While law does not dictate that a works council must be established by a company, workers in any private company with more than five employees are entitled to have one. The size of the council depends on the size of the company (e.g. 51-100 employees, a seven-person council).
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Works councils have extensive and substantial rights, from overseeing the implementation of employment laws and rights, to issues around appointments, contract terminations and even the layout of a given workplace.
They differ from German unions in that unions are generally not made up of a company’s employees and are a group that represents an industry’s workers. In Germany, employers have unions too and together with workers’ unions, they negotiate wages and pay scales.
While works councils are an important part of the overall co-determination model, perhaps the most influential dimension of co-determination is the right it gives workers in big companies to elect up to half the members of a company’s supervisory board, and one third in a company with 500-2,000 employees.
Companies’ supervisory boards make the big decisions in corporate life and German workers, via the co-determination model, have a big say in those decisions.
In Germany, large public and private companies have a supervisory board (elected by the shareholders and the workers), which in turn appoints and oversees a company’s board of management, which takes care of the day-to-day running of the company.