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What does the law say?

The works council has the right of consent when a company has the intention to introduce or change a remuneration system. A remuneration system is a method by which remunerations are calculated and allocated to certain positions or the mutual ranking of remunerations, as is the case, for example, with the classification in salary scales. The works council has no right of consent regarding primary remuneration of employees, such as the level of remuneration. The right of consent therefore only relates to the systematics of the remuneration scheme.

However, as the systematics of the determination and the level of remuneration do follow on from each other, the difference between them does sometimes remain difficult to assess, which is also evidenced by rather varying case law.

What was the decision of the court?

In a recent ruling, the court held that the amendment of a bonus scheme required consent.

In this case, after an acquisition, the existing bonus scheme was replaced by another scheme of the new US parent company. Under the new scheme, different conditions applied, such as the performance of the relevant employees, a cap on the number of employees to be rewarded within a pay scale and the available budget. As a result, fewer employees would be entitled to a bonus under the new scheme. According to the court, the decision affected the mutual ranking and represented a break with the past trend. Also, the decision was not primarily about primary employment conditions, such as basic salary. The court therefore came to the decision that prior consent should have been sought from the works council as it involved amending a remuneration scheme.