Under New BAG Ruling, Works Councils Gain Leverage as Volkswagen and Zalando Push Job Cuts
21.06.2026 - 20:43:23 | boerse-global.de
A landmark decision by Germany’s Federal Labour Court (BAG) is reshaping the ground rules for mass redundancies, just as major industrial employers accelerate restructuring plans. The ruling, issued on 1 April 2026 (docket 6 AZR 157/22), prohibits employers from submitting a mass dismissal notification before completing the consultation process with the works council. Any dismissal based on a premature or defective notification is void, and the court stressed that subsequent corrections cannot remedy the flaw.
The decision immediately raises the stakes for ongoing negotiations. At Zalando’s logistics centre in Erfurt, talks over a social plan collapsed on Saturday. Works council member Jana Clausen called management’s offer unacceptable. The procedure now moves to a mediation board led by a former labour judge, with the first meeting scheduled for Tuesday. The planned closure on 30 September affects roughly 2,000 jobs.
Volkswagen is confronting a similarly volatile situation. CEO Oliver Blume defended the company’s cost-cutting course during Sunday’s annual general meeting. The group aims to eliminate about 50,000 positions across the group by 2030, with 35,000 of those cuts at the core brand. By the end of 2026 the workforce is supposed to shrink by 19,000. Voluntary exit agreements have already been reached for 28,000 employees. VW’s target is an operating return on sales of 8 to 10 percent by the end of the decade.
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Works councils push for binding AI guardrails
Parallel to these restructuring battles, employee representatives are demanding clear statutory rules for the use of artificial intelligence. On Saturday, more than 140 elected officials from IG Metall in Duisburg-Dinslaken called for legally binding guidelines. Their concern is backed by recent data on how AI is reshaping employment.
According to PwC’s Global AI Jobs Barometer 2026, companies that combine automation with workforce support see headcount growth of 52 percent, while those relying solely on automation achieve only 36 percent. Productivity in the mixed-strategy group is 34 percent—double that of automation-only firms. Nevertheless, 19 percent of businesses using AI have already cut jobs, according to Bitkom. The Institute for Employment Research (IAB) projects that up to 1.6 million positions could be affected, with 800,000 job losses potentially offset by an equal number of new roles.
The technology’s importance is widely acknowledged: 98 percent of companies surveyed by KPMG attach great significance to AI, and 71 percent say their expectations have already been met. A separate youth study finds that 53 percent of 14- to 29-year-olds expect AI to replace simple tasks.
New procedural clarity for works council elections
The BAG has also tightened the rules around elections. In a separate case (docket 7 ABR 40/24), the court ruled that a works council election can be challenged in isolation, and that filing such a challenge by email fax with a scanned signature page is legally valid.
The Higher Labour Court (LAG) of Celle reinforced individual works council members’ rights, holding that under Section 40(2) of the Works Constitution Act, each member is entitled to a personalised company email address.
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Training and recognition ahead
With the legal and technological landscape shifting, preparatory courses for works council chairs are growing more important. From Monday to Wednesday, IG Metall is holding a seminar in Lohr on leadership and management of works council bodies, aimed at chairs and their deputies.
Outstanding achievements in works council work will be acknowledged later this year. The German Works Council Prize 2026 is scheduled to be awarded on 16 September in Berlin, under the patronage of Bundestag President Bärbel Bas.
