Factory Councils and Workers’ Co-Determination in Austria: Part 2

Co-Determination Austra Cover

This is the second part of my translation of Co-Determination at the Workplace: The Constitutional Law on Work (Vienna: Federal Press Service 1983). As I said, this is very much not an official translation, and the information in it is more than thirty years out of date, so please don’t take it as a guide to present-day Austrian employment law. As I said, I put it up because it shows the system of factory councils and associated bodies, which give Austrian, and German workers some official representation and participation in the management of factories and businesses.

Extensive Co-Determination in Personal Matters

A range of measures can only be legally enacted by the factory owner with the express agreement of the factory council:

* The execution of factory disciplinary orders.
* The planning of staff questionnaires, in so far as they are to include not only general information about the person and about the technical assumptions for the proposed employment of the employees.
* The execution of control measures and technical systems for the control of employees, as far as these measures (systems) affect human dignity.
* In so far as regulations in the collective agreement do not exist, the execution and regulation of performance related pay.

The right of co-operation of the factory council in staff matters are especially important. The factory council is to be informed in advance of staff planning, the recruitment of employees and the placement of works accommodation, at its wish matters from the employees are to be consulted with it.

That is equally valid for an employee’s proposed promotion. Promotion is every raise in employment at the factory, which is connected to a higher ranking in the pay scheme or otherwise with a rise in salary. If the factory owner infringes one of these decisions, he can only be punished with a fine.

The settlement of efficiency wages in individual cases can, if the employee himself doesn’t agree to it, take place with the consent of the factory council. The transfer of an employee to a bad work place or the infliction of disciplinary measures also requires the agreement of the factory council. Agreements of the factory council to a settlement can also be superseded by one from the Settlement Office.

Veto on Dismissal

The factory council’s position in cases of employee’s dismissal is particularly strong. The entrepreneur must inform the factory council in advance of the proposed dismissal; the factory council can contest the dismissal within a determined time through the settlement office (an arrangement for the mediation of disputes over workers’ rights which exists outside the factory).

Appeals against dismissal by the factory council is allowed in two cases: if the dismissal has taken place because of the activities of the employee for the trade union or the factory council, and if the dismissal is socially unjustified. A dismissal is socially unjustified, which adversely affects the employee’s present interests. Dismissal is nevertheless also permitted in this case, if the entrepreneur brings proof, that the dismissal is based on conditions, which lie in the person of the employee and adversely affect the factory’s interests or factory requirements oppose the further employment of the employee. In practice that means, that a dismissal, which means social hardship for the person dismissed, is only then admissible, if the dismissed person has allowed any such offence to be his fault, or if it has been unavoidable because of a necessary reduction of the employee’s condition.

On the basis of the factory council’s possible veto against dismissal, it is necessary that the entrepreneur establishes contact with the factory council early before the proposed dismissal measures and discusses matters precisely. Pains can be taken with that, to find ways, in which the necessary measures can be carried out with as little social difficulties as possible. Frequently the help of the state administration of the labour market is is also called on.

Economic Proposals

In the frame of the factory council’s right to co-operate in economic matters the factory owner has to give information to the factory council about the economic position of the factory, the type and size of production, orders in hand, quantity and value of sales, investment plans, as well as about other measures to raise the factory’s efficiency. The factory council can lay before the entrepreneur proposals on all these areas. In middle and larger factories the entrepreneur has to convey annually to the factory council the balance, including the accounts of profit and loss. The factory council is also to be given supporting documents, and explanations as required, to understand them.

The entrepreneur is further bound to inform the factory council of planned changes to the factory, as early as possible and consult with it about them. Changes to the factory comprise especially the reduction or closure of the whole factory, the factory’s transfer, its combination with other factories, changes to the factory’s purpose, equipment, work and factory organisations, the introduction of new working methods, the introduction of measures for rationalising and automation, and of considerable significance and change for the factory’s legal forms or property relations. The factory council can deliver proposals for preventing, removing, or ameliorating the detrimental consequences of such measures for the employees. The factory council also has to take into consideration with that the factory’s economic necessities. In factories with at least 20 employees a factory agreement can be concluded over appropriate measures.

The factory council is further entitled to co-operate in the company’s organs in joint-stock companies. These rights, recognised as ‘co-determination’ as well as the right to invoke the state economic commission are handled in more detail later.

Legal Protection for Factory Councils

The law provides for the protection of the members of the factory council from arbitrary dismissal by an entrepreneur, that the dismissal of a member of the factory council can only take place with the agreement of the Settlement Office. The Settlement Office is only allowed to agree to the dismissal of a member of the factory council, if the factory council’s workplace does not exist any more because of alterations to the factory and he can not be employed any more in one of the other workplaces in the factory, if the member of the factory council is not able to perform his work any more, or if he persistently violates his duty. A dismissal is also possible because of quite gross offences by the member of the factory council. In all cases, in which a proposal for the dismissal or release of a member of the factory council is based on his personal conduct in the exercise of his mandate, the Settlement Office, has to consider, whether this behaviour, was based on the function of the member of the factory council – the representation of the employee’s interests.

In practice these decisions means, that a member of the factory council can only be dismissed or released, if he commits serious, inexcusable offences, or further employment in the factory is not possible due to factory reasons (above all from the serious reduction of numbers of staff). In the last instance, nevertheless, the rule in doubt, is that the members of the factory council are the last to be eliminated from a factory.

Apart from the factory council, for which they are nevertheless not entitled to vote, there are youth trust councils, which are also convoked and elected by young people, for the protection of the special rights of youthful employees. The youth trust councils are elected similarly to the factory councils through secret ballot and exercise in collaboration with members of the factory council analogous functions for young people. They also are covered by similar protective decisions regarding the dismissal and release as factory council members.

The Role of the Trade Unions in the Factory

In connection with the business of negotiating for the employees’ organisations and the trade unions at the level above the factory, and especially in connection with the employees’ organisation in the factories, the question arises of the legal regulation of the trade union organisations. In Austria the trade unions are not subject to their own legislation, but fall under the common law on associations, which proceed from the principle of freedom of association, protected by the constitution. Legal regulations thus merely relate to which rights belong to the trade unions in their capacity as recognised bodies capable of collective agreements.

Except for the already mentioned right to concluded collective agreements, it deals with the right of access of trade union officials to the factory. The factory councils can draw on the organs of the trade unions for consultation in all matters at any time. In these cases, and so far as this otherwise necessary for the exercise of the powers granted to them through the Constitutional Law on Work, the factory owners have to grant the organs of the trade unions access to the factory. He is to be informed prior to the forthcoming visit. Further, the organs of the trade union are to be invited to the factory assembly and also in these cases access is to be granted. The factory council is free to consult a representative of the trade union for the regular consultation with the factory owners mentioned above. It has to inform the factory owner in time for this work. In factories, in which there is no factory council, the trade union can take the initiative under agreed conditions through which a factory assembly is convened to prepare a factory council election.

The constitutional law on work also establishes that staff organs in the factory should proceed with the realisation of its tasks in agreement with the trade unions.

According to the statutes of the Austrian Federation of Trade Unions the elected members of the factory council (as far as they belong to the trade union, which is almost always the case) automatically constitute the trade union’s board in the factory group. In trade union practice, this means that the factory council elections, and also equally, as a rule, the original elections for the trade union functionaries, are elected in an indirect electoral system from the local level to the district and land level up to the federal level.
The Factory Agreements

In principle the entrepreneur and the factory council are free to conclude agreements, which also have effects on the particular work negotiations according to prevailing jurisdiction. Such agreements are met above all in the area of wage rights. In its frame, for example, are agreed higher wages than the set minimum wage established in the collective agreement. Beyond this are special regulations concluded for wage additions, frequently at the factory level. There are nevertheless factory agreements, which are naturally legally dependent on the agreement of the factory council, such as the initiation of a disciplinary order, the introduction of staff questionnaires, as far as it does not only deal with general information on their person, furthermore the execution of control measures, if these affect human dignity (for example, control system to tap telephone conversations) and finally regulation of remuneration for performance, which means payment systems, which rest on performance (for example, piece-work). The last regulation is only valid, as far as the collective agreement does not assign a regulation.

Free factory agreements are not especially regulated in the Constitutional Law on Work, which are concluded on the basis of the law itself or on the basis of the authority of collective agreement. The law provides a whole range of matters, about which such factory agreements can be concluded between the entrepreneur and the factory council. Even the settlement of a factory agreement can be compelled in several matters. If a factory agreement in these cases is not reached, a mediation agency makes a decision on the offer of one of the conflicting parties, which is proportionally put together from the representatives of the employer and employees.

The settlement of a factory agreement is compelled about the following questions in the form outlined:

* General orders, regulating the conduct of the employees in the factory.
* General establishment of the beginning and end of the working day, the duration and position of breaks and the division of work time in particular days of the week.
* The type and means of deductions and especially the time and place for the payment of salaries.
* Measures for the prevention, removal or amelioration of the consequences of an alteration to the factory, as far as this brings with its present disadvantages for everyone or an increased part of the workforce.
* The type and scope of the participation of the factory council in the administration of the factory and the enterprises own training, educational and welfare arrangements.
* Measures for the use of factory arrangements and factory resources appropriate to the purpose.

Apart from these matters, about which the factory council can compel the settlement of a factory agreement, there are a multitude of subjects, about which factory agreements are likewise possible with a legally valid action between the factory council and the management of the enterprise. To these matters belong, among others:

* Directions for the award of works accommodation
* Measures for forms of work according to human justice
* Methods of making proposals in the factory
* Profit-sharing systems
* Factory pensions and payment of retirement money
* Methods for making a complaint in the factory.

Altogether 24 areas of rights are specified in the law, about which factory agreements can be concluded. This specification is an estimate. Agreements between enterprise management and factory councils about other matters are merely free factory agreements, whose legal validity would have to be bested in individual cases.

Tertiary Representation of Employees in the Supervisory Councils

Austrian enterprise law also provides for a supervisory organ for joint-stock companies apart from the organs of complaint for the daily business management. As a rule, this supervisory organ is called the Supervisory Council. Especially extensive powers fall to the share of the supervisory council in joint-stock companies, and partly in co-operatives. In joint stock companies the supervisory council elects the members of the board, which applies itself to the business’ management.

The Constitutional Law on Work now gives the factory council (where there are several factories, the central factory council) the right to appoint a third of the members of the supervisory council from the circle of the members of the factory council. The members of the supervisory council, who have been sent by the employees must thus be serving members of the enterprise.

The employee’s representatives in the supervisory council fundamentally have the same rights and duties, as those members of the supervisory council elected by the businesses meetings of the shareholders. However, apart from a majority of votes in the supervisory council a majority of the votes of those members of the supervisory council, who were elected by the shareholders’ meetings, is required for the appointment of the board of managing directors and the election of the chairman as well as its first representation.

Two of the workers’ representatives in the supervisory council in particular also have the possibility to demand at any time a report from the board about company matters, including their relations tot eh group of enterprises.

In combines, in which the parent company employs less than a third of the employees of the whole combine, there is the possibility, for the factory councils of the daughter companies to cooperate in the election of employees’ representatives in the parent company’s supervisory board.

The decisions about the tertiary representation in the supervisory council for joint-stock companies are valid independently of the numbers of their employees. A tertiary representation in the supervisory council, is also provided with that to companies with a limited liability, also independently of the number of its employees, although such companies must only then appoint a supervisory council, if they employ more than three hundred employees. Tertiary representation in supervisory councils first comes into affect in co-operatives, if they employ at least 40 employees.

These regulations, which have been fought about particularly vehemently, for Austria mean a present broadening of the right of co-determination in factory organs. Up to 1974 it was only provided, that two representatives of the factory council should belong to the supervisory council in joint-stock companies. In other forms of companies generally not representation of the workforce in the supervisory council was prescribed. A representation of the employees in the managing organs of the companies (like, for example, in the board of directors of joint-stock companies) is not striver for by the Austrian trade unions.

The State Economics Commission

In factories with more than two hundred employees the factory council can raise an objection with the entrepreneur against alterations to the factory or other economic measures, as far as they bring with them disadvantages for the employees. A factory closure can be delayed for four weeks through this objection. If no agreement is reached in direct negotiations between factory council and the enterprise management about the planned measure, a mediation commission can be called in, formed proportionally by the sides of the employers and employees, whose task it is, to mediate and work towards an agreement of the conflicting parties. The mediation commission can nevertheless only then pronounce an award, when both the conflicting parties submit themselves before its award.

In factories with more than four hundred employees, if the efforts of the mediation commission are in vain, an appeal can the be raised above the Austrian Trade Union Federation with the State Economics Commission. Apart from representatives from the side of the employers and employees, representatives from the federal government also belong to the State Economics Commission. It is also their task to mediate between the conflicting parties and to deliver suggestions for the settlement of the points at issue. If an agreement also is not reached with the help of the State Economic Commission, the factory owner has to convey all the necessary supporting documents to this commission for it to handle the objection. The State Economic Commission has to establish in the form of an expert opinion, whether the objection is justified.

Agencies of Labour Constitution

The agreement offices mentioned, which, for example, have to decide in questions of dismissal, to which representatives nominated by the state also belong, apart from the representatives from the sides of the employers and employees, are permanent state agencies. These are to make decisions according to hearings of the employers’ and employees’ organisation.

The mediation agency, which, for example, is responsible for the enforcement of factory agreements, is newly assembled for every particular case of conflict. Representatives of the sides of the employers and employees belong to it, in which, in each case, a representative on each side of the factory in question should be represented in the mediation agency. It is presided over by a professional judge.

Rights and Duties

The entire Constitutional Law on Work is based on the principle mentioned at the beginning, which is also anchored in the text of the law: the goal of the decision about the constitution of the factory and of its application to it is to bring about an equalization of interests to the welfare of the employee and the factory.

For that the rights of the factory council have been so far developed, that in practice is becomes necessary for the entrepreneur to strive for a successful co-operation with his factory council. As the law gives the factory council the possibilities of taking an influence in so many particular questions, that a factory, in which there is a lasting conflict between management and the factory council, would be severely hampered in his work.

There far-reaching possibilities for the factory council and the necessity, which results from it, of the management and factory council co-operating, means, however, not just rights, but also duties for the factory council. The factory council has with its possibility of making co-decisions, then naturally as has a co-responsibility. It bears this responsibility not only towards the enterprise, but above all towards the employees, who have elected it, and which it has to represent.

The efforts for an equalization of interests are not just a lip service for the entrepreneurs and trade unions of Austria. That is proven amongst other things by the parliamentary decisions agreed about the Constitutional Law on Work, which has been realised after protracted negotiations about its extremely complicated matters at the end of the 1973. Once again the system of partnership has provide, that is has contributed so much to economic and social progress in Austria.

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