Federal Labor Court: No works councils with purely app-based control

In the world of delivery services and the platform economy, co-determination seemed to be on the rise recently. In cities like Braunschweig, Kiel, or Bremen, couriers elected their own works councils to make their interests heard by major operators like Lieferando, Uber Eats, or Wolt. However, the legal ground under these bodies has now massively given way. The Federal Labor Court (Bundesarbeitsgericht, BAG) has clarified in several decisions announced on Wednesday that purely digital control via an app is not sufficient to legally classify a delivery area as an independent operational unit (Az.: 7 ABR 23/24, among others).

The dispute revolves around a fundamental question of labor law: What exactly is an operational unit? Previously, the Works Constitution Act (BetrVG) defined it as an organizational unit within which an employer pursues specific work-related goals using personnel and material resources. The decisive factor here is the power of management, i.e., the competence to make binding decisions in personnel and social matters.

In the delivery service concerned, the structures are divided into two parts. There are "Hub-Cities" where, in addition to the drivers, administration and back office are located. On the other hand, there are "Remote-Cities": here, only the couriers are active, controlled by algorithms and a central app. The employer contested the elections in these outposts, arguing that the necessary on-site management infrastructure was lacking. The Federal Labor Court has now upheld this view. A grouping of drivers into a delivery area with its own duty roster is not sufficient to establish the organizational independence required for an operational unit.

Judiciary does not want to close the gap

The hope of trade unions that the highest German labor court would dynamically expand the definition of an operational unit in the course of digitalization has thus been dashed. The judges in Erfurt emphasize that the standards of the BetrVG also apply when employment relationships are essentially digitally controlled. A minimum level of organizational independence must be present. A mere community of interest among drivers using the same algorithm does not meet these criteria.

With this, the Federal Labor Court follows the line that experts had already outlined. In 2021, the legislator lowered hurdles for elections with the Works Council Modernization Act, but did not touch the core of the definition of an operational unit. The court now makes it clear that it is not its task to fill this legislative gap through far-reaching case law.

Bundesrat calls for reform against "Union-Busting"

In July, the Bundesrat already lamented that current case law effectively denies employees in delivery areas demarcated by app access to their own co-determination. The chamber of states therefore called on the legislator to adapt the definition of an operational unit to the reality of the digital working world. Especially in the founding phase, such bodies must be better protected from employer interference. The states see the danger of "union-busting" here, when digital structures are used to make the formation of works councils difficult or impossible through organizational tricks.

The decision comes at a critical time, as regular works council elections are scheduled nationwide in the spring. For many election committees in the delivery, retail, and service sectors, the ruling feels like a cold shower, but at the same time offers legal certainty. Those who organize elections in digitally fragmented structures must carefully examine whether the targeted unit is even eligible for a works council. Otherwise, subsequent invalidity by the labor courts is a risk.

The ball is now in the legislator's court. The Ministry of Labor must decide whether to follow the Bundesrat's call. Until then, the location-bound concept of management remains the gold standard – even if the boss only appears as an icon on the smartphone.

(vbr)