EU: CJEU indicates that Germany’s legislation can retain the right for representatives of establishments in Germany to participate on supervisory boards
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EU: CJEU indicates that Germany’s legislation can retain the right for representatives of establishments in Germany to participate on supervisory boards

In an ruling delivered on 18 July, the CJEU declared that the EU Member States can legally choose to retain their right of representation and the collective defence of workers’ interests within the management an supervisory organs of a company with employees working within the Member State and that this does not breach the EU principle of non-discrimination not does it constitute an impediment to the free-movement of labor. 

A German shareholder in the tourist company TUI brought a case to court on whether Germany’s Co-Determination Act, which requires joint participation on the supervisory boards of large companies with more than 2,000 staff, actually violated the principle of non-discrimination as guaranteed by the treaty on the Functioning of the European Union (TFEU). According to the shareholder, 80% of TUI staff cannot be represented on the board because they cannot present any candidate for a seat on the board. The company currently employs approximately 10,000 staff in Germany with a further 40,000 across other EU Member States. In addition, the complainant maintained that the act also runs counter to the right for free movement of workers because it constitutes an impediment to the expatriation of a Germany worker to a TUI subsidiary located abroad whereby s/he would then have lost the right to representation on the group’s supervisory board.The officially recognized and accepted goal of the complainant was to call into question the German system of co-determination.

In line with the conclusion given by the Advocate General, the CJEU’s Luxembourg based judges held that the TUI’s non-resident employees working in Germany did not fall within the scope of the EU principle that prohibits discrimination (based on nationality) that only operates for European nationals having exercised their right to free-movement. Thus the CJEU only had competence to decide on the issue of the treatment of employees who leave Germany to work in subsidiaries abroad. On this point, the judges declared that even if EU law aims to promote free-movement of people by banning all national measures liable to hinder or render free-movement less appealing, it cannot guarantee to a worker that moving to a Member State other than his Member State of origin will be neutral in terms of social rights, since, given the disparities between the Member States’ social schemes and legislation, such a move may be more or less advantageous for the person concerned in that regard.” In other words EU law ‘does not grant to that worker the right to rely, in the host Member State, on the conditions of employment which he enjoyed in the Member State of origin under the national legislation of the latter State.’

The court added that the EU Member States can legally choose to retain their right of representation and the collective defence of workers’ interests within the management an supervisory organs of a company with employees working within the Member State of the parent company just like they can decide to raise staff numbers in subsidiaries located abroad.

CJEU 18 July 2017, C‑566/15, Erzberger.

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