Dusseldorf In the past few weeks, there has been a lot of rumbling in the VW works council. The reason is a judgment by the Federal Court of Justice (BGH), which could entail significant salary cuts. The Handelsblatt reported.
According to this, the losses in individual cases should account for almost half of the salary. According to Handelsblatt information, the top cuts are up to 4,000 euros per month.
But middle incomes are also likely to be affected by the verdict. The Handelsblatt is aware of the case of a leading VW works council that would drop from pay level 17 to pay level 8. Expressed in gross salaries, this means: 3,800 euros instead of 6,100 euros – 2,300 euros less per month.
The reasons for the judgment have probably been available to VW since the beginning of the week. Since then, there has been intensive consultation within the group as to what the 17-page document means for the Volkswagen works council. According to information from the Handelsblatt, the company has already sought talks with the employee representatives concerned. They will be informed in writing about the cuts in the coming days.
Federal Supreme Court ruling quashes works council remuneration after “hypothetical career”
Volkswagen does not comment on the Handelsblatt research. In a statement, the group announced that they had taken note of the reasoning behind the BGH judgment. It goes on to say: “The company will take into account the findings contained therein on the scale of works council remuneration.”
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In addition, the group points out that further lawsuits regarding works council remuneration are pending before the labor courts. “Whether and to what extent these proceedings will result in reassessments for the payment of works councils remains to be seen in the further development,” says Wolfsburg.
In mid-January, the BGH, Germany’s highest criminal court, overturned the acquittals for four VW personnel managers in a breach of trust case before the Braunschweig Regional Court. In its written justification, the BGH also conceded the works council remuneration based on the model of the so-called “hypothetical career”.
Rather, a works council salary “is to be measured according to the remuneration of comparable employees with customary development”. Exactly this passage affects the approximately 80 employee representatives at VW.
Pimped
750,000
euros per year
including bonus payments, the former Volkswagen works council chief Bernd Osterloh collected at the top.
In principle, works councils in Germany can be paid according to two models. One is based on the usual development of comparable people in the company, the other variant is the so-called hypothetical career. To put it simply, it is estimated which career path an employee would have taken if he had not been a member of the works council – a popular remuneration model for numerous works councils in German industrial companies, not just at VW.
Six-digit salaries for top works councils in Osterloh and Cavallo
A very prominent example is the former head of the VW works council, Bernd Osterloh, who started out as a line worker in the group. Later, as head of staff, he received six-figure annual salaries, peaking at around 750,000 euros including bonus payments. Osterloh is now Head of Human Resources at VW’s Traton truck division.
His successor at the head of the works council, Daniela Cavallo, will be paid according to the comparative model, which is still permissible. Cavallo earns around 100,000 euros a year, as she made public in 2021.
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A spokesman for the Volkswagen works council called the decision “a scandalous verdict” that was tantamount to a “nationwide frontal attack on co-determination”. The criticism: In the case of a core labor law issue, the BGH “as a criminal court wipes aside the years of supreme judicial practice of the Federal Labor Court”. As a result, this is now permitted under labor law, which is also prohibited under criminal law.
The employee representative receives significantly less annual salary than her predecessor Bernd Osterloh.
(Photo: imago images/Susanne Hübner)
In fact, the BGH decision conflicts with earlier judgments by labor courts and ultimately also with the Works Constitution Act (BetrVG). This de facto regulates the payment of employee representatives, dates back to the 1970s and is considered outdated and vague by a number of legal commentators.
According to the law, works councils may, to put it simply, be neither favored nor disadvantaged in terms of payment compared to other employees. In its judgment, the BGH now makes it clear that company managers violate their asset management obligations if they approve works council salaries that are too high. In case of doubt, you face a conviction for infidelity. Germany’s companies and HR managers now have to move in this narrow corridor between criminal and labor law.
If the salary is too high, a lawsuit for breach of trust threatens
The fact is: The BGH judgment is not a Lex Volkswagen, but should also change the remuneration of works councils in other companies. For decades, payment based on the model of a hypothetical career was the norm in a number of industrial groups. You all must act now.
To an observer who is familiar with questions of works council remuneration, the BGH’s statements sometimes appear as if he does not really know what he is talking about. Georg Annuß, labor lawyer
The trade union IG Metall warns that the verdict leads to “an enormous legal uncertainty” for those affected and calls on the legislator to “ensure legal clarity here”, as a spokeswoman explains.
The VW works council assumes that the employee representatives concerned will take legal action against the verdict. A spokesman says that 98 percent of all VW works council members are paid according to collective agreements. The average salaries were already comparable with those of the entire workforce before the BGH decision.
The well-known employment lawyer Georg Annuß also sharply criticized the written justification in a LinkedIn post. He wrote verbatim on the career network: “To an observer familiar with questions of works council remuneration, the statements of the BGH sometimes seem as if he doesn’t really know what he’s talking about.”
He estimates that the verdict could even go as far as the Joint Senate of Supreme Courts – that would be a legal rarity. The judgment could keep lawyers and employee representatives busy for quite a while.
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