According to the German European Works Councils Act, the employees at companies or groups of companies with an aggregated headcount of more than 1,000 employees and at least each 150 employees in two Member States of the European Union have the right to elect a European Works Council (EWC). This representative body is located at the German parent company’s seat. It has various rights of information, either based on an agreement between the EWC and the parent company, or based on the Act if no agreement was found.
The Regional Labor Court of Cologne (8 September 2011 – 13 Ta 267/11) had to answer the question in preliminary proceedings whether the EWC can request a preliminary injunction restricting the parent company to implement a measure unilaterally prior to the due fulfillment of the information and consultation duties. It denied the question. Afterwards, the local labor of Cologne has repeated that decision in the principal proceedings on that issue (25 May 2012 – 5 BV 208/11).
The Case
Visteon Germany, the German subsidiary of Ford, decided to close its plant in Cadiz (Spain). Visteon informed its EWC on this plan only through a short PowerPoint-presentation. In the EWC’s view, this was not sufficient information as required under the German Works Councils Act. Therefore, the EWC requested a preliminary injunction at the local and Regional Labor Court of Cologne with the aim to restrict Visteon from implementing the closure (e.g. by issuing notices of termination, terminating the lease, selling property) before the information and consultation provided for in the European Works Councils Act were duly fulfilled by Visteon.
The Decision
Both the local and Regional Labor Court of Cologne denied granting the preliminary injunction to Visteon’s EWC. The courts argued that Visteon had indeed violated the EWC’s information and consultation rights regarding the contemplated closure of the Cadiz plant. However, neither the German European Works Councils Act nor the EU Directive on European Works Councils (2009/38/EC) gives the EWC a right against the parent company or employer for an injunctive relief. Rather, the German European Works Councils Act (implementing the EU Directive) only provides for a fine of EUR 15,000 if information or consultation rights of the EWC had been violated. Other remedies are not expressly stipulated in the law; therefore, no preliminary injunction could have been granted.
Comment
In particular if employers contemplate plant closures and/or mass redundancies, works councils tend to exhaustively exercise their information and consultation rights in order to play for time. A common argument is that the employer has not sufficiently fulfilled its duties, followed by the request to get more information.
In Germany, several Regional Labor Courts grant works councils (established under the German Works Councils Act) a preliminary injunction not allowing the employer to implement mass redundancies until it has completed the consultation and negotiation process on a compromise of interests and social plan So far, no legal precedence existed whether also the EWC could successfully claim a preliminary injunction securing its information and consultation rights. The above decisions are the first judgments of a German court on this subject.
The Cologne decisions have been heavily criticized by several legal scholars. They claim that the EWC’s information and consultation are in fact of less value if not enforceable through a preliminary injunction, and refer to the jurisdiction allowing works councils to get such remedy in case of the employer’s non compliance. The critics’ arguments are, however, not valid. In contrast to a works council having real co-determination rights (the employer is not allowed to implement a mass redundancy prior to the conclusion of a compromise of interests / social plan), the EWC has “only” information and consultation rights in relation to such a measure. This different quality of rights justifies not granting the EWC a preliminary injunction. Further, in the parliamentary process implementing the EU Directive on European Works Councils into national law, it was discussed whether, in addition to the fine of EUR 15,000, the possibility of an injunctive relief should be stipulated in the Act on European Works Councils. The respective proposal was rejected.