Company agreements: Implementing the basis of modern labor relations
Company agreements create a reliable framework for cooperation within the company. They regulate the cooperation between employers and employees and adapt existing guidelines to current developments. Old hat? An outdated way of thinking? No, because in times of new technologies such as AI or new ways of working such as remote work, works agreements are more important than ever before. But how are works agreements created? What types are there and how do you successfully implement the agreements in your company? This article provides answers to the most important questions.
What is a works agreement?
A works agreement forms the legal basis for cooperation between employers and employees in a company. The Works Constitution Act (BetrVG) regulates this:
- the form and effect of works agreements,
- the co-determination rights of the works council,
- the distinction between enforceable and voluntary works agreements,
- the relationship to collective agreements and
- the termination options and the subsequent effect.
The works council and the management negotiate and sign these jointly. The regulations agreed are legally binding for both sides. They set standards for the entire company or individual departments. Works agreements regulate, for example, the use of new IT systems, the organization of working hours or the implementation of compliance guidelines.
The works agreement has a direct and binding effect on all affected employees - individual agreements are not necessary. It supplements existing collective agreements and must not contradict them. Central to its legal validity: the works agreement must be in writing and signed by the works council and management.
How is a works agreement created?
Employees and employers can take the initiative for a company agreement. For example, when new legal requirements come into force or the company introduces new technologies. Negotiations then begin between the works council and management. Both sides put forward their interests and develop a draft together:
- The works council brings its interests into the negotiations and ensures that the employees' co-determination rights are safeguarded.
- The management represents the company's interests and ensures that the agreement is economically viable and can be implemented in practice.
lawyers check whether the draft complies with applicable law. There are no deadlines for the negotiations - the duration depends on the complexity of the issues. Once agreement has been reached, the parties formulate the final works agreement. The signed agreement then usually comes into force immediately. The works council informs the employees and the management ensures the technical and organizational implementation.
Who is covered by a company agreement?
A works agreement applies to all employees of a company or a specific department. This includes full-time, part-time and temporary employees. New employees are also automatically bound by the existing works agreements. This does not apply to temporary workers, freelancers, contract workers and managers who can hire or fire staff independently.
The territorial scope extends to a specific company or certain parts of a company. In companies with several locations, a works agreement can also apply to all branches - however, this must be clearly regulated. Group-wide regulations are made through general works agreements or group works agreements.
Where does the company agreement stand between the collective agreement and the employment contract?
The BetrVG sets out a clear order of precedence for various agreements. The collective agreement takes precedence over the works agreement. A works agreement may therefore not deviate from collective agreements - unless the collective agreement permits this (opening clause).
The works agreement in turn takes precedence over the individual employment contract. It has a direct and binding effect. This means that provisions in employment contracts that deviate from the works agreement are invalid. The only exception are provisions in the employment contract that are more favorable to employees (principle of favorability).
The BetrVG also stipulates certain topics that must be regulated by a works agreement. These include, for example, questions of company organization or working hours. Other issues - such as the level of pay - are reserved for collective agreements.
Can company agreements be terminated?
Both the works council and the management can initiate termination of the works agreement. The notice period is three months, unless another period applies. Special notice periods apply, for example, to company pension schemes.
Notice of termination must be given in writing and must be clearly justified. After termination, the works agreement generally continues to apply for a transitional period (subsequent effect). This phase is intended to allow time for renegotiation. However, not all regulations continue to apply - for example, regulations on company rules end immediately upon termination.
What types of company agreements are there?
The BetrVG distinguishes between two types of works agreements.
Enforceable company agreements
In the case of enforceable works agreements, an agreement must be reached. If this is not reached, the conciliation committee makes a binding decision. This applies to central matters such as working hours, monitoring systems or occupational health and safety.
The conciliation committee consists of an equal number of assessors from both parties and a neutral chairperson. Its decision replaces the agreement between the parties. The costs of the proceedings are borne by the company.
Voluntary company agreements
In the case of voluntary company agreements, the parties are free to decide whether to reach an agreement. Neither party can force the other to reach an agreement. This applies, for example, to additional social benefits or family support measures.
If the negotiations fail, the current situation remains unchanged. The conciliation committee will only take action if both sides want it to.
Examples of company agreements
Let us illustrate the theory with two practical examples. These show how company agreements shape specific working conditions.
Company agreement on mobile working
A company agreement on mobile working regulates the framework conditions for working outside the office. It roughly defines the scope of mobile working, the technical equipment and accessibility. Key points are occupational health and safety, data privacy and the recording of working hours. The agreement also defines how communication works in the hybrid working model and how teams work together.
Company agreement on the use of AI systems
This company agreement regulates the use of artificial intelligence in the company. It defines which AI systems are used and how they support the work. The agreement creates transparency regarding the use of employee data and defines the limits of automated decision-making. It also regulates employees' training entitlements and the works council's monitoring rights when new AI functions are introduced.
Implementing a works agreement in the company
The best company agreement is useless if it does not reach all the employees concerned. Professional implementation ensures the effectiveness of the agreed regulations. According to the BetrVG, the company is obliged to inform all affected employees - for example by means of a notice or on the intranet. The type of notice must ensure that all employees are aware of the regulations.
A company agreement usually entails a rollout of guidelines, as it defines binding regulations for the company that must be implemented and communicated. The rollout is an important step in effectively implementing the provisions set out in the works agreement within the company.
The following aspects must be considered when rolling out guidelines following the conclusion of a company agreement:
- Obligation to implement: Employers are obliged to implement the company agreement and ensure that employees also comply with the regulations.
- Communication: The new guidelines must be made available to all employees. This can be done via notices, digital platforms or e-mail.
- Documentation: The rollout process should be documented in order to be able to prove later that the guidelines have been properly introduced.
It is important to note that the rollout process should be carefully planned and executed to ensure effective implementation of the company agreement and avoid potential conflicts or misunderstandings.
Conclusion: company agreements as the key to successful cooperation
Company agreements have a significant impact on working relationships in companies. They create binding standards for both sides - from dress codes to occupational health and safety to break times. The path to a works agreement leads through negotiations between the works council and management. The decisive factor for the success of a works agreement is its professional implementation in the company. This is where the particular value of digital solutions such as the guideline rollout becomes apparent: they guarantee legally compliant distribution and documentation.
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