New legislation: Works council remuneration – AI Act – Cannabis legalisation

Amendment of the works council remuneration

On 28 June 2024, the German Bundestag passed a legal clarification on works council remuneration (BT-Drs. 20/9469, 20/9875) and adopted a proposal drawn up by the expert commission "Legal certainty in works council remuneration".

Accordingly, the following sentences were added to Sec. 37 (4) German Works Council Act (Betriebsverfassungsgesetz – BetrVG): "The determination of comparable employees pursuant to sentence 1 shall be based on the date on which the works council office is assumed, unless there is an objective reason for a later redetermination. The employer and the works council may regulate a procedure for determining comparable employees in a works agreement. The specification of comparability in such a works agreement can only be reviewed for gross errors; the same applies to the determination of comparable persons, provided that it is mutually agreed between the employer and the works council and documented in text form." 

The following sentence was added to Sec. 78 BetrVG: "There is no favouritism or disadvantage with regard to the remuneration paid if the member of a representative body referred to in sentence 1 personally fulfils the operational requirements and criteria necessary for the granting of remuneration and the determination is not based on an error of judgement." 

However, these supposed clarifications only address a few of the many unanswered questions on the subject of works council compensation. This is particularly unfortunate given that prejudicing or favouring a member of the works council is punishable (Section 119 of the German Works Constitution Act), but in practice it is often very difficult for the employer to determine the level of compensation. Therefore, ensuring proper works council compensation will continue to be a challenge for employers in the future.

AI Regulation came into force

AI systems

The EU Regulation 2024/1689 laying down harmonised rules on artificial intelligence (Artificial Intelligence Act – AI Regulation) came into force on 1 August 2024 and will apply in stages from 2 February 2025. The majority of the provisions of the AI Regulation will only apply after a 24-month transitional period and therefore from 2 August 2026.

The AI Regulation covers machine-based systems that are designed for autonomous operation, are adaptable and can generate derivatives from the input received that can influence physical or virtual environments ("AI systems", Art. 3 (1) AI Regulation).

AI applications are categorised into four risk categories according to a strict risk-based approach, which results in different obligations. AI applications with an unacceptable risk are banned after a transitional period of six months with effect from 2 February 2025, as they may violate fundamental EU values. AI applications with low or minimal risk (example: chatbots) are subject to hardly any restrictions, apart from certain transparency obligations.

AI systems in HR work

The third category of high-risk AI systems is likely to become particularly relevant in labour law, as general purpose AI models ("GPAI") may fall under this category, depending on their classification. According to Art. 6 (2) in conjunction with Annex III (4) AI Regulation, this includes, for example, AI systems that are used for the recruitment or selection of natural persons (for example, the. announcement of vacancies, selection/filtering of applications, assessment of applicants) or are also to be used for the termination of employment relationships, the assignment of tasks or the monitoring and assessment of performance and behaviour. According to Art. 8 et seq. AI Regulation, strict requirements must be observed. In particular, these applications must be transparent and comprehensible, human supervision must be ensured and information obligations must be complied with. 

Obligations of the employer

The AI Regulation distinguishes between providers and operators of AI systems. In particular, the "provider" of an AI system (Art. 3 No. 3 AI Regulation), i.e. the person who develops an AI system or has it developed in order to place it on the market or put it into operation under their own name or brand, whether for payment or free of charge, is covered by the requirements of the AI Regulation. However, employers are usually categorised as "operators" of AI systems (Art. 3 No. 4 AI Regulation), as they only use AI systems developed by third parties under their own responsibility. 

If employers act as the operator of an external AI system, they must monitor its operation on the basis of the instructions for use provided by the provider (Art. 26 (1) AI Regulation) and retain the logs automatically generated by the AI system. Furthermore, when using high-risk AI systems, employers must entrust a natural person trained for this purpose with human supervision and provide them with the necessary support (Art. 26 (2) AI Regulation).

If employers are operators, they remain obliged to inform both the Works Council and affected employees before commissioning or using high-risk AI systems in the workplace (Art. 26 (7) AI Regulation). The existing provisions of the BetrVG on informing works councils can be used here. When using high-risk systems for decision-making or decision support, affected persons (employees, applicants) must be informed separately about the purpose and nature of the decision in accordance with Art. 26 (11) AI Regulation, as well as about the right to information in accordance with Art. 86 (1) AI Regulation, which grants the affected person the right to request clear and meaningful explanations from the company about the role of the AI system in the decision-making process and about the most important elements of the decision taken. 

Tip for the practice

• When the AI Regulation comes into force, employers who already use AI applications or are planning to use them will have to comply with a comprehensive catalogue of obligations that requires close coordination of labour law, data protection law and organisational requirements. It remains to be seen to what extent national regulations, for example in an employee data protection act, will bring relief. 

Legalisation of cannabis

With the entry into force of the Act on the Controlled Use of Cannabis (Federal Law Gazette 2024 I No. 109 - CanG) on 01.04.2024, the legislator partially legalised the use of cannabis, whereby a distinction is made between use for medical (Medical Cannabis Act - MedCanG) and non-medical purposes (CanG). Cannabis and non-synthetic THC are now considered recreational substances and are not classified as narcotics, as was previously the case. 

The law does not contain a general ban on the consumption of cannabis in the workplace. From the perspective of occupational health and safety law, Art. 10 CanG merely provides for an amendment to Sec. (5)(1) sentence 1 Workplace Ordinance (Arbeitsstättenverordnung – ArbStättV), according to which the regulation on the protection of non-smokers will be extended to smoke and vapours from cannabis products.

The use of cannabis becomes relevant for HR managers if the employee is in a state in which they are no longer able to properly fulfil their contractual obligations (Sections 241 (2), 242 BGB) or could endanger themselves or others (see Sec. 15 (2) DGUV Regulation 1). The problem is that there are currently no THC threshold values that can be used to reliably determine incapacity for work as limited or cancelled. 

Tip for the practice

• In order to fulfil their duty of care, employers should regulate the handling of cannabis in the workplace, update risk assessments and define suitable measures to ensure the safety and health of employees.
• Any co-determination rights of the works council pursuant to Sec. 87 (1) No. 1 (regulatory behaviour) and No. 7 BetrVG (health protection) must be observed. Irrespective of this, information should be provided on the potential for addiction and how to avoid addiction in the workplace context.