Works Council IT Systems in Germany: Approval Before Rollout
Short answer: In Germany, a works council must agree before you introduce almost any IT system, because the test is whether the software is objectively capable of monitoring employees' behaviour or performance, not whether you intend to use it that way (section 87(1) no. 6 BetrVG). Without agreement, the system cannot go live; an arbitration board decides if talks fail.
Global IT teams tend to meet German co-determination late. The new CRM is configured, the vendor contract is signed, the rollout date for EMEA is set. Then the German subsidiary reports that the works council has not agreed and the system cannot go live there. Weeks or months of delay follow.
That outcome is avoidable, but only if you understand how broad the rule is. In 2016 the Federal Labour Court held that a blood donation service’s Facebook page required works council approval, because visitors could post comments about individual staff (decision of 13 December 2016, 1 ABR 7/15). If that is enough, nearly everything is.
What a works council is, briefly
A works council (Betriebsrat) is a body elected by employees at an establishment. Employees can set one up wherever there are usually at least five permanent employees eligible to vote (section 1 BetrVG). Many German subsidiaries of international groups have one, often without head office being fully aware of its powers. In larger groups there may also be a central works council for each company and a group works council above that.
Its rights range from information to full co-determination. For IT, co-determination is the one that matters.
The test: capable of monitoring, not intended to
Section 87(1) no. 6 of the Works Constitution Act gives the works council a say over “the introduction and use of technical devices designed to monitor the behaviour or performance of employees”. German courts have read “designed to” very broadly for decades. It is enough that the technology can objectively record and evaluate data about behaviour or performance. What the employer plans to do with it is irrelevant.
In practice, any software that logs who logged in when, which record they edited or how long a task took is covered. That includes ERP, ticketing, Microsoft 365, time recording, applicant tracking and practically every cloud application with user accounts.
| Criterion | s. 87(1) no. 6 | Other rights |
|---|---|---|
| Time recording | s. 87(1) no. 2: working hours | |
| Applicant tracking with selection criteria | s. 95 selection guidelines, s. 94 questionnaires | |
| Microsoft 365, Teams, Slack | s. 90 information | |
| Rota software | s. 87(1) nos. 2 and 3 | |
| AI-assisted selection or scoring | s. 95(2a), s. 80(3) expert | |
| Offline calculator with no login | none |
Other rights that come with it
Section 87 is the strongest right, not the only one. Under section 90, the employer must inform the works council in good time when planning technical systems and work processes, explicitly including AI. “In good time” means before the decision is made, not after signing.
Since a 2021 reform, AI has its own rules. If the works council has to assess AI, an expert is deemed necessary (section 80(3)), so the usual argument about whether an expert is needed disappears. Selection guidelines remain subject to co-determination even when AI creates or applies them (section 95(2a)).
For recruiting tools, section 94 adds that personnel questionnaires, including mandatory fields in an online application form, need works council consent. More on choosing such tools in our guide to an applicant tracking system.
What happens without agreement
Without consent the system may not be introduced. If the employer goes ahead anyway, the works council can seek an injunction in the labour court. If the sides cannot agree, an arbitration board (Einigungsstelle) decides, chaired by a neutral person, usually a labour judge, with equal numbers of members from each side. That process can take months, and the employer pays its costs.
A project plan that gives the works council a contract two weeks before go-live is, in effect, a plan for delay.
The Workday ruling: an agreement is no free pass
Many employers treated a works agreement as a convenient legal basis for processing employee data. Then came the Workday case, which should interest anyone running a global HR cloud.
A German group company had signed an agreement with its works council allowing a test phase of the cloud HR system Workday. The agreement allowed only a short list of basic data to be transferred. The company actually sent more to its parent, including salary details, home address, date of birth, social security number and tax ID.
The Federal Labour Court referred questions to the Court of Justice of the EU. On 19 December 2024 the CJEU ruled (C-65/23) that a works agreement can serve as a legal basis for processing, but must itself comply with the general principles of the GDPR, and courts can review that fully. On 8 May 2025 the Federal Labour Court awarded the employee €200 in damages (8 AZR 209/21). The amount is small. The message is not: processing beyond the agreement breaches the GDPR, and an agreement that breaches the GDPR protects nobody. The court’s press release is on the Federal Labour Court website.
For HR projects, the lesson is practical. Test systems loaded with real employee data are a risk of their own. Pseudonymised or synthetic test data is almost always the better choice.
What goes into an IT framework agreement
Negotiating a separate agreement for each new tool is tiring. Many companies sign one framework agreement for IT systems instead. It settles principles once, and each new system only needs a short annex.
- Scope and procedure for new systems, with one annex per system
- Purpose limitation: what data may be used for and what it may not
- Ban on, or tight limits for, individual performance monitoring
- List of data collected per system, with retention periods
- Roles, access rights and logging of reports
- Procedure for suspected misconduct: who may analyse which data, when
- No use of data collected in breach of the agreement
- Rules for AI features and for updates that add functionality
- Works council inspection rights and access to experts
- Test environments with pseudonymised data only
The point about updates is often missed. Cloud software changes constantly. An agreement describing the 2024 version won’t fit in 2026. Good agreements oblige the employer to present significant new functions before switching them on, and define what “significant” means.
Where disputes usually arise
Rarely about whether a tool is introduced. Usually about three details. Reports: management wants dashboards, the works council fears individual rankings. Team-level reporting with a minimum group size, say five people, often settles it. Admin rights: whoever can see everything does see everything, so a list of administrators and a log of their access calms many debates. Data location: with US cloud providers, the works council will ask about transfers. That is a data protection question, but it lands on the table regardless, so have your data protection officer’s answers ready.
The EU AI Act adds a duty to inform
From 2 December 2027, obligations for high-risk AI in employment apply. Article 26(7) of the AI Act requires employers to inform workers’ representatives and affected workers before putting such a system into service at the workplace. That comes on top of co-determination, it does not replace it. Our overview of the EU AI Act in recruitment has the details, and time tracking law in Germany shows how co-determination plays out for one common system.
How to run an IT project with a German works council
Start early, in writing, with specifics. Inform the works council as soon as a tool is seriously considered, with a description of the data it processes. Ask the vendor for an overview of logs and reporting functions you can pass on. Negotiate the annex in parallel with vendor selection, not afterwards.
If you build HR software in-house, you can design for co-determination from the start, for instance with logs that can be switched off per country. A studio like OnlineBuilders builds systems of that kind, which lets an agreement be enforced technically rather than only on paper.
Your next step: list every application with user accounts used at your German sites and check which ones are covered by a works agreement. The gaps on that list are the agenda for your next meeting with the works council.
Questions people ask
Does the works council have to approve Microsoft 365 or Slack?
Almost always, yes. These tools create usage and activity data from which behaviour can be inferred, which makes them objectively capable of monitoring. Many companies sign a dedicated agreement with annexes for individual services.
Who negotiates for a group-wide system?
If a system is rolled out across several German companies in a group and cannot sensibly be regulated company by company, the group works council (Konzernbetriebsrat) is usually responsible. Otherwise each local works council negotiates for its own establishment.
What if we go live without agreement?
The works council can demand that use stops and enforce that in the labour court, often through fast interim proceedings. Measures based on data from the system, such as a warning, become open to challenge.
Can the works council bring in an AI expert at our cost?
Yes. When the works council has to assess the introduction or use of AI, bringing in an expert is deemed necessary by law (section 80(3) BetrVG), and the employer bears the cost.
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