Co-determination

Co-determination

The sophisticated system of co-determination in Germany encompasses operational co-determination (Betriebliche Mitbestimmung) and corporate co-determination (Unternehmensmitbestimmung). This is a system that allows employees to influence company decisions at various levels. Along with a responsible wage policy, legally enshrined co-determination is another key to the success of the German economy.

According to co-determination law, the works council influences the remuneration and payment of employees not covered by standard collective agreements. Because even outside of collective wage agreements, the employer and works council have to establish salary brackets and determine their relation to each other.

The aim of corporate co-determination is to get employees involved in key company decisions regarding planning, management and organisational issues. This is achieved through active employee participation in the supervisory board of the co-determined company.

Corporate co-determination takes three forms in Germany: in addition to Montanbestimmung (co-determination in the German coal, iron and steel industry), which is now only practised in a small number of companies, the German Co-determination Act (Mitbestimmungsgesetz) of 1976 governs co-determination for companies that habitually employ over 2,000 members of staff. The One Third Participation Act (Drittelbeteiligungsgesetz) also applies to companies with between 501 and 2,000 employees. Due to the rise in transnational corporate structures, the negotiated form of co-determination in a European company (Societas Europaea – SE) also applies in addition to statutory German co-determination.

Senior executives have a guaranteed seat on the supervisory board in companies whose co-determination is governed by the German Co-determination Act of 1976. VAA members also apply for employee seats and union seats on the supervisory board.

Advantages of co-determination

  • Strengthens employees’ level of identification with their companies
  • Promotes sustainable innovation processes
  • Contributes to a diverse, responsible corporate culture
  • Safeguards the dignity of the individual in working life
  • Relieves the company partners of conflicts
  • Prevents labour disputes

Works councils

In order to represent the interests of employees not covered by the standard collective agreement (außertarifliche Angestellte – AT-Angestellte), the association also campaigns for the economic, social and legal concerns of employees at operational level. When employees not covered by the standard collective agreement participate in the process of operational co-determination, this helps to ensure a climate of social harmony within the company.

Employees in non-executive positions not covered by the standard collective agreement can only be legally represented via the works council. Many of the VAA works council members belong to this group themselves and are therefore very familiar with the concerns of their clientele. Drawing on the knowledge of company structures they have gained in positions of leadership, employees not covered by the standard collective agreement help to settle conflicts of interests between the works council and the company management 

The VAA representatives in works councils stand for:

  • Job security
  • Fair pay
  • Transparent appraisal and bonus systems
  • Boosting company pensions
  • Transparent company policies
  • Qualification, training and development measures
  • Delegation of responsibility
  • Health management in the workplace

The VAA works council members regularly convene at meetings and seminars. As well as providing an opportunity to find out about the latest developments in works constitution law, a particular emphasis here is on exchanging experiences. Each year, the VAA also offers the works councils a number of seminars on matters relating to works constitution law and individual labour law.

Executive committees

In a pluralist works constitution, employees in executive positions (Leitende Angestellte – LA) are represented by the executive committee, which defends their interests in dealings with the company management. VAA members are in the majority in the executive committees representing senior executives in all major companies in the chemical industry. In the vast majority of cases, the VAA also provides the chairperson. Non-executive employees not covered by the standard collective agreement (außertarifliche Angestellte – AT-Angestellte) are competently represented by the VAA in the works council.

The association supports, advises and instructs its executive committee members on all manner of legal issues: everything from applying for a candidacy to the day-to-day work in the executive committee. The association also supports its elected representatives when it comes to conducting plenary assemblies of the executive employees in the company.

The VAA provides information about the election procedure and the management of the executive committee, as well as the co-determination rights and the conclusion of executive committee agreements. Pay schemes and company pensions are also a frequent topic of consultation.

Members of executive committees convene twice a year at conferences and meetings, where they are brought up to date on matters relating to legislation and jurisdiction by the association lawyers. The VAA also influences scientific discourse with a commentary on the Executive Committee Act (Sprecherausschussgesetz).

Supervisory boards

Corporate co-determination is achieved through active employee participation in the supervisory board of the co-determined company. The supervisory board is responsible for supervising and advising the company management. The supervisory board, the executive board and the management are responsible for their own duties: they are obliged to work for the benefit of the company and to protect it from harm.

VAA members occupy the senior executive seat on almost all supervisory boards of co-determined chemistry companies. VAA candidates are also regularly successful in their applications for employee seats and union seats. VAA supervisory board members are constantly adding to the expert knowledge required for duties to be performed in a competent manner. The association offers its supervisory boards two conferences a year and holds seminars for members of audit committees to ensure this is the case. All VAA supervisory board members pay a portion of the compensation received for supervisory board work to the association.

The VAA’s supervisory board candidates belong exclusively to the company and act for the benefit of the workforce as a whole. Based on their expert knowledge and their operational roles, they know all about the company and its structures. They work closely with other employee representatives on the supervisory board, as well as with works councils and executive committees.