Perennial issue: software vs. co-determination (Section 87 (1) No. 6 BetrVG) - On the trials and tribulations of the German Federal Labour Court

Section 87 (1) No. 6 BetrVG: wording and history

The legal basis for co-determination in the case of technical equipment is Section 87 (1) No. 6 BetrVG. According to this provision, the works council must be involved in the “introduction and use of technical devices designed to monitor the behaviour or performance of the employees”. The actual scope of the co-determination provision cannot yet be surmised from the wording. Even when the provision came into force in 1971, its current significance could not be foreseen. This provision was introduced because of the special feature of monitoring by technical equipment that – unlike human monitoring – a large amount of data can be collected and processed. It is often not obvious to employees whether and how a technical device monitors their behaviour. In the explanatory memorandum to the law, the legislator states that this danger emanates from technical monitoring equipment which has the purpose of monitoring the behaviour or performance of employees.

According to the wording of the law, it is clear: the device must be specifically designed to monitor employees. Moreover, the scope of application should then only be opened if the employer wishes to use a device for monitoring purposes (even if the device per se is not designed for monitoring).

Federal Labour Court case law: designed for the purpose = possibility

Section 87 (1) No. 6 BetrVG has only gained such far-reaching significance through extensive interpretation by the Federal Labour Court. First and foremost, a 46-year-old landmark decision (Federal Labour Court, 9 September 1975 – 1 ABR 20/74), which continues to have an effect today. At the time of this decision, Microsoft was established only five months ago, and Google founders Larry Page and Sergey Brin were two years old. The Federal Labour Court stated at that time that a device was already designed for monitoring if the technical device was suitable for monitoring employee behaviour or performance. Neither an intention to monitor on the part of the employer nor an actual evaluation of the performance or behaviour-related data is necessary. The Federal Labour Court bases its interpretation on the consideration that it makes no difference to the employee whether monitoring is the objective pursued by the employer or only represents a side effect. The extent to which that reasoning can be used to justify the reinterpretation of the term ‛designed’ as meaning ‛suitable’ is not only questionable but incorrect. Since then, the Federal Labour Court case law has rightly come under heavy criticism. The Court did not provide any further specific details regarding this.

This extensive and, according to the view represented here, incorrect interpretation of the Federal Labour Court leads to an incorrect understanding of Section 87 (1) No. 6 BetrVG and ultimately to the fact that the works council must be involved in almost every introduction of a technical device. Consequently, even Microsoft Excel or an Outlook group calendar constitute such monitoring devices.

Reading tip: A more detailed article can be found in “SPA – Rapid Information for Personnel Management and Labor Law, Issue 8/2020”

In practice, it is clear what difficulties the extensive Federal Labour Court case law entails, as almost every HR-relevant issue is co-determined. Since, according to the Federal Labour Court case law, co-determination is triggered by the collection of behaviour-related data, the introduction of office software is also affected. Even an attendance list maintained in Microsoft Excel can be used for monitoring. The sum function stored in Excel enables performance-related data to be processed (Hamm Higher Labour Court (Landesarbeitsgericht, LAG), 10 April 2018 - 7 TaBV 113/16; notwithstanding this, the Hamm LAG already considered the requirements to be met even without a stored sum function). The use of the Outlook group calendar allowed the employer to make an evaluation with regard to the coordination and concentration of appointments of the employee (Nuremberg LAG, 21 February 2017 - 7 Sa 441/16).

It becomes particularly problematic where technically complex solutions such as Workday, SAP Success Factors or the already mentioned Office 365 and MS Teams are involved. The company must manage to involve the works council in good time in order to build up the necessary technical knowhow in the committee – if this is not already available in the works council itself. Otherwise, the introduction of such comprehensive systems often leads to the involvement of the conciliation committee.

Access rights of the works council: co-determination must be related to a specific task

In consulting practice, the problem often arises that works councils want to have permanent access rights to certain software solutions without any concrete reason (frequently on the grounds of “compliance with data protection principles”). It should be emphasised that data protection per se - i.e. without any reference to the tasks of the works council - is not subject to co-determination. However, especially after the introduction of the EU GDPR, there is a misconception in many companies that the works council has a say in issues relevant to data protection even if it is not involved in the task. This frequently leads to works councils demanding far-reaching access rights to system and employee data. In a decision of 9 April 2019, the Federal Labour Court (1 ABR 51/17) once again highlighted two points in this context - the works council in this case demanded the automatic disclosure of notifications of an employee’s pregnancy - in continuation of established case law:

• the works council must demonstrate that “a task of the works council exists in the first place” and that “in the individual case the requested information is necessary for the performance of the task”;
• “Therefore, when making a request for information involving sensitive data, the works council must demonstrate the existence of measures that protect the legitimate interests of the employees concerned – in this case, the female employees communicating their pregnancy.”

In another context – it concerned the permanent transfer of salary lists requested by the works council – the Federal Labour Court stated: “The works council cannot demand permanent access to detailed gross salary payrolls for the works committee under any legal aspect.” (BAG, 29 September 2020 – 1 ABR 32/19).

Co-determination is also required for updates

Furthermore, it must be taken into account that the respective software is updated on a regular basis. Section 87 (1) No. 6 BetrVG does not establish a right of co-determination of the works council in the case of a large number of updates. This only exists if the update (i.e. the change in the software resulting from an update) gives rise to the possibility of more intensive monitoring or a new quality of monitoring. However, most updates are intended solely to improve system security or user-friendliness. In all these cases, the works council already has no right of co-determination.

Nevertheless, works councils demand – often without considering their own time capacity – that all updates be subject to a comprehensive approval process. When drafting works agreements, the following conciliatory solution has proven successful:

Formulation guide: “Updating the software”

(1) The Software shall be implemented with the technical status as it exists on the date this agreement takes effect. The parties agree that updates of the software do not constitute a new introduction or acquisition of the software as long as the version or the modules contained therein are not changed by the employer and the operation of the software is carried out in accordance with the principles governed in this company agreement. Against this background, service and security updates initiated by the manufacturer of the software, as well as updates that serve to eliminate errors, can be carried out without informing the works council.

(2) The employer shall monitor developments in connection with the software, in particular with regard to privacy and security, and shall take necessary measures at its own discretion to ensure compliance with the principles provided for in this company agreement.

(3) The works council may, if and to the extent that the functionality changes with regard to the privacy of employees, lodge an objection with management regarding this change in functionality, which will examine such objection and enter into open-ended discussions with the works council in order to coordinate further measures.”

If, on the other hand, the quality of the monitoring changes as a result of the update, this constitutes a (renewed) introduction of a technical device and thus a measure subject to co-determination. The same applies, of course, if various elements or packages are additionally purchased after the introduction of a comprehensive HR suite. Particular caution is required in the case of a “SaaS model” (“software as a service”). A characteristic feature of SaaS is that the entire IT administration of the software is taken over by an external service provider. The latter also carries out maintenance work and software updates, sometimes without the client knowing anything about it. This could result in a situation contrary to co-determination occurring unnoticed.

Typical: prohibition of use as evidence

Increasingly since the introduction of the EU GDPR, works councils often state that they agree to the introduction of a software solution if a comprehensive prohibition of use as evidence is included in a company agreement. In fact, it must be noted that the works council does not have a right of co-determination in this respect. Even if such a provision were to be included, it would have no effect – at least with regard to the disciplinary measures inherent in the employer’s relationship with the employee concerned – in the event of labour court proceedings. This is because the parties simply have no regulatory competence to agree on prohibitions of use as evidence. Thus, in a judgment of 6 June 2018 (21 Sa 48/17), the Baden-Württemberg LAG pointed out the following with pleasing clarity with regard to a prohibition of use as evidence clause in a works agreement:

“Any independent prohibitions of use as evidence expressed in the company agreements in the event of violations of the regulations contained in the company agreements regarding the evaluation and collection of data do not constitute a judicial prohibition of use as evidence or a restriction of the principle of the free assessment of evidence by the court. In the absence of regulatory competence, the parties to the agreement cannot create prohibitions of use as evidence for the judiciary, to which courts belong, among others, that are broader than those provided for by current legislation.”

This understanding is of importance for companies because, according to the view represented here, the provision regarding a prohibition of use as evidence cannot be the subject of the ruling of a conciliation committee. Against this background, the following formulation is often chosen in practice when introducing software:

“Performance and behaviour monitoring

(1) Data generated is in principle used exclusively for the administration of the software (e.g. troubleshooting, access control). Access to such generated data is exclusively permitted to the persons entrusted with the administration for the purposes of system administration.

(2) In principle, the employer undertakes not to use any data that may be generated by the software for the purposes of monitoring performance and behaviour. This does not apply if the legitimate interests of the employer outweigh those of the employee.

(3) The employer’s legitimate interests are the avoidance of threats to system security as well as the prevention and detection of breaches of duty and criminal offences under the terms of the employment contract, misuse or breaches of the usage rules set out in this company agreement. The justified, concrete and documented suspicion of a violation entitles the employer to initiate monitoring measures and, if necessary, also to carry out personal evaluations, while observing the principle of proportionality. The works council must be informed of this.”

In practice, employers are well advised to involve works councils in the planned acquisition of software at an early stage. In addition, a clear understanding of the problems that regularly occur when dealing with updates and the evaluation of data (keyword: prohibition of use as evidence) must be communicated. Otherwise, the introduction of software can be considerably delayed; in the worst case, such projects can even fail completely. It usually helps if representatives of the works council attend promotional workshops of the various providers. An accompanying measure regarding software solutions can be the conclusion of a framework company agreement. For example, how to deal with later software updates may be agreed in advance in such an agreement.