German Labour Courts Strengthen Works Council Powers in Cross-Border Companies

Germany’s failure to meet the June 7 transposition deadline for the EU Pay Transparency Directive has left state employers exposed to direct claims, while private-sector workers must wait for national legislation. The political standoff over working-time reform adds another layer of uncertainty. Amid this, a series of recent court rulings have clarified the scope of works council rights in multinational corporate structures—decisions that could reshape how employee representation functions in globally integrated companies.

Matrix management case: When is a manager deemed ‘hired’?

On 27 January 2026 (Case No. 1 ABR 18/25), the Federal Labour Court (BAG) addressed a question that had vexed labour practitioners: What constitutes a “hiring” that requires works council approval? The case involved a manager employed by an Austrian subsidiary of a US conglomerate who worked at a diagnostics facility in Germany. The manager received instructions from a colleague at a British affiliate within the same group.

The BAG ruled that a hiring subject to co-determination requires the plant owner to exercise at least partial control over the content, location and timing of the work. Merely working within a pre-set framework is not enough. Because the lower labour court had not adequately examined these criteria, the case was sent back.

In a September 2025 ruling, the same court had already established that a hiring can exist even without a direct employment relationship with the plant owner—as long as the worker is integrated into the plant’s operations.

BER base works council election upheld

Another landmark decision came on 13 May 2026 (Case No. 7 ABR 7/25). A Maltese-registered airline with its corporate headquarters in Ireland challenged the election of a works council at its base at Berlin Brandenburg Airport, where around 320 crew members are stationed.

The BAG ruled that an independent plant division under the Works Constitution Act can exist even when the main administration is abroad. Although personnel decisions are made centrally from outside Germany, the base captain and the local on-site supervisor exercise technical supervisory authority. This was deemed sufficient to create an electable plant division in Germany without violating the principle of territoriality.

Nuremberg Labour Court: Works council member’s intranet postings protected

The limits of permissible communication for works council members were tested at the Nuremberg Labour Court on 16 April 2026 (Case No. 9 Ca 6336/25). An employer had terminated a long-serving works councillor without notice, accusing her of using the internal intranet to distribute union information and details about company pension schemes.

The court declared the dismissal invalid and ordered the company to continue employing her. The postings constituted work-related communications, not private use. Furthermore, the summary dismissal was deemed disproportionate: after prior complaints, the employee had already removed the content.

EU pay transparency: deadline missed, implications mixed

The transposition deadline for Directive (EU) 2023/970 on pay transparency expired on 7 June 2026, and Germany has yet to table a draft bill. Without national implementation, the directive has no direct horizontal effect between private employers and employees.

For public-sector employers, a vertical effect may apply, meaning state agencies could be held to the directive’s standards. In the private sector, specific provisions—such as the expanded right to information for job applicants or the joint pay evaluation with works councils—are not directly enforceable. However, labour courts retain the possibility of interpreting the existing Pay Transparency Act in a directive-compliant manner.

Political summit on working-time reform

Adding a political dimension to the legal developments, a high-level meeting is scheduled today at the Chancellery. The agenda: replacing the daily maximum working time with a weekly limit.

DGB chair Yasmin Fahimi sharply criticised plans to soften the eight-hour day, instead demanding that the government invest more heavily in infrastructure. A decision by the coalition committee on the reform package is expected by the end of June 2026.

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