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.
Accordingly, the losses should account for half of the salary in individual cases. According to Handelsblatt information, the top cuts are up to 4,000 euros per month. Medium incomes are also likely to be severely affected by the BGH ruling. 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.
Volkswagen did not want to comment on the Handelsblatt research and only announced in a statement that the group had taken note of the reasoning behind the judgment of the Federal Court of Justice. It says: “The company will take into account the findings contained therein on the scale of works council remuneration.” The company did not comment on the number of those affected.
Federal Supreme Court ruling quashes works council remuneration after “hypothetical career”
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.
>> Read about this: Ex-board members of VW have to go to the dock again because of the salary of the works council
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. The ex-board members Karlheinz Blessing and Horst Neumann as well as two HR managers of the car manufacturer are said to have wrongly granted high-ranking works council members lavish salaries and bonuses. The district court rated this as infidelity. However, the Braunschweig judges did not recognize intent.
However, the BGH overturned precisely this decision. In the written justification, the Supreme Criminal Court also rejected the remuneration of works councils based on the so-called “hypothetical career” model. Exactly this passage affects the approximately 80 employee representatives at VW.
Literally, it says that a works council salary is “to be measured according to the remuneration of comparable employees with developments customary in the company”. Working as an employee representative is essentially a voluntary position. According to the judges, this “forbids taking into account the hypothetical salary development of the works council in the case of a special career”.
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 in two ways. 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 many works councils in Germany, and not just at VW.
Six-digit salaries for top works councils in Osterloh and Cavallo
A prominent example is the former head of the Volkswagen 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 months ago.
>> Also read: How much can a works council earn? Surprising court decision alarms corporations
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 brushes 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)
The Works Constitution Act (BetrVG), which 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 grant works council salaries that are too high – they are therefore threatened with a conviction for breach of trust. 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
According to the employee spokesman, 98 percent of all VW works council members would be paid according to collective agreements. The average salaries were also comparable to those of the entire workforce even before the BGH decision. Accordingly, the employee representatives concerned would take legal action against the verdict.
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
With a view to the BGH judgment, Volkswagen is not a special case. 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.
The trade union IG Metall therefore 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 renowned employment lawyer Georg Annuß sharply criticized the written justification in a LinkedIn post on Wednesday. He wrote verbatim on the career network: “To an observer who is familiar with questions of works council remuneration, the statements of the BGH sometimes seem as if he does not really know what he is talking about.” He estimates that the judgment even reached the Joint Senate of the Supreme Courts could go. The judgment will probably keep lawyers and employee representatives busy for a while.
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