Artificial Intelligence and German Labor Rights

Artificial Intelligence (AI) is now on everyone's lips. It is transforming our world. At first, Italy banned the use of ChatGPT. Europe puts the worries into perspective. Those who can, make use of the new technology. More and more companies are implementing AI systematically to boost efficiency, e.g. process automation, people analytics and recruiting. It is now becoming clear that AI is fundamentally changing the workplace.

German Study Commission on AI

It was in 2018, that the German Bundestag established a Study Commission on Artificial Intelligence. In their final report in 2020, the commission sums up: "In order to protect the employees’ influence on how to safeguard their rights of privacy and personality, avoid work overload, master future business transformations and reshape working conditions, a refresh of German labor rights is essential to adequately respond to the rapid progress of AI technologies and to reinvent the existing system of balance between workers' and employers’ rights." (Report of the Study Commission, Oct. 28, 2020, BT-Dr. 19/23700, p. 38).

"Rethinking German Labor Law" - AI enters the German Works Constitution Act (BetrVG)

Germany made a first attempt in this direction: "Artificial Intelligence" entered German labor laws as a new terminology when the German Works Constitution Act (BetrVG) was updated in 2021 through the Works Council Modernisation Act (Betriebsrätemodernisierungsgesetz).

In more detail:

• AI-driven IT tools
  
  Even before the law amendment, the works council had to be involved when implementing AI-assisted IT tools.  If a company intends to implement a new software system, particularly when based on AI, the company must consult with the works council and find an agreement prior to go-life, Sec. 87 (1) No. 6 BetrVG (German Works Constitution Act).

• Additional expertise required?
  
  What is new since 2021, however, is that it is easier for the works council to call in external expertise in case the company wants to make use of AI tools, Sec. 80 (3) BetrVG. The explicit motivation of the German lawmaker by involving the works councils at an early stage is to build trust in AI technology and gain acceptance within the workforce (BT-Dr. 19/28899, p. 2). That this can be achieved just by strengthening statutory labor rights is not free of doubt.

• Working procedures and operations
  
  Works councils must be involved in the planning of work procedures and operations. This regulation has been in the law since. However, the German lawmaker made clear that this also applies when AI is used in the planning of these work principles, Sec. 90 (1) No. 3 BetrVG. The change in law has probably not yet been widely recognized. It also may be required to rethink the present interpretation of the legal term "work procedures and operations" to achieve the legislator's goal to engage the works council at an early stage prior to the application of AI in the company.  

• AI in recruiting & selection processes
  
  Finally, it is not surprising Germany has ruled participation rights of the works councils when establishing personnel selection guidelines with the support of AI or if AI-tools are implemented to automate selection processes, Sec. 95 (2a) BetrVG. Internationally, the role of AI in HR Management is no longer a novelty, especially in recruitment and people analytics.  

Comments

A start has been made, even though the legislator missed the target to renew the German Works Council Constitution Act (BetrVG) with respect to the rapid technological evolution. In any case, if a company intends to make use of AI affecting the workforce, there is hardly any way around the works council to comply with German labor laws.

It remains to be seen whether and when Germany is ready to pursue the national AI-strategy, i.e. to build trust in the potential of machine learning without ignoring the risks from AI. A solid foundation needs to be built within Germany’s works constitution to ensure the works council is participating but not misusing labor rights with the aim to stop the companies from using AI-technologies at all. A successful business transformation adopting AI needs extensive investment in digital skills and competences, not only to educate German works councils (cf. BT-Dr. 19/23700, p. 92).