Co-determination in abeyance: Establishing a works council mid-change

When companies are preparing for extensive restructuring, the works council plays a key role: It is the main point of contact for balancing interests and social plans and is therefore an integral part of the social compensation mechanism. However, things get interesting in situations where there has been no works council to date and one is only being established after the decision to change operations has already been made internally or even communicated. A recent ruling has once again brought this constellation to light – and shows how complex the timing of co-determination rights can be.

When do participation rights arise?

Co-determination rights in the event of operational changes require that a works council exists at a point in time when it can actually still influence the employer's decision-making process. The decisive factor is therefore not an abstract phase in the process, but the question of whether the business decision is still negotiable.

Case law generally assumes that:

• As long as the employer is still in the planning phase, decisions are typically not final, and the works council can use its scope for action.
• The right to a reconciliation of interests and a social plan does not arise only when individual measures are implemented, but already at the moment when the planned operational change is finalised – and this is precisely where the complex distinction begins.

Until now, it has been disputed whether the relevant point in time ends with the completion of the planning or only when the employer begins implementation, i.e. takes irreversible steps.

New momentum from the Federal Labour Court 2022 (decision of 8 February 2022 – 1 ABR 2/21)

A decision by the Federal Labour Court in 2022 brought new momentum to the debate. It stated that an operational change is "planned" as long as the employer has not yet begun implementation. Up to this point, a works council can still exert influence even if the decision itself has already been prepared.

However, this wording was received with ambivalence in practice:

• On the one hand, it sounds more generous because the start of the actual implementation is defined as the limit.
• On the other hand, it appears narrower than older case law, which focuses more on the completion of the planning phase – a point in time that may be significantly earlier.

This lack of clarity has led to considerable uncertainty, especially for companies with long lead times, multi-stage approval processes or comprehensive communication requirements.

LAG Düsseldorf 2025 (decision of 23 September 2025 – 3 TaBV 39/25): Clear limits to co-determination

The Düsseldorf Regional Labour Court has now clarified the discussion and drawn up a practical distinction. The core of the decision is that the co-determination rights of a works council established only later end as soon as the business decision has been finalised and communicated externally.

The court clarifies several points in this regard:

• Concrete implementation measures are not relevant. Terminations, transfers or termination agreements do not even have to have taken place yet.
• What is decisive is rather the binding nature of the decision. If the key points – i.e. whether, when and how the measure will be implemented – have been determined and communicated to employees, authorities or the public, the operational change can no longer be influenced.
• A subsequent works council election cannot "reactivate" co-determination. A newly established works council enters a process whose decisive part has already been completed. Objectively speaking, it is no longer possible to exert influence.

The court thus deliberately distances itself from a narrow interpretation of the wording of the Federal Labour Court and emphasises the importance of actual opportunities to exert influence rather than a rigid phase logic. In practice, this creates noticeable clarity: Company decisions should not be "reopened" by the subsequent establishment of a works council if the relevant course has already been set.

What does this mean for employers?

This results in a number of practical recommendations for companies, especially in situations where it is foreseeable that the workforce will want to establish a works council:

• Clearly document internal decision-making: The point in time at which the decision to change operations was finally made should be clearly recorded.
• Make communication steps traceable: Communications to employees, authorities or external stakeholders not only serve to provide information, but can also document that the decision has long been binding.
• Prepare further implementation steps at an early stage These include internal guidelines, coordination with authorities, and the preparation of severance and retention bonus models.
• Avoid the risk of abuse: Companies are allowed to continue with operational changes without waiting for a works council to be established. However, they are not allowed to choose a course of action that is clearly aimed at preventing or delaying an election.

This careful documentation helps to prove in the event of a dispute that the operational change had already been fully decided and that a subsequent works council election could therefore no longer trigger co-determination rights.

Outlook

The question of the time limit for the creation of co-determination rights remains exciting. A case is pending before the Federal Labour Court (1 ABR 4/26) for clarification by the highest court. The coming months or years could therefore bring a reassessment – with high relevance for restructuring projects of all sizes.

Until then, the decision from Düsseldorf provides a clear, practical framework for guidance: the decisive factor is the actual influence of the works council – not the timing of individual operational steps.