Under what circumstances does the deployment of international managers within a group trigger co-determination rights of works councils in Germany?

The effects of matrix structures in connection with German works constitution law are increasingly becoming the focus of the highest employment court rulings: in addition to the multiple voting rights of matrix managers (Federal Labour Court (Bundesarbeitsgericht), decision of 22 May 2025 – 7 ABR 25/24), the Federal Labour Court, in its decision of 23 September 2025 (1 ABR 25/24), ruled for the first time at the highest judicial level on the deployment of intra-group managers in matrix groups with regard to the co-determination rights of works councils under section 99 (1) of the Works Constitution Act (Betriebsverfassungsgesetz - BetrVG).

What is the decision about?

This decision was based on the following case:

The employer belonged to an international US group that had implemented matrix structures throughout the group. Four managers worked at the only German branch in B. However, they were not employed by the German company, but by foreign group companies. These four intra-group managers performed their work for the German employer’s branch mainly via video conferences, as they lived abroad and worked from there. They were not only responsible for the employees working at branch B, but also for conducting target agreement meetings, with the results of the performance appraisals affecting both the amount of performance-related remuneration and the adjustment of salaries in the following year. Besides this, holiday requests had to be agreed with the manager in charge before formal approval was given by the employer. Furthermore, the managers were involved in decisions on continuing employment contracts after probationary periods, issuing warnings, dismissing employees and rejecting or accepting applications to work part time. The works council existing at the German branch in B was not involved in the deployment of the four managers. The works council argued that the deployment of the managers constituted employment in the German branch within the meaning of section 99 (1) first sentence of the Works Constitution Act and was therefore subject to its right of co-determination. It justified this in particular on the grounds that the managers were effectively integrated into the business and performed supervisory functions to some extent.

The works council sought an order from the competent labour court requiring the employer to revoke the appointments of the four managers as long as its consent had not been given or replaced by a court order. Both the labour  Bremen-Bremerhaven  (decision of 17 January 2023 – 2 BV 201/22), and on appeal the Regional Labour Court Bremen  (decision of 2 May 2024 – 2 TaBV 2/23) upheld the works council’s right of co-determination under section 99 (1), first sentence of the Works Constitution Act. The employer subsequently filed an appeal on points of law to the Federal Labour Court.

The Federal Labour Court’s decision: “right to issue instructions” and “actual integration” as dual prerequisites

The Federal Labour Court overturned the decision of the Regional Labour Court Bremen and referred the case back for a new ruling, initially confirming its established case law. According to the settled case law of the Federal Labour Court, employment within the meaning of section 99 (1), first sentence of the Works Constitution Act exists if an employee is integrated into the organisational work structures of a company in order to achieve the work-related purpose of the company together with the employees already employed there by performing work under instructions. It is irrelevant whether an employment relationship exists with the owner of the business. This means that the deployment of managers from other group companies can also constitute hiring subject to co-determination in a business in Germany.

• However, the Federal Labour Court emphasised at the outset that a mandatory prerequisite for this is that the business owner (i.e. the German “employer”) at least partially has a typical right to issue instructions to an employee with regard to the content, location and time of their work. It stated that if such a right or partial right to issue instructions is missing, the works council has no right of co-determination under section 99 of the Works Constitution Act for this reason alone.
• In addition to the employee being bound by such instructions, the court also requires the employee’s actual integration into the company’s organisational work structures: the employee must be involved in performing the tasks to be carried out in the company or in the work processes through their actual activities. To support this, the Federal Labour Court requires specific findings regarding the purpose of the business and the activities actually performed; mere indications such as entry in a holiday list or a certain degree of consideration for operational processes are not considered sufficient.

Since the  Regional Labour Court Bremen had neither sufficiently clarified who actually had the right to issue instructions nor what specific tasks the four managers performed with regard to the purpose of the business, the Federal Labour Court was unable to reach a final decision and referred the matter back to the lower court.

Key practical messages – what employers should bear in mind now

For international companies with matrix structures and managers who are deployed group-wide, the decisive factor with regard to a German works council’s right of co-determination under section 99 of the Works Constitution Act is whether these managers

(i) are subject to at least partial authority of the German business owner with regard to the content, location and time of their work, and

(ii) are actually integrated into the work processes and tasks of the German company in such a way that they contribute to achieving its business purpose.

If both prerequisites are met, the right of co-determination also applies in principle to managers who perform their work in a matrix group from abroad. It should be noted, however, that managers who are classified as senior executives within the meaning of section 5 (3) of the Works Constitution Act are excluded from the scope of this Act, meaning that their deployment does not trigger an approval procedure under section 99 of the Works Constitution Act.

Employers should therefore keep three points in mind when it comes to managers who are deployed group-wide:

1. Clarify and document rights to issue instructions:

Who issues instructions regarding content, location and time of the activity in practice – the German company or exclusively a foreign group company?

These role and instruction structures should be set out in writing group-wide (e.g. in organisation charts, role descriptions, matrix guidelines) and designed in such a way that it remains clear which company the instructions are coming from.

2. Check actual integration:

Is the manager really integrated into the daily operations of the German company (e.g. responsibility for projects, teams, processes) or do they only act in a strategic or advisory capacity “from the outside”?

What is decisive is the actual integration into the company’s organisational work structures – not just the formal description.

3. Involve the works council early on and document decisions:

Before deploying such managers, an employer should first conduct its own legal assessment to determine whether the employment requires approval in accordance with section 99 of the Works Constitution Act and then, if a right of co-determination is affirmed, involve the works council at an early stage.

Where there is clear operational integration and at least partial authority to issue instructions on the part of the German entity, an approval procedure is generally required. Conversely, where the manager’s functions are purely strategic or advisory in nature, without such integration and without the German company’s authority to issue instructions, no co-determination rights generally apply. In case of doubt, this assessment should be documented briefly but clearly to avoid subsequent disputes with the works council.

Conclusion:

In the case of international group structures, it is therefore important – especially in light of the upcoming works council elections – to clearly define and document which managers who are deployed group-wide are assigned to a company located in Germany for the purposes of works constitution law and are thus subject to co-determination by the local works council.

We are happy to assist you when it comes to legally assessing and implementing the group-wide deployment of managers. Please feel free to contact us at any time.