Social Europe

politics, economy and employment & labour

  • Themes
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

Co-determination at issue in Europe’s top court

Nora Back, Patrick Dury and Reiner Hoffmann 11th April 2022

Can companies dilute national worker-involvement rights by becoming European? The ECJ is to adjudicate.

DGB,unions,ver.di,IG Metall,co-determination,European Court of Justice,ECJ
More reflective: co-determination brings a critical perspective to supervisory boards (Rawpixel.com/shutterstock.com)

Shortly before Christmas, the European Parliament sent a positive signal about democracy at work. By a large majority, the parliament adopted a resolution committing it more clearly than ever before to employee participation. The motion emphasised its crucial role in social cohesion, a just transition to a climate-neutral and resource-efficient economy, and sustainability in corporate governance.

Co-determination rights have hitherto principally been national, as in Germany and Sweden. They must not be weakened by transformation of a national public limited company into a European company, a societas Europaea (SE). Yet this is what has taken place at the software company SAP, which in 2014 converted from a public limited company under German law into an SE, as provided for under a 2001 European Union regulation. German and Luxembourg trade unions are challenging the accompanying curtailment of co-determination rights at the Court of Justice of the EU (ECJ).

More successful

Co-determined companies are economically more successful and operate more sustainably. For example, the Hans Böckler Foundation has found that companies with strong co-determination train more people, offer greater job security and appoint more women to supervisory boards.  

Worker representatives on supervisory boards provide an essential counterweight to short-term investor interests. Their deep knowledge of companies and critical attitude strengthen the monitoring of internal compliance and risk management.


Our job is keeping you informed!


Subscribe to our free newsletter and stay up to date with the latest Social Europe content. We will never send you spam and you can unsubscribe anytime.

Sign up here

This positive role of co-determination is based on decades of tried and tested co-operation on the supervisory board between employee representatives in the workplace and trade union representatives from outside the company. While the company-based representatives have important internal knowledge, for example about working conditions and processes, the external trade union representatives bring profound knowledge of the sector, as well as legal and economic awareness. Their trans-company perspective strengthens the competences on the workers’ side and those of the supervisory board as a whole.

It is this important co-operation that is now at issue before the ECJ. A hearing was held on February 7th by the Grand Chamber in Luxembourg.

This follows from an action by ver.di and IG Metall, the two biggest affiliates of the German Confederation of Trade Unions (DGB), against SAP. The German Federal Labour Court (Bundesarbeitsgericht) referred the underlying legal question to the ECJ: can the national legislature make the participation of trade union representatives on a supervisory board mandatory, even if a national public limited company is converted into an SE?

‘At least the same’

In the case of such a conversion, a special negotiating body of the employees and the management negotiates how co-determination will be structured in the future company. To prevent a reduction in participation rights, article 4 of the associated EU directive however provides that ‘in the case of an SE established by means of transformation, the agreement shall provide for at least the same level of all elements of employee involvement as the ones existing within the company to be converted into an SE’.

It is undisputed, for example, that equal representation of owners/shareholders and employee representatives on the supervisory board must be maintained even after conversion into an SE. In the opinion of the DGB, together with its two Luxembourg counterparts, the OGBL and LCGB, the internal composition of the employees’ side is one of the components protected by the EU directive.

Whether this is the case with the conversion into an SE is now the subject of the legal dispute. In the case of SAP, the special negotiation body and the company had agreed that in future the independent ballot for trade union representatives—the guarantee of trade union participation in the supervisory board—could be abolished. IG Metall and ver.di consider the relevant provisions in the agreement null and void. The Federal Labour Court agreed with their argumentation.

In its view, the employee representatives on the supervisory board proposed by the trade unions in a separate election procedure are, according to the German SE Employee Involvement Act, one of the defining elements of co-determination in Germany; hence guaranteed seats and separate election of trade union representatives on the supervisory board must also be ensured in the SE established by conversion. It is up to the national law of the member states to define the essential elements of co-determination.

At the same time, however, the Federal Labour Court made it clear that it ‘cannot judge with the certainty required of a court of last instance’ which requirements—to be implemented by the member states—resulted from the directive. Therefore, it referred the question of whether the German SE Involvement Act was compatible with the directive to the ECJ. The German government as well as the European Commission supported the trade unions´ position in the proceedings before the ECJ.


We need your support


Social Europe is an independent publisher and we believe in freely available content. For this model to be sustainable, however, we depend on the solidarity of our readers. Become a Social Europe member for less than 5 Euro per month and help us produce more articles, podcasts and videos. Thank you very much for your support!

Become a Social Europe Member

Direct consequences

In the view of the DGB, OGBL and LCGB, this goes beyond the specific issue of trade union representatives on the supervisory board of SAP. The government of Luxembourg has decided to support IG Metall and ver.di in these proceedings, which may have direct consequences for the representation and co-determination of trade union representatives on the supervisory and administrative boards of public limited companies established in Luxembourg. As in Germany, the co-determination of employee and trade union representatives in companies in Luxembourg has contributed to strengthening the latter, both at the economic and at the labour-law level, and to ensuring the maintenance of social peace.

The next step will take place on April 28th, when the advocate general of the ECJ will deliver his opinion. Only then will the court pronounce.

Ultimately, this case is about whether national workers’ standards can be lowered through European law. The ECJ should answer this question with a clear ‘no’. The aim of European law is to protect workers and their participation—not to destroy nationally developed participation models.

Nora Back
Nora Back

Nora Back is president of the Independent Luxembourg Trade Union Confederation (OGBL) and president of the Chamber of Employees.

Patrick Dury
Patrick Dury

Patrick Dury is president of the Luxembourg Confederation of Christian Trade Unions (LCGB) and vice-president of the Chamber of Employees.

Reiner Hoffmann
Reiner Hoffmann

Reiner Hoffmann is chair of the Deutscher Gewerkschaftsbund (DGB).

You are here: Home / Economy / Co-determination at issue in Europe’s top court

Most Popular Posts

European civil war,iron curtain,NATO,Ukraine,Gorbachev The new European civil warGuido Montani
Visentini,ITUC,Qatar,Fight Impunity,50,000 Visentini, ‘Fight Impunity’, the ITUC and QatarFrank Hoffer
Russian soldiers' mothers,war,Ukraine The Ukraine war and Russian soldiers’ mothersJennifer Mathers and Natasha Danilova
IGU,documents,International Gas Union,lobby,lobbying,sustainable finance taxonomy,green gas,EU,COP ‘Gaslighting’ Europe on fossil fuelsFaye Holder
Schengen,Fortress Europe,Romania,Bulgaria Romania and Bulgaria stuck in EU’s second tierMagdalena Ulceluse

Most Recent Posts

EU social agenda,social investment,social protection EU social agenda beyond 2024—no time to wasteFrank Vandenbroucke
pension reform,Germany,Lindner Pension reform in Germany—a market solution?Fabian Mushövel and Nicholas Barr
European civil war,iron curtain,NATO,Ukraine,Gorbachev The new European civil warGuido Montani
artists,cultural workers Europe’s stars must shine for artists and creativesIsabelle Van de Gejuchte
transition,deindustrialisation,degradation,environment Europe’s industry and the ecological transitionCharlotte Bez and Lorenzo Feltrin

Other Social Europe Publications

front cover scaled Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship
Women Corona e1631700896969 500 Women and the coronavirus crisis
sere12 1 RE No. 12: Why No Economic Democracy in Sweden?

Hans Böckler Stiftung Advertisement

The macroeconomic effects of re-applying the EU fiscal rules

Against the background of the European Commission's reform plans for the Stability and Growth Pact (SGP), this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the existing and unreformed rules, the most prominent options include an expenditure rule linked to a debt anchor.

Our results for the euro area and its four biggest economies—France, Italy, Germany and Spain—indicate that returning to the rules of the SGP would lead to severe cuts in public spending, particularly if the SGP rules were interpreted as in the past. A more flexible interpretation would only somewhat ease the fiscal-adjustment burden. An expenditure rule along the lines of the European Fiscal Board would, however, not necessarily alleviate that burden in and of itself.

Our simulations show great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way. Raising the debt ceiling to 90 per cent of gross domestic product and applying less demanding fiscal adjustments, as proposed by the IMK, would go a long way.


DOWNLOAD HERE

ILO advertisement

Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power

The International Labour Organization's Global Wage Report is a key reference on wages and wage inequality for the academic community and policy-makers around the world.

This eighth edition of the report, The Impact of inflation and COVID-19 on wages and purchasing power, examines the evolution of real wages, giving a unique picture of wage trends globally and by region. The report includes evidence on how wages have evolved through the COVID-19 crisis as well as how the current inflationary context is biting into real wage growth in most regions of the world. The report shows that for the first time in the 21st century real wage growth has fallen to negative values while, at the same time, the gap between real productivity growth and real wage growth continues to widen.

The report analysis the evolution of the real total wage bill from 2019 to 2022 to show how its different components—employment, nominal wages and inflation—have changed during the COVID-19 crisis and, more recently, during the cost-of-living crisis. The decomposition of the total wage bill, and its evolution, is shown for all wage employees and distinguishes between women and men. The report also looks at changes in wage inequality and the gender pay gap to reveal how COVID-19 may have contributed to increasing income inequality in different regions of the world. Together, the empirical evidence in the report becomes the backbone of a policy discussion that could play a key role in a human-centred recovery from the different ongoing crises.


DOWNLOAD HERE

ETUI advertisement

Social policy in the European Union: state of play 2022

Since 2000, the annual Bilan social volume has been analysing the state of play of social policy in the European Union during the preceding year, the better to forecast developments in the new one. Co-produced by the European Social Observatory (OSE) and the European Trade Union Institute (ETUI), the new edition is no exception. In the context of multiple crises, the authors find that social policies gained in ambition in 2022. At the same time, the new EU economic framework, expected for 2023, should be made compatible with achieving the EU’s social and ‘green’ objectives. Finally, they raise the question whether the EU Social Imbalances Procedure and Open Strategic Autonomy paradigm could provide windows of opportunity to sustain the EU’s social ambition in the long run.


DOWNLOAD HERE

Eurofound advertisement

Eurofound webinar: Making telework work for everyone

Since 2020 more European workers and managers have enjoyed greater flexibility and autonomy in work and are reporting their preference for hybrid working. Also driven by technological developments and structural changes in employment, organisations are now integrating telework more permanently into their workplace.

To reflect on these shifts, on 6 December Eurofound researchers Oscar Vargas and John Hurley explored the challenges and opportunities of the surge in telework, as well as the overall growth of telework and teleworkable jobs in the EU and what this means for workers, managers, companies and policymakers.


WATCH THE WEBINAR HERE

Foundation for European Progressive Studies Advertisement

Discover the new FEPS Progressive Yearbook and what 2023 has in store for us!

The Progressive Yearbook focuses on transversal European issues that have left a mark on 2022, delivering insightful future-oriented analysis for the new year. It counts on renowned authors' contributions, including academics, politicians and analysts. This fourth edition is published in a time of war and, therefore, it mostly looks at the conflict itself, the actors involved and the implications for Europe.


DOWNLOAD HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube