German Works Council Rights Apply to Domestic Sites With Foreign Headquarters

00:00

24:53

Quick Hits

• A separate department of an establishment (Betriebsteil) eligible for a works council under the German Works Constitution Act (Betriebsverfassungsgesetz (BetrVG)) can exist even if the main establishment is located abroad. This does not violate the principle of territoriality.
• For the required minimum degree of organizational independence of a separate department of an establishment, it is not harmful that key personnel and disciplinary decisions continue to be made centrally abroad.

The Case

The employer is an airline with its registered seat in Malta and group headquarters in Ireland. It operates, among other locations, a base at Berlin-Brandenburg Airport (BER) with approximately 320 cockpit and cabin crew members. It maintains an “Airport Office” on-site. The cockpit and cabin personnel start and end their shifts in or at the aircraft.

Decisions on hirings and dismissals, disciplinary measures, scheduling, promotions, and transfers are made by management personnel based in Malta and Ireland. However, a base captain (chief of the cockpit crew) and a base supervisor (chief of the cabin crew) are assigned to the base at BER.

After the employees at BER took the initiative to elect a works council, the employer filed a petition with the Labor Court Cottbus (Arbeitsgericht Cottbus) seeking a declaration that the base at BER did not constitute an organizational unit eligible for a works council.

Both lower courts—including the Higher Labor Court of Berlin-Brandenburg (Landesarbeitsgericht (LAG))—dismissed the petition.

The Decision of the LAG

The LAG had already held that the base at BER constitutes a separate department of an establishment—eligible for a works council—within the meaning of the Works Constitution Act (Betriebsverfassungsgesetz (BetrVG)).

Not an Establishment, but a Separate Department Eligible for a Works Council

The court found that the base does not qualify as an establishment (Betrieb) within the meaning of Section 1(1) of the BetrVG. The key personnel and social management functions—such as scheduling, hirings, dismissals, disciplinary measures, and leave decisions—are not exercised on-site but rather from the group headquarters in Ireland and the registered seat in Malta.

However, the court held that the base constitutes a separate department of an establishment (selbständiger Betriebsteil) in which a works council can be formed. The requirements of Section 4(1) sentence 1 no. 1 of the BetrVG were met:

1. The BER base is geographically far removed from the main establishment—regardless of whether the group headquarters in Ireland or the registered seat in Malta is considered the main establishment. The fact that the main establishment is located abroad does not preclude this conclusion. A domestic main establishment as a reference point is not strictly required.
2. In addition, the base has its own permanent workforce of approximately 320 cockpit and cabin crew members. Together with the “Airport Office,” it also has the necessary operational infrastructure.
3. The required minimum degree of organizational independence is established through the base captain and the base supervisor, who issue technical instructions to the local employees. The fact that key personnel and disciplinary decisions continue to be made centrally in Ireland or Malta is not harmful. A rudimentary level of managerial authority on-site is sufficient.

BAG Confirms: Works Council Election Permissible

The BAG confirmed the LAG’s decision: A works council can be elected at the BER base.

The fact that the main establishment is located abroad does not prevent this. This does not violate the territoriality principle, under which the BetrVG applies only to domestic establishments. The separate department, deemed an independent establishment pursuant to the BetrVG, is located in Germany.

Practical Implications

So far, the BAG has only published a press release regarding the decision. The full text of the ruling will provide further insight into the detailed reasoning. One thing is already clear: The BAG’s decision is particularly significant for companies with cross-border management structures.

Internationally active companies that maintain operating sites with their own workforces in Germany may want to anticipate that works councils can be elected at those sites—even if key personnel and disciplinary decisions are made centrally abroad.

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

Bastian Sepp is an associate in the Munich office of Ogletree Deakins.

Niklas Thiel, a law clerk in the Munich office of Ogletree Deakins, contributed to this article.

Follow and Subscribe
LinkedIn | Instagram | Webinars | Podcasts