Works agreement (Betriebsvereinbarung)

A works agreement applies directly and mandatorily to all employees it covers. It therefore acts like a small law for the individual establishment, without every employment contract having to be amended.

In practice you encounter the works agreement above all when a company with a works council wants to introduce new software, time recording or an employee app. That is exactly where it often decides whether an IT project starts on time or stalls for months. This entry explains the legal basis, the distinction from related instruments and the typical content of an IT works agreement. It does not replace legal advice in individual cases.

Legal basis: what § 77 BetrVG requires

§ 77(2) BetrVG specifies the form. Works agreements are to be decided jointly by the works council and the employer, put down in writing and signed by both sides. Since the reform by the Works Council Modernisation Act, the electronic form is also permitted, provided both sides sign the same document electronically. The employer must display the agreement at a suitable place in the establishment, for example on the intranet.

On the works council side, an effective works agreement requires a proper resolution of the body. If only the chair signs without a resolution, the basis is missing. It is therefore worthwhile for employers to have the resolution confirmed.

The effect is regulated by § 77(4) BetrVG: works agreements apply directly and mandatorily. Directly means that the rules take effect in the employment relationships without any further act of implementation. Mandatorily means that individual contracts may not deviate from them to the detriment of employees. According to the prevailing opinion, the favourability principle applies to more favourable arrangements in the employment contract. Employees can only waive rights arising from a works agreement with the consent of the works council.

Distinction from a regulatory agreement and a collective agreement

Not every arrangement with the works council is a works agreement. The following table shows the differences to the two instruments with which it is most often confused.

A regulatory agreement is sufficient to exercise a co-determination right in an individual case. But if the rights and obligations of individual employees are to be laid down in a binding way, a works agreement is needed.

In relation to the collective agreement, the collective agreement reservation of § 77(3) BetrVG applies. Remuneration and other working conditions that are regulated or usually regulated by collective agreement cannot be the subject of a works agreement, unless the collective agreement expressly permits supplementary works agreements. For the matters in § 87 BetrVG, according to the case law of the Federal Labour Court (the so-called priority theory), only the narrower priority of collective agreements from the introductory sentence of § 87(1) applies: co-determination is only blocked once a collective arrangement actually exists.

Enforceable and voluntary works agreements

The BetrVG distinguishes two types, and the difference has considerable practical consequences.

Enforceable works agreements concern matters in which the works council has a genuine right of co-determination. The most important catalogue is in § 87(1) BetrVG. It includes, among other things:

• questions of the order of the establishment and the conduct of employees (no. 1)
• the beginning and end of daily working time, including breaks (no. 2)
• the introduction and use of technical devices intended to monitor the conduct or performance of employees (no. 6)
• questions of remuneration arrangements in the establishment (no. 10)
• the organisation of mobile work performed by means of information and communication technology (no. 14)

In these cases the employer may not implement the measure unilaterally. If no agreement is reached, the conciliation committee decides according to § 87(2) BetrVG.

Voluntary works agreements regulate topics on which the works council has no enforceable right of co-determination. § 88 BetrVG gives as examples additional measures to prevent accidents at work, measures of operational environmental protection, social facilities, asset formation and the integration of foreign and severely disabled employees. The list is not exhaustive. A voluntary works agreement only comes about if both sides want it.

Many agreements are partly subject to co-determination. One example is a company bike leasing or bonus scheme: whether the employer provides any money at all is for the employer alone to decide, but how it is distributed is subject to co-determination under § 87(1) no. 10 BetrVG.

Conciliation committee: what happens if no agreement is reached

The conciliation committee under § 76 BetrVG is the internal arbitration body. It consists of an equal number of assessors from both sides and an impartial chair. If employer and works council cannot agree on the person of the chair or the number of assessors, the labour court decides.

In enforceable matters, the conciliation committee acts at the request of one side. Its ruling then replaces the agreement and has the effect of a works agreement. It decides at its reasonable discretion, taking due account of the interests of the establishment and the employees. Exceeding this discretion can only be asserted before the labour court within two weeks of the decision being delivered. In voluntary matters, the ruling is only binding if both sides have submitted to it.

For IT projects this means: conciliation committee proceedings cost time and money, because the employer bears the costs. Anyone who wants to introduce software therefore plans the negotiation with the works council into the project plan early on.

Termination and continued effect

Under § 77(5) BetrVG, works agreements can be terminated with three months' notice, unless otherwise agreed. No reason for termination is required. In addition, works agreements end when their term expires, by a termination agreement or by a new works agreement on the same subject.

What is decisive is the continued effect under § 77(6) BetrVG. In matters in which a ruling of the conciliation committee can replace the agreement, the provisions continue to apply after expiry until they are replaced by another arrangement. Enforceable works agreements therefore have a continued effect; voluntary ones in principle do not, unless the parties have expressly agreed on a continued effect.

For an IT works agreement this means: if the employer terminates it, it may not suddenly analyse the software as it pleases. The previous rules continue to apply until there is a new agreement or a ruling of the conciliation committee.

Works agreements for the introduction of software and apps

The co-determination provision of greatest importance for IT is § 87(1) no. 6 BetrVG. Under it, the works council has a say in the introduction and use of technical devices intended to monitor the conduct or performance of employees.

The wording "intended" is misleading. According to the established case law of the Federal Labour Court, it is sufficient that a device is objectively suitable for monitoring. The employer's intention is irrelevant. A well-known example is the decision of the Federal Labour Court of 13.12.2016 (1 ABR 7/15): an employer's Facebook page on which users could publicly post comments on the conduct or performance of employees was subject to co-determination.

Because almost all modern software stores log data, timestamps or user IDs, practically every application that processes personal data falls under co-determination: ERP systems, CRM, ticket systems, collaboration tools, time recording and also the employee app: use cases, features and costs. This applies to self-hosted solutions just as much as to software as a service.

For AI systems, the legislator has tightened the rules. According to § 80(3) sentence 2 BetrVG, calling in an expert is deemed necessary if the works council has to assess the introduction or use of artificial intelligence. The employer bears the costs.

Typical content of an IT works agreement

A robust IT works agreement describes the system so concretely that both sides can later check whether it is being operated as agreed. These building blocks are common:

1. Purpose: what is the system used for? A clear statement of purpose limits any later use.
2. Range of functions: which modules and functions are active? Often as an annex with screenshots or a list of functions.
3. Prohibition of analysis: no monitoring of the performance and conduct of individual employees, except in precisely described exceptional cases, for example in the event of a specific suspicion of a criminal offence and with the involvement of the works council.
4. Access rights: a role and authorisation concept, for example along the lines of role-based access control, that specifies who may see which data.
5. Deletion periods: how long are log and usage data stored, and when are they deleted automatically?
6. Change procedure: how are updates, new modules or changed interfaces agreed with the works council?
7. Control rights and training: the works council's right to inspect configuration and logs, and training for employees.

Especially with cloud software and frequent releases, an individual agreement per tool quickly reaches its limits. Many companies therefore conclude a framework works agreement for IT. It lays down general principles for all systems, i.e. the prohibition of analysis, data protection standards and the procedure for new applications. For each individual system, only a short annex with purpose, functions, roles and deletion periods is then added.

From a technical point of view, it is worth building these requirements into the architecture from the outset. Anyone who sets up roles, logging and deletion routines in a configurable way can implement commitments from the works agreement verifiably.

Works agreements and the GDPR

A works agreement can not only clarify co-determination questions but also serve as a legal basis for processing employee data. The basis is the opening clause in Art. 88 GDPR. According to it, member states can provide more specific rules on employee data protection by law or by collective agreements. Works agreements count as such collective agreements.

How far this leeway extends was clarified by the Court of Justice of the European Union in its judgment of 19.12.2024 in case C-65/23. The trigger was a reference from the Federal Labour Court. A group of companies had introduced the cloud-based HR software Workday and, on the basis of a toleration works agreement, transferred employee data from the previous SAP system to a server of the US parent company. An employee claimed damages under Art. 82 GDPR.

The CJEU decided two key points:

• A works agreement must comply not only with Art. 88(2) GDPR but also with the general requirements of the GDPR, in particular the principles of Art. 5, a legal basis under Art. 6(1) and, for sensitive data, the conditions of Art. 9.
• National courts can review a works agreement in full for its compatibility with the GDPR. The parties to the establishment have no margin of discretion on the question of whether processing is necessary. Provisions that violate it remain unapplied.

In practice this means: a works agreement does not create a special data protection regime. It can specify processing operations and make them transparent, but it cannot lower the level of protection of the GDPR. Principles such as data minimisation and purpose limitation must be implemented technically, for example through the principle of least privilege. If an external service provider is used, a data processing agreement is also required, which the works agreement does not replace.

Frequently asked questions about works agreements

Do I need a works agreement if there is no works council?

No. A works agreement presupposes a works council. Without a works council, co-determination under § 87 BetrVG does not apply. The GDPR nevertheless applies in full, and data processing must then be based on another legal basis.

May software be introduced before the works agreement has been concluded?

In matters subject to co-determination, in principle no. The works council can demand that use be refrained from until there is an agreement or a ruling of the conciliation committee. For test phases, temporary pilot or toleration agreements are often concluded, but these must also comply with the GDPR.

What is the difference between a works agreement and a service agreement?

The service agreement (Dienstvereinbarung) is the counterpart in the public sector. It is concluded between the public authority and the staff council under the staff representation acts of the federal government or the federal states. In terms of content, it fulfils a comparable function.

How long does negotiating an IT works agreement take?

That depends on the system, the preparation and the relationship with the works council. An existing framework works agreement shortens the process considerably, because only the system-specific annex still has to be negotiated. Complete documentation of functions, roles and the deletion concept speeds up the agreement further.