Matrix Managers: Participation in Works Council Elections in Multiple Establishments Is Possible

Facts of the Case

The plaintiff operates an IT company in which certain teams are organized in a matrix structure. As a result, many managers lead teams whose members belong to different divisions and establishments of the company.

For the works council election in the “Region South” establishment, the election committee classified 128 such “matrix managers” (who were not executive staff members) as entitled to vote, even though they each belonged to other “home establishments” and were contractually assigned to different locations. The reasoning for including them on the “Region South” voter list was that, due to the matrix structure, they were also functionally managing employees in that establishment.

The employer, however, argued that these managers did not belong to the “Region South” establishment and were therefore not entitled to vote there. The employer contested the election. The lower courts (Labor Court Stuttgart, decision of October 25, 2023, Case No. 14 BV 112/22, and Regional Labor Court [LAG] Baden-Württemberg, decision of June 13, 2024, Case No. 3 TaBV 1/24) agreed with the employer and declared the election invalid.

The LAG reasoned that the matrix managers were already assigned to another establishment and were therefore entitled to vote only there. Multiple voting rights would result in an unjustified overrepresentation in the general works council and the group works council. In line with basic principles of the BetrVG, an employee should belong to only one establishment. Practical considerations also supported limiting voting rights to the establishment to which an employee is contractually assigned for regular work performance.

The works council successfully appealed this decision to the Federal Labor Court (BAG).

Decision

The BAG held that matrix managers can, in fact, be entitled to vote in more than one establishment. Voting eligibility in works council elections is determined by Section 7 BetrVG, which states that all “employees of the establishment” are entitled to vote. Establishment membership is defined by integration into the establishment’s organization.

According to the BAG, being integrated into one establishment (e.g., the “home establishment”) does not exclude the possibility of also being integrated into another establishment – and thus being entitled to vote there as well. Multiple voting rights are therefore permissible in principle.

The BAG therefore overturned the LAG’s decision and remitted the case back to it for further fact-finding. The LAG will now have to establish whether the matrix managers were in fact integrated into the “Region South” establishment.

Key Takeaways and Implications

• Matrix managers may be entitled to vote in multiple establishments, thereby potentially influencing the composition of several works councils.
• This entails the risk of a disproportionate representation of their interests compared to employees without a matrix function – something that, in our view, is difficult to reconcile with the principles of representation and democracy under the Works Constitution Act (BetrVG).
• Consequently, matrix managers could also, in principle, be members of several local works councils at the same time, since passive voting rights (eligibility to stand for election) under Section 8 BetrVG – like active voting rights – are tied to establishment membership as well.
• It remains unclear whether matrix managers working from abroad are entitled to vote in works council elections of German establishments in which they manage employees.
• Recognizing multiple establishment memberships of employees could lead to higher costs for employers, as this status is relevant for determining establishment size, which in turn can increase the number of works council members and, consequently, the amount of release of work and related expenses.
• Belonging to multiple establishments raises further co-determination questions. For example, a cautious employer might, depending on the structure of the matrix, consider consulting the general works council or even the group works council under Section 102 BetrVG when dismissing matrix managers.

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