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Reconciliation of interests

Trusting the power of representation of the works council chair
(Higher Labour Court (LAG) of Hamm, decision of 04/12/2013 4 Sa 530/13)

The Works Constitution Act (BetrVG) provides for agreeing a reconciliation of interests and a severance scheme in cases of changes affecting a company (e.g. cessation of operations, changing the company location, etc.). If the employer has not attempted to reconcile interests with the works council, the employees affected by the company change may have a claim to a compensation for any disadvantage suffered. Employers are even required to constitute a conciliation committee if no agreement with the works council can be reached regarding the reconciliation of interests. According to case law the employer has not sufficiently attempted to agree a reconciliation of interests until negotiations are determined to have failed within the conciliation committee. The reconciliation of interests must be in writing and must be signed by both the employer and works council. The chair of the works council signs, or if the chair cannot, the chair's proxy. This power of representation only exists within the framework of resolutions adopted by the works council; the works council therefore makes the decision on the reconciliation of interests by way of resolution.

In the case described here, the employer had negotiated a reconciliation of interests with representatives of the works council. Since the chair of the works council could not do so, the chair's proxy signed the reconciliation of interests for the works council. However, no resolution had been adopted by the works council regarding conclusion of the reconciliation of interests. An employee affected by the company change brought an action before the Higher Labour Court (LAG) of Hamm for compensation for the disadvantage suffered. The Higher Labour Court (LAG) dismissed the action. According to the Higher Labour Court (LAG), the employer had done everything to ensure that a reconciliation of interests could take place. It had negotiated a reconciliation of interests with the works council, yet this may have been invalid since no works council resolution was adopted. The employer has a legitimate interest in not suffering a disadvantage as a result of shortcomings in the works council's decision making process if such shortcomings are not evident to the employer. In this case the employer had no indications for the lack of a properly adopted resolution. For instance, the proxy for the works council chair did not sign the reconciliation of interests immediately, in the presence of the employer, but rather first took the document with him. The employer furthermore does not have an obligation to inquire as to any adoption of resolution by the works council. The employer could therefore reasonably expect that the reconciliation of interests actually took place, such that no additional measures, such as constitution of the conciliation committee, appeared necessary.

Recommendation for practice:

The decision of the Higher Labour Court (LAG) of Hamm brings with it a certain measure of legal certainty. At the same time, employers should ask for a copy of the adopted resolution if they suspect the lack of a validly adopted resolution. If the employer in a given case would have had to know that a resolution could not have been adopted, the employer is not entitled to trust the validity of the reconciliation of interests.

Tobias Grambow
Author:
Lawyer and specialist
for employment law
Tobias Grambow
grambow@buse.de

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