Germany: Artificial intelligence soon in the focus of works councils?

Works councils already have a strong position in digitalisation projects. On the one hand, section 87 of Works Constitution Act (Betriebsverfassungsgesetz) grants them a co-determination right regarding the implementation of technical applications, including software, which allow conclusions about the behaviour or performance of employees. This applies to most software solutions. On the other hand, the implementation of new software solutions is often challenging for employers from a data protection law perspective, particularly if the software is used within a group of companies and data is transferred to the USA or other countries which do not provide for data protection standards that are comparable to those in the EU. Although works councils do not have a co-determination right in this regard, they are entitled to check compliance with European and national data protection laws and can thus force the employer to implement data protection requirements in the best possible way. In practice, the implementation of digitalisation projects therefore often requires difficult and lengthy negotiations with the works council.

Focus on artificial intelligence

The Works Council Modernisation Act, which came into force on 18 June 2021, further strengthens the rights of the works council in digitalisation projects and directs attention to the use artificial intelligence in human resources. The Act does not define the term artificial intelligence and does not limit it to so-called "strong artificial intelligence" in the sense of self-learning systems. The use of so-called "weak artificial intelligence", for example algorithms that facilitate the decision-making process, is thus sufficient.

Artificial intelligence has so far been used primarily in the application process to make the selection of applicants more efficient and to improve the quality of the selection process. The questions that arise in this context are discussed in particular under the heading of "algorithm-based discrimination". Another example are internal trainings of sales employees, where artificial intelligence conducts a conversation with the employees and checks they name certain keywords.  

Beyond the examples mentioned, there is a wide range of possible applications of artificial intelligence, including, for example, performance evaluations, promotion processes, assessments regarding the required headcount and identifying savings potentials in preparation of restructurings.

Involvement of an expert admissible

It is to be expected that works councils will take a closer look at the use of artificial intelligence with expert assistance in the future: Section 80 para 3 of the Works Council Constitution Act was amended by the Works Council Modernisation Act in a way that the involvement of an expert by the works council is deemed necessary if the works council has to assess the introduction or use of artificial intelligence in order to carry out its duties. The works council is thus given the opportunity, for example with the help of an IT expert, to examine whether artificial intelligence is being introduced or applied. The works council must still conclude an agreement with the employer for this purpose. However, the employer will no longer be able to reject the request by arguing that the involvement of an expert is not necessary.

Further newly introduced rights of the works council

Furthermore, Section 90 para 1 no. 3 of the Works Council Constitution Act was amended and now provides that the employer must inform the works council in a timely manner about the planning of work processes and work procedures including the use of artificial intelligence. Section 95 of the Works Council Constitution Act stipulates that the participation rights of the works council regarding personnel selection guidelines within the meaning of Section 95 of the Works Council Constitution Act also exist if artificial intelligence is used in the establishment of those guidelines.

Overall, it is to be expected that works councils will take a close look at digitisation projects with the help of experts in the future in order to examine whether artificial intelligence is used and whether and how it supports the employer's decision-making process.