When Does a Company Need a Works Council in Germany?

Let's say you have eight employees in Germany, and you're planning to grow your team to twenty-five.

Your finance team has approved the budget, and HR is ready to start hiring.

But before you move ahead, have you checked whether your German team has a works council?

You might think works councils are only for large companies. But in Germany, employees can elect one with as few as five permanent employees entitled to vote, as long as three are eligible to stand for election.

It doesn't happen automatically, but if a works council exists, you may need to involve it in decisions about working hours, dismissals and employee-monitoring systems.

As your team grows, some hiring and transfer decisions may also require its consent.

So before you bring in more employees, it's worth checking which rules apply. You don't want to find out about an extra compliance step after your hiring plans are already in place.

When can employees establish a works council in Germany?

In Germany, employees can elect a works council once an establishment normally has at least five permanent employees entitled to vote, with at least three eligible to stand for election.

This comes under Section 1 of Germany's Works Constitution Act (Betriebsverfassungsgesetz).

But that doesn't mean you have to set up a works council as soon as you hire your fifth employee.

Your employees can choose to start an election. If they don't, your company can continue without a works council.

What you can't do is stop them from forming one.

Under Section 119, interfering with an election or trying to influence employees through threats or promised benefits can lead to criminal penalties.

So if you're managing a small team in Germany, you don't necessarily need to change anything right away.

But your HR team should know these rules and be prepared if employees decide to elect a works council. Even a small German team can have these requirements.

What changes for employers once a works council is established in Germany?

Once your German employees elect a works council, you'll need to involve it in certain workplace decisions.

For example, if you're planning to change working hours across your European offices, you may need the German works council's agreement before introducing those changes.

Under Section 87, this applies to certain decisions about working hours, shifts and overtime.

And it's not just working hours. There are a few other areas you should know about.

Employee-monitoring tools

Let's say you're introducing software to track employee attendance or productivity.

Even if your headquarters has approved it, you may still need the works council's agreement.

That's because Section 87 gives works councils rights over certain systems that can monitor employee behaviour or performance.

Dismissals

If you're planning to dismiss an employee, Section 102 requires you to consult an existing works council first.

Skipping this step makes the dismissal legally invalid, even if your German establishment has only eight employees.

Hiring and transfers

Once your business normally has more than twenty employees entitled to vote, Section 99 may require works council consent for certain hiring, grading and transfer decisions.

This means your recruitment process may need an additional step as your business grows.

You don't need works council approval for every decision. But before changing policies, hiring more people or making staffing decisions, it's important to know when their involvement is required.

Does a works council need to approve every HR decision in Germany?

No. A works council doesn't need to approve every HR decision. But some hiring decisions do require its consent.

Let's say you have twenty-five employees in Germany and an elected works council.

You're planning to hire three software engineers. Your recruitment team has selected the candidates and agreed on their joining dates.

If Section 99 applies, you'll need to inform the works council and provide the required details before completing those hiring decisions.

The council generally has one week after receiving complete information to refuse consent for legally valid reasons. If it doesn't respond, consent is considered granted.

If the council refuses, you can ask the labour court to replace its consent.

This doesn't mean the works council can reject a candidate simply because it prefers someone else.

But imagine you've already promised someone a joining date without allowing time for this process. Your HR team may then have to manage an unexpected delay.

So if your business is growing beyond twenty employees entitled to vote, check whether Section 99 applies and whether you have a works council. It's better to plan for these steps before confirming joining dates.

How can a works council affect hiring, working hours, and employee-monitoring systems?

Let's say your company has teams in Germany, France and the Netherlands.

You're planning to hire ten more employees, introduce a new attendance system and change working hours across all three countries.

But if your German establishment has a works council, you may need to follow a few additional steps.

For hiring, Section 99 may require works council consent if the workforce threshold and other conditions are met.

For working hours, Section 87 may require the council's agreement before making certain changes.

For attendance software, you'll need to check whether the system can monitor employee activity, as this may also require works council involvement.

You can still move ahead with your plans. But it's better to check these requirements before setting deadlines, rather than dealing with unexpected delays later.

This is where Dhi ADT can help

If you're growing your German team, we can help you understand which employment and compliance requirements you need to consider.

At Dhi ADT, we work with international companies on hiring, payroll and employment compliance.

We can review your current employment setup, look at your hiring plans and identify where works council procedures or other German employment requirements may need attention.

Planning to hire another 5–20 employees in Germany?

Let's review your current setup and identify what needs checking before you move ahead. Schedule a 30-minute Germany Employment Review →

What should international companies do before expanding their workforce in Germany?

Before growing your German team, there are three important employee thresholds you should check with HR.

5 employees: Works council elections

Once your establishment has at least five permanent employees entitled to vote, including three eligible to stand for election, employees can elect a works council.

If they elect one, you may need to involve it in decisions about working hours, monitoring systems and dismissals.

Even if your team is small, it's worth knowing these rules.

More than 20 employees: Hiring and transfer approvals

If your company normally has more than twenty employees entitled to vote and an elected works council, Section 99 requires consent for certain hiring and transfer decisions.

So if you're planning several new hires, make sure your recruitment timeline includes this step where required.

Remember, the legal employee count may be different from the headcount shown in your HR report.

200 employees: Works council release arrangements

Once your establishment normally reaches 200 employees, Section 38 generally provides for at least one works council member to be released from their regular work duties.

They continue receiving their salary, so this is something your finance team should consider when planning workforce costs.

Don't forget dismissal protection rules

There's another requirement worth checking as your team grows.

Under Germany's Dismissal Protection Act, general dismissal protection usually applies when an employee has worked for more than six months and the establishment has more than ten employees under the applicable counting rules.

These rules can apply even if your employees haven't elected a works council.

And if a council exists, you must also consult it before dismissing an employee.

So before approving your next hiring plan, make sure your HR team knows which employee thresholds apply. It can help you avoid compliance issues as your German team grows.

Does using an EOR change works council obligations?

If you're planning to hire in Germany without setting up your own company, an Employer of Record (EOR) can help you manage employment contracts, payroll and local compliance.

But using an EOR doesn't mean works council rules no longer apply.

German employment laws still matter. The responsibilities depend on who legally employs your workers, how they're managed and where they work.

In some cases, employee leasing rules may also apply.

So before choosing an EOR, make sure you understand who handles these responsibilities and how works council requirements will be managed.

And if you're planning to move from an EOR to your own German entity as your team grows, you'll need to review those obligations again.

An EOR can make hiring in Germany easier, but it's important to understand how the arrangement works as your business grows.

Bottom line

If you're growing your German team from eight to twenty-five employees, it's worth checking a few things before hiring.

Does your team already have a works council? If so, will it need to be involved in your hiring plans, working-hour changes or new employee-monitoring systems?

And has your HR team allowed time for any required procedures?

Having a works council doesn't mean you can't expand your business. It simply means certain decisions may need an additional step.

So before you bring in more employees, make sure your hiring plans and HR processes meet German employment requirements. It's easier to check compliance now than deal with problems after recruitment has started.

Get in touch with Dhi ADT

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