The way to the conciliation board
If there are differences of opinion between the employer and the works council and these cannot be resolved by negotiation, the German Works Council Constitution Act provides for the formation of a reconciliation board. In this reconciliation board, the parties to the dispute negotiate under the leadership of an impartial chairman and usually with two or three members from each side. If the parties are unable to reach an agreement, the reconciliation board makes a decision by way of a ruling in which the chairman usually has a casting vote.
In companies where the relationship between the employer and the works council has broken down, going to the reconciliation board seems to be a foregone conclusion when any conflict arises, no matter how small.
Often it is the works council that forces the formation of the reconciliation board because it sees itself limited in the exercise of its co-determination rights. The employer, in turn, always bears the costs of the reconciliation body, which can be a considerable financial burden - depending on the composition, costs of EUR 10,000 or more for a full day of meetings of the labor conciliation board cannot be ruled out. This naturally increases the pressure to reach an agreement.
In the event of differences of opinion on matters subject to co-determination, neither side may refuse to participate in the formation of the reconciliation board. However, if no agreement is reached on the person of the chairman or the number of further members of the reconciliation board, the decision on this can be made by the labor court at the request of one of the parties. If such a request is rejected by the labor court, the formation of the reconciliation board has failed.
The labor court examines whether the reconciliation body would have jurisdiction at all for the dispute in question. However, this examination of jurisdiction is only carried out according to a very limited standard: motions may only be rejected in this context if the reconciliation board is obviously not competent. If there is no obvious lack of jurisdiction, it is then up to the reconciliation body itself to examine its jurisdiction later as part of its own procedure.
In addition to this limited check on jurisdiction, the labor court also checks whether negotiations were actually held between the parties with the serious intention of reaching an agreement before the application was filed.
The case law does not place too stringent requirements on either the competence of the reconciliation board or the failure of negotiations. Nevertheless, the requesting party cannot blindly trust that the reconciliation body will actually be formed.
Obvious lack of competence
"If I have to think about it for more than two minutes, the reconciliation board is not obviously not competent."
This exemplary sentence by a labor judge illustrates that labor courts do not allow the establishment of the reconciliation body to fail unless there is clear and obvious lack of competence. If, for example, the works council seeks the establishment of the reconciliation board, the latter is only obviously not competent if the right of co-determination claimed obviously does not exist.
Nevertheless, the individual case must be examined carefully, as a right of co-determination may be excluded, for example, because there is no room for a collective regulation at all. For example, there are state labor courts which reject the formation of reconciliation bodies with regard to the employer's obligation to offer home office if there are no compelling operational reasons to the contrary (formerly SARS-CoV-2 Occupational Health and Safety Ordinance, now regulated in the German Federal Infection Protection Act) because there is no longer any regulatory leeway to be filled in the respective constellation, which is, however, necessary for the exercise of co-determination rights.
Failure of the negotiations
Furthermore, particularly in the event of a breakdown in relations between the parties, there is often a reflex to assume from the outset that a mutual agreement will not be reached anyway and to immediately file an application with the labor court for the appointment of a reconciliation board chairman. However, this can lead to the application being rejected due to the lack of an interest in legal protection. This is because the petitioner must have actually attempted to negotiate an agreement beforehand. Only if the other party refuses to negotiate or if negotiations have failed there is a need to set up a reconciliation body.
Admittedly, the case law does not impose any high requirements in this respect, either, with regard to the presentation of the failure of the negotiations. However, the assumption that the other party is not willing to negotiate anyway does not exempt one from at least attempting negotiations with the aim of reaching an agreement. For example, there is no need for a decision by the labor court if the works council announces in an e-mail to the employer that it will appeal to a reconciliation board if four different works agreements are not reached within about three weeks. This request by the works council does not show any willingness to negotiate, but only the will to implement its own ideas immediately. In this case, the period of three weeks was too short from the outset.
Even if the requirements for a judicial appointment of a reconciliation body are low, such an application is not a "no-brainer". It is therefore always worthwhile, particularly from the employer's point of view, to take a closer look at corresponding applications from the works council.
Furthermore, business mediation can often promote more constructive cooperation between employer and works council.