German Federal Labor Court: No Works Councils for Mere Delivery Zones

Quick Hits

• For the election of a separate works council in Germany, a certain territorial unit belonging to a company must either constitute an establishment with unified management or an independent part of an establishment with a minimum degree of organizational autonomy.
• Mere delivery zones (“remote cities”) of a platform-based delivery service, where only delivery drivers are employed, do not constitute organizational units eligible to elect a works council. The simple grouping into a delivery zone with its own shift schedule is insufficient; nor does a community of interest among the drivers employed there provide the requisite minimum degree of organizational autonomy.

The Case: Hub Cities and Remote Cities

The employer operates a platform-based food delivery service. The company is organizationally divided into three areas: the central human resources department at the company’s headquarters, so-called “hub cities” (main distribution bases with administrative and back-office staff as well as delivery drivers), and so-called “remote cities” (mere delivery zones where only delivery drivers work). Communication between the drivers and the employer is conducted primarily through an app.

In 2022 and 2023, separate works councils were elected in several remote cities. The employer challenged these elections, arguing that the remote cities did not constitute independent establishments or autonomous parts of establishments within the meaning of the German Works Constitution Act (Betriebsverfassungsgesetz (BetrVG)). The German regional labor courts ruled in favor of the employer and declared the elections void. The works councils’ appeals on points of law to the BAG were unsuccessful.

The Decision: No Works Council Without Autonomy

The BAG affirmed the decisions of the regional labor courts: Pursuant to Section 1 of the BetrVG, works councils are elected in establishments. Pursuant to Section 4 paragraph 1, sentence 1 of the BetrVG, independent parts of establishments are also deemed to be establishments.

However, an organizational unit satisfies the definition of an establishment only if it is managed by unified leadership responsible for that unit in essential personnel and social matters. A minimum degree of organizational autonomy vis-à-vis the main establishment is required.

The BAG clarified that these principles apply to “normal” work and platform work, where employment relationships are managed predominantly through a digital app. The shift to digitally organized work does not modify the establishment concept.

The remote cities do not meet these requirements, the BAG held. The mere grouping of delivery drivers into a delivery zone with its own shift schedule does not constitute an establishment or an independent part thereof. The remote cities lack the requisite minimum degree of organizational autonomy, which, in particular, cannot be established solely by the drivers employed there forming a community of interest.

Key Takeaways

The BAG’s reasoning is not surprising and is consistent with prior case law (e.g., concerning stationing locations of foreign airlines). The focus on the independent organizational unit is appropriate, as a works council can effectively perform its function as the employees’ representative body and as a negotiating counterpart of management only when it is formed at the level where managerial decisions are made. It requires a capable counterpart in establishment management in order to enforce codetermination rights in personnel and social matters. This requirement is fulfilled only in an establishment or in an organizationally autonomous part of an establishment with its own management.

Ogletree Deakins’ Berlin and Munich offices will continue to monitor developments and will post updates on the Cross-Border and Germany blogs as additional information becomes available.

Tatjana Serbina is counsel in the Berlin office of Ogletree Deakins.

Teodora Ghinoiu contributed to this article as a research assistant in the Berlin office of Ogletree Deakins.

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