The recent terminations at Twitter have once again shown how different the protection against dismissal is in German and American labor law.
U.S. employees will probably receive continued pay for 60 days, or two months, under the WARN Act, and that’s it. If Elon Musk offers the dismissed employees (instead) a severance payment amounting to three months’ salary, that is considered quite fair by American standards. After all, Musk is paying 50% more than he has to.
In Germany, we would rather draw up a social plan that grants the dismissed employees (at least) 1 gross month’s salary per year of service as severance pay, in addition to compliance with the notice period.
Where do these differences come from, and which system is actually better?
Germany has some of the strictest labor laws in the world, with a key focus on protecting the rights of employees. To ensure a balanced relationship between the employer and employees, two systems exist alongside legislation to bridge the gap that can exist in corporate systems. The work undertaken by a German Works Council within companies is the system that focuses on company-level matters for decisions that impact employees.
Key Takeaways
1. A German Works Council (‘works council’, or, ‘Betriebsrat’) is a group of elected employees that represent the interests of a company’s workforce. A works council collaborates with management on key decisions within the company.
2. Although it is formally mandatory for companies with five or more permanent employees to set up a works council, this does not mean that all companies do. Companies can operate without a works council until it is formally requested by employees to hold an election to set one up.
3. The Works Constitution Act grants elected members of a works council a range of rights to effectively conduct their purposed tasks: This includes a right to information, a right to consultation, a right to decline, and a right to co-determination.
4. There are various pros and cons to having a works council within any given company. The pros include that works councils protects employee rights, provide a unified voice for negotiation with employees, are free for employees, and increase productivity. The cons include the costs of operation and maintenance, arguably lesser employee freedoms, and longer decision-making timeframes.
It is said that a salary increase should have little effect on motivation at work. Appreciation and more responsibility are the key. But that’s not entirely true – because salary does play a role in employee satisfaction.
Money alone does not bring happiness – this is the result of countless job studies that have examined how the level of salary affects the motivation of employees. Sometimes experts are looking for the ideal salary that makes people happy. Time examines how salary increases affect employee engagement. The answers that these studies give to the salary questions are similar: salary increases only have a minimal effect that quickly fizzles out over time. If you want to motivate employees or keep them in the company, you should use other means as a boss.
All of this may be true, but it is not the whole truth. “Money does not necessarily generate motivation, but if the payment is not right, demotivation can arise,” says psychology professor Maika Rawolle from the University of Media, Communication and Economics in Berlin to the “Süddeutsche Zeitung”. The unclear expression of “incorrect salary” is very correct, because there are some salary constellations that reduce motivation. Everyone agrees: It’s about injustice, that is, about a comparison.
Relations between German employers and employees are extensively regulated under German labor and employment law. German labor and employment law is strongly biased in favour of employees and is probably best referred to as the “employee protection law”.
The German government is drafting new plans to smooth the entry process for foreign skilled workers. It’s a move that companies say is long overdue: The country’s aging workforce is a growing liability, while positions in IT and software development are notoriously hard to fill. More companies are now looking abroad for help.
YouTube comments:
“I am a Spanish Software engineer living in Germany, I love this country. The language barrier was difficult, but my german wife helped me a lot.”
“German companies should start paying more, to begin with. I have hard time believing they can attract top talent with present level of salaries. Even their doctors are leaving en masse to other countries.”
“To compare German passports with Titanic tickets might be too harsh of a comparison. But if German thinks its innovation can be fueled by mercenaries, that kind of human resource policy is doomed to fail. Companies give options and shares to encourage employees to give their best and be loyal. There’s a reason electric cars are re-imagined in the USA, by immigrants, not in Germany where all the automobile giants reside. But well, some people try to steer the Titanic, some probably are proud just sinking with the tickets in their hands. If there’s a book that fits German’s approach, it’s “Only the Paranoid Survive”, the thing is 🙂 Germany often is paranoid about the wrong thing.”
“There is a very specific and a systematic reason as to why in the 50 years of the software/Internet/IT industry, there has NOT been a single non-American company which has gone on to become a globally profitable, consumer product, and a publicly traded company. Germany still lives in the 19th century when it comes to their traditional companies. You have to accept the fact that English is a global language. No one speaks German in Asia, for example, which is the two thirds of the world population.”
“They are more skilled workers in Germany than they need, the problem is the companies require you to speak fluent German language which is impossible in one year. They need us but they don’t want us!”
A new report shows where in Germany it’s easiest to strike that perfect balance between career and personal life. Sorry Berlin and Frankfurt – you didn’t make it into the top ten.
Germany has relatively strict employment and labor laws: Many provisions have a special emphasis on protecting employees. However, these laws also provide clear guidance for employers on individual employment contracts, employee benefits and entitlements, and rules around termination and dismissal.
The rich in Germany been never been as well-off as they are today and assets have never been so unevenly distributed. But who are they? How do they live? And what do they think of their country?
A journey into the discreet world of the super-rich. One percent of Germans own over a quarter of the country’s assets, whilst half of the country’s citizens have no assets at all. But while the German media report on the growing poverty in the country on a daily basis, little is known about the super-rich. They keep a very low profile and can walk the streets unrecognized.
While other European countries make the transition to cashless societies, Germany still has a stubborn affection for a pocket full of loose change. Rachel Stewart investigates the very specific German attitude to money.
The works council represents the interests of all employees. In our video clip you will find out when and to what extent a works council must be involved and what a head of HR of a major company with a works council has to bear in mind. For further information please visit