Employer Beware: German Court Tightens Rules on Works Council Pay Disputes
Published on 07/26/2026 at 04:21 | Redaktion boerse-global.de
A recent flurry of rulings from Germany’s highest labour court has redrawn the battlefield over how much companies must pay their works council members. The decisions, handed down between March 2025 and May 2026, place new burdens on employers—especially when they try to cut or correct past compensation.
The Burden of Proof Shifts
For years, the default rule was simple: works council members must prove their own pay claims. That principle still stands. The Lower Saxony State Labour Court (LAG Niedersachsen) confirmed on 12 June 2024 (case 8 Sa 687/23) that even when an employer has previously slashed a councillor’s salary, the member still bears the obligation to substantiate why the demanded amount is justified.
The core question is always the same: How does the councillor’s pay compare with that of comparable employees? And what career path would that person have followed without the council role? The same court had already laid out criteria for such hypothetical career trajectories in February 2024 (6 Sa 559/23).
But the Federal Labour Court (BAG) went further on 20 March 2025. It ruled that while a councillor must generally prove entitlement to a pay adjustment under Section 37(4) of the Works Constitution Act (BetrVG), a crucial exception applies: if the employer previously made adjustments itself, the burden of proof flips. The company must then explain in detail why its original classification or raise was wrong.
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Transparency Rules Add Pressure
Pay transparency is becoming a legal minefield of its own. On 19 February 2026, the BAG (8 AZR 83/25) clarified that the right to information under Germany’s Pay Transparency Act is workplace-specific and covers only the most recent completed calendar year.
Legal experts point to the EU Pay Transparency Directive, which from 7 June 2026 will force national courts to interpret German law in line with European requirements. That could widen disclosure obligations further.
Late Targets Cost Money
A separate BAG ruling on 22 April 2026 (10 AZR 28/25) hits companies that fail to communicate corporate targets on time. If targets are announced late, employees may claim damages. Courts can then estimate bonus amounts based on an assumed 100 percent target achievement, using the discretion granted by Section 287 of the Code of Civil Procedure (ZPO).
A Postal Trap for Dismissals
Perhaps the most practical risk for employers emerged on 7 May 2026, when the BAG (2 AZR 184/25) ruled on a flaw in Deutsche Post’s registered mail procedure. The court found that the postal service’s previous scanning method—which logged delivery before the letter was actually dropped into the mailbox—no longer creates a prima facie case that the item was received. Delivery staff had been documenting the drop-off before it happened.
Deutsche Post has since changed its process: confirmation now comes after the letter is deposited. But the BAG has not yet given a final ruling on the revised system. Until it does, the full burden of proving that dismissals or invitations to a company integration management (bEM) meeting were properly served remains squarely on the employer.
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