Restructuring of companies and businesses often constitutes – from an employment law perspective – a change in operations, which is subject to co-determination rights


Managing the increasing complexity of the markets requires enormous speed and flexibility. Strategic decision making is one of the central tasks of the responsible management. In addition to the effects on the business, employees are always affected as well. Therefore, it is necessary to also find solutions for the concerns of employment law.

In particular the following facts constitute changes in operations:

Shut-down / reduction and relocation of operations of establishments or substantial parts thereof Merger and splitting of operations Fundamental changes in the organization, the objective or the facilities of the enterprise Introduction of fundamentally new working methods and manufacturing processes

In practice, particularly the reduction and splitting of operations is relevant (e.g. if parts of operations are transferred to a subsidiary or sold to a third party). Also the pure reduction of staff without simultaneous reduction of the tangible means of operations can constitute a change in operations, which is subject to co-determination rights.

Changes in operations pursuant to sections 111 Works Council Constitution Act have to be planned in detail by the company also from an employment law perspective, since:

The employer must inform the works council already in the planning stage. The employer must consult with the works council and must negotiate on a reconciliation of interests and agree on a social plan. Thorough planning helps speed up negotiations.

These co-determination rights require that a substantial part of the staff is affected by the change in operations. Pursuant to court rulings, a respective clue are the thresholds, which section 17 Protection against Dismissal Act (Kuendigungsschutzgesetz) provides for (the 30 days period does not apply however). The obligation to set up a social plan applies in case of a pure reduction of staff, only if the special thresholds pursuant to section 112 a para. 1 Works Council Constitution Act (Betriebsverfassungsgesetz) are exceeded. However, the obligation to negotiate on a reconciliation of interests still applies.

Furthermore, in case of a change in operations, it must be checked whether the employer is obligated to notify the competent employment office of dismissals pursuant to section 17 Protection against Dismissal Act (Mass Dismissals).

In addition to the participation rights of the works council (Co-Determination), it must be checked what consequences the change of operations has for the works council.
Finally, participation rights of a possibly established Economic Committee (Wirtschaftsausschuss) must be observed as well.

Kristina Schweier has been entrusted with numerous assignments in these areas. Please see Projects.