Special Negotiating Body
The Special Negotiating Body is a central legal organ for employee participation at the European level, particularly in connection with the formation of a European Company (Societas Europaea, SE) or a European Works Council. It is a representative body elected or appointed by the employees, whose main task is to negotiate the modalities and scope of employee participation. The legal foundations regulate, among other things, the composition, powers, procedures, and legal effects of the actions of the Special Negotiating Body.
Legal Basis and Formation
The introduction of the Special Negotiating Body is based on EU directives, especially the SE Directive 2001/86/EC, supplemented by the SE Participation Act (SEBG) as well as the Act on Employee Participation in Cross-border Mergers (MgVG) and the Act on European Works Councils (EBRG). These regulations implement the requirements of the European Union to promote employee participation and codetermination rights in companies operating across borders.
National Implementation
In Germany, the SEBG is the key legal basis for the Special Negotiating Body. In addition, regulations can be found in the One-third Participation Act, the Codetermination Act, and the relevant implementing laws of the EU member states.
Composition and Appointment
Formation of the Special Negotiating Body
The Special Negotiating Body is formed as soon as a company, group of companies, or merger is planning a process that involves a cross-border corporate structure (e.g., the formation of an SE, a European Cooperative Society, or a European Works Council). In this case, the management of the company must promptly invite the employee side to form such a body.
Selection and Appointment of Members
The members of the Special Negotiating Body are elected or appointed in accordance with the requirements of the respective national laws. In Germany, the selection process is governed by §§ 8 et seq. SEBG. Appointments are made in proportion to the number of employees in each of the member states within the relevant company or group, so that the workforce of each affected country is appropriately represented.
Number of Representatives
The number of members depends on the total number of employees in the respective EU member states. For each specified number of employees (e.g., every 10% or every 1,000 employees started, depending on legal requirements), the respective state sends at least one member to the body.
Tasks and Powers
Negotiating Mandate
The Special Negotiating Body has a statutory mandate to negotiate all aspects of employee participation with the central management of the company or group. This includes, in particular:
- Rights to Information and Consultation
- Codetermination rights in management or supervisory bodies
- the establishment of a European Works Council or a comparable body
Conclusion of a Participation Agreement
The goal of the negotiations is to conclude a written agreement on the structure of employee rights (the so-called participation agreement). This agreement regulates, among other things, the composition, powers, procedures, and internal effects of the participation body.
Decision-making Mechanisms
The Special Negotiating Body generally decides by absolute majority of the votes cast by its members, unless the law specifies otherwise. For certain resolutions, such as breaking off negotiations, qualified majorities are required.
Procedure and Progress of Negotiations
Initiation and Duration of Negotiations
Central management must immediately invite the Special Negotiating Body to commence negotiations after drafting or announcing its plan to form an SE or similar restructuring. The negotiations have a maximum duration of six months; an extension by a further six months is possible if both sides agree (§ 21 SEBG).
Support by Advisors
The body may be assisted in negotiations by additional appointed experts. As a rule, the so-called “management” of the company bears the necessary and reasonable costs for meetings and the experts involved in the negotiations (§ 25 SEBG).
Rights and Duties During Negotiations
The members and advisors of the Special Negotiating Body are subject to a statutory duty of confidentiality regarding confidential company information. Activities related to the body must not result in any disadvantage for employees.
Negotiation Outcomes and Alternatives
Conclusion of an Agreement
If the Special Negotiating Body and central management of the company reach agreement on a participation agreement, the agreed terms generally apply. Employee participation rights are then structured in accordance with the agreement.
Failure of Negotiations – Statutory Subsidiary Regulation
If no agreement is reached and the negotiations are not extended after the negotiation period has expired, the statutory subsidiary regulations (so-called “subsidiary provisions”, §§ 22 SEBG) automatically apply. These are largely uniform among member states and, among other things, require the establishment of a European Works Council.
Rejection by the Special Negotiating Body
The Special Negotiating Body has the option, by qualified majority resolution, to decide not to enter into negotiations. In this case, for a certain period (generally two years), there is no entitlement to new negotiations on employee participation within the same cross-border corporate formation in the affected area.
Termination and Continued Effect
Upon conclusion of the negotiations or the decision not to commence or to end them, the mandate of the Special Negotiating Body ends. The rights and obligations then transfer to the participation body established under the agreement. In the case of subsidiary regulations, applicability is determined by the provisions of the relevant laws.
Legal Significance and Practical Relevance
The Special Negotiating Body is an important instrument for safeguarding the collective interests of employees in complex, cross-border corporate structures within the European single market. It ensures employee codetermination in companies operating beyond national borders and is essential for the implementation of European principles of employee participation. Its legal significance arises directly from securing participation rights and the harmonization of corporate codetermination within the European Union.
Literature and Legal Sources
- SE Participation Act (SEBG)
- Directive 2001/86/EC of the Council of 8 October 2001
- Act on European Works Councils (EBRG)
- One-third Participation Act, Codetermination Act
- Act on Employee Participation in Cross-border Mergers (MgVG)
The information presented here provides a comprehensive overview of the legal structure and function of the Special Negotiating Body in the context of employee participation in Europe.
Frequently Asked Questions
Which legal foundations regulate the formation of the Special Negotiating Body?
The Special Negotiating Body (SNB) is primarily regulated by the Act on the Participation of Employees in a European Company (SE Participation Act – SEBG) and the Act on the Participation of Employees in a Cross-border Merger (MgVG). The EU Directive 2001/86/EC supplementing the Statute for a European Company with regard to employee involvement serves as the primary basis under European law. In the German context, these laws specify the composition, election, tasks, rights, and obligations of the SNB. The regulations determine, in particular, how employee representatives from the various member states are appointed, the requirements for composition, and the procedural steps necessary for effective establishment.
What are the legal tasks of the Special Negotiating Body?
The main task of the Special Negotiating Body is to initiate and conduct negotiations with the management of an SE or a company involved in a cross-border merger concerning employee participation. Legally, the body is authorized to negotiate the modalities of informing, consulting, and codetermination of employees. Within these negotiations, it can particularly agree on regulations for the establishment of an SE works council, the procedure for employee participation in the supervisory or administrative body, and the rights and procedures of employee representation. The body is legally obliged to appropriately inform the workforce and has the right, during the entire negotiation phase, to consult legal counsel and experts, and, in the absence of an agreement, to trigger the statutory fallback provisions.
How are the members of the Special Negotiating Body composed and appointed according to legal requirements?
The composition of the SNB depends on the number of employees employed in each member state within the affected company or group. For every 10% of employees employed in each country, a seat is awarded in the body. The respective employee representatives are elected or appointed according to the national regulations of the sending countries, which in Germany is usually carried out by existing works councils or an employee representative assembly. In companies with employees in several EU member states, comprehensive coordination is required so the respective national election or nomination mechanisms must be considered. Substitute members are also possible and are appointed according to the respective national law.
What legal deadlines must be observed in calling and conducting negotiations by the Special Negotiating Body?
The legal process provides that after initiation of the SE formation procedure or registration for a cross-border merger, company management must initiate the SNB establishment procedure without delay, and in any case within one month. If negotiations are commenced, there are time limits for their conclusion. The law sets a deadline of six months from the SNB’s first meeting for negotiations, which can be extended by mutual agreement for up to a year. After expiry of the deadline, the statutory subsidiary regulations apply, provided that no agreement has been reached.
What rights to support and information does the Special Negotiating Body have by law?
The SNB has a comprehensive right to information from management in order to adequately prepare and conduct the negotiations. This includes, in particular, information about structure, employee numbers, likely effects of the planned restructuring on employee participation, and other essential organizational information. The body has the right to involve external experts—including legal advisors, trade union representatives, and interpreters. The costs incurred for this must be borne by management, as long as they are reasonable and necessary. In addition, legal protection mechanisms exist if these rights are violated, such as by applying to labor courts.
How is the outcome of negotiations further handled legally?
The result of negotiations between the SNB and management results in a binding written agreement, which must be signed by the negotiating parties. This agreement may contain regulations on information, consultation, establishment of an SE works council, and codetermination rights. The SNB adopts the outcome of the negotiations by the qualified majority of its members as prescribed by law. If no agreement is reached, the mandatory statutory fallback provisions come into force, ensuring a minimum level of employee participation. The agreements made are legally binding and may be subject to labor court review if appropriate.
What are the legal consequences if negotiations in the Special Negotiating Body fail?
If the negotiations do not lead to agreement between the SNB and management within the statutory period, the statutory fallback provisions automatically come into effect. These are laid out in the SEBG and MgVG in detail and specify minimum standards for employee participation and codetermination. The fallback provisions are based on the previous codetermination rights of employees in the original or participating companies and secure them for the newly established corporate entity. After this occurs, the SNB has no further decision-making authority regarding the specific structure of employee participation. If applicable, only the monitoring of implementation remains with the competent bodies, especially the SE works council.
