Works Councils and their corresponding 283 Central Works Councils. The survey responses indicated that Central Works Councils signed (Central) Works Agreements more frequently than local Works Councils in 15 out of 23 categories.