Works Council election at Porsche invalid

The Baden-Württemberg Regional Labor Court (“LAG”) has confirmed the invalidity of the works council election at the Porsche car manufacturer's Zuffenhausen site. The reason for this was that employees at the Leipzig site had also voted (decision of March 19, 2024 - 15 TaBV 2/23).

Facts of the case

The decision of the LAG Baden-Württemberg is based on the following facts: The original seven employees eligible to vote (applicants) contested the election of the 41-member works council for the “Zuffenhausen/Ludwigsburg/Sachsenheim plant” of Dr. Ing. h.c. F. Porsche AG, Porsche Logistik AG and Porsche Logistik AG, which was held from March 14 - 18, 2022. The company structure on which the works council election is based deviates from the basic model of a company in accordance with the Works Constitution Act. Among other things, it is based on management agreements that Dr. Ing. h.c. F. Porsche AG has concluded with its subsidiaries and on agreements concluded between Dr. Ing. h.c. F. Porsche AG and its subsidiaries with the IG Metall trade union. For example, a collective agreement concluded in 2013 provided for the extension of the Works Council's responsibility for the “Zuffenhausen/Ludwigsburg/Sachsenheim plant” to the Porsche Dienstleistungs GmbH plant in Leipzig (gastronomy).

The applicants complain that the election took place under misinterpretation of the definition of an establishment permitted under works constitution law, because the electoral establishment should not have been formed as it was, even on the basis of a collective agreement. The employees of Porsche Dienstleistungs GmbH at the Leipzig site should not have been allowed to participate in the works council election. The allegations of manipulation in the conduct of the works council election originally raised by the petitioners were no longer upheld by them at the end of the proceedings at first instance. The Stuttgart Labor Court declared the works council election invalid in its ruling dated April 6, 2023 (case no. 21 BV 54/22). The election had taken place with a misunderstanding of the definition of an establishment, which constituted a breach of essential election provisions of the Works Constitution Act. The employees of the catering trade in Leipzig were not allowed to participate in the election. The collective agreement from 2013 did not effectively include the Leipzig site in the jurisdiction of the works council responsible for the “Zuffenhausen/Ludwigsburg/Sachsenheim plant”.

Dr. Ing. h.c. F. Porsche AG and its subsidiaries as well as the Works Council have filed an appeal against the decision of the Labor Court with the Baden-Württemberg State Labor Court. They continued to defend the election against the challenge, which was only pursued by three employees in the appeal instance. The employees of Gastronomie Leipzig were effectively included in the election on the basis of the jointly managed company and - in accordance with Section 3 (1) No. 3 of the Works Constitution Act - on the basis of the collective agreement from 2013. They had also been included in the list of voters, against which no objection had been raised within the relevant deadlines prior to the election. The possible incompleteness of the collective agreements with which the electoral establishment was formed in its entirety, which was also discussed before the Regional Labor Court, had at least been remedied by a further confirmation collective agreement concluded in 2024 between all three companies and IG Metall with retroactive effect to the time of the election.

Reasons for the decision

The Regional Labor Court rejected the complaints of the works council and the employers. In the opinion of the court, the concept of a company was misunderstood in the election. If an organizational unit under works constitution law within the meaning of Section 3 para. 1 no. 3 of the Works Constitution Act (“BetrVG”) is to be formed as the basis of a “different employee representation structure” and is to be considered a company (Section 3 para. 5 BetrVG), all companies participating in the organizational unit under works constitution law would have to agree on this accordingly in a collective agreement. In this case, however, not all employers involved had concluded such collective agreements. The additional collective agreement subsequently concluded in 2024 was not able to rectify this with retroactive effect to the election date of 2022. The challenge on the grounds of misunderstanding the definition of an establishment was also not a challenge based on the incorrectness of the list of voters. The failure to meet the relevant deadlines for an objection to the list of voters was therefore irrelevant.

The LAG has allowed an appeal on points of law to the Federal Labor Court.

Note for the practice

As the decision is not yet legally binding, the elected works council will therefore remain in office for the time being. The consolidation of companies with such a large geographical distance requires a mandatory explanation that the representation of the employees' interests does not suffer from this situation in practical terms. This decision also shows once again that works council elections are difficult in complicated company law and geographically distant (matrix) structures. This is compounded by the increasing number of (remote) employees working from home in Germany and abroad. It is therefore always worthwhile - for employees, works councils and employers - to take a close look and check for which employees and which companies works councils (can) be elected.