Works council elections 2026: Definition of an establishment and matrix structures

The basic prerequisite for any works council election is the existence of a works council-eligible establishment within the meaning of Art. 1 (1) BetrVG (German Works Constitution Act) with at least five permanent employees who are eligible to vote. But what exactly is meant by the term “establishment” or “separate department” in Art. 4 BetrVG – especially in corporate and matrix structures? 

Errors in determining the establishment often lead to disputes between the employer and the election committee. If, for example, a single establishment is assumed to exist when in fact there are two separate establishments, the election may be invalid. In such cases, the employees who are eligible to vote and stand for election are not assigned to the correct establishment, with the result that the number of the works council’s members is incorrect, which can lead to the election being declared invalid or contested.  

The term “establishment” as defined under works constitution law 

According to the German Federal Labor Court’s (“BAG”) case law, an establishment is an organizational unit within which the employer continuously pursues certain work-related objectives with the help of its employees. The tangible and intangible operating resources available at the permanent establishment must be combined, organized, and used in a targeted manner, and the use of human labor must be controlled by a uniform management structure (BAG, decision of August 13, 2008 – 7 ABR 21/07). 

Distinction between an establishment and a separate department 

Under certain conditions, a separate works council may also be elected in a unit that is integrated into the organization of a principal establishment and aligned with its purpose, if the separate department is eligible for a works council based on the number of employees, is organizationally distinct and independent, and is situated at a considerable distance from the principal establishment.  

There are no generally applicable principles for such distance. Rather, it depends on accessibility by (public) transport, which enables the works council to properly support the secondary establishment. According to the Federal Labor Court’s case law, 50 km is considered “far”; if the secondary establishment is difficult to reach due to poor transport connections, 28 km is sufficient. 

If a separate department is independent pursuant to Art. 4 BetrVG, it elects its own works council. However, the majority of the independent separate department’s employees can informally decide to participate in the principal establishment’s elections, Art. 4 (1), sentence 2 BetrVG. Such vote can also be initiated by the principal establishment’s works council. This allows the separate department’s employees to ensure that their interests are represented without having to hold their own election.  

It must be clarified that very small establishments that do not meet the requirements of Art. 1 (1) BetrVG, i.e., that employ fewer than five eligible voters, may be independent departments but are always assigned to the principal establishment, Art. 4 (2) BetrVG. 

Are matrix structures subject to different provisions? 

Matrix structures serve to increase efficiency and shorten decision-making processes, with employees working across establishments, companies, and even countries. In this respect, matrix structures are not usually identical to the operational structures defined by works constitution law, making it difficult to assign employees to a specific establishment. 

An employee's integration into a company organization generally determines their affiliation with an establishment and entitles them to vote in works council elections. But what about employees who work for different establishments within a matrix structure?   

On May 22, 2025, the Federal Labor Court (7 ABR 28/24) clarified that managers in a matrix structure who are assigned to several establishments in a professional capacity have the right to vote in each of these establishments. This decision places increased demands on the preparation of voter lists and may lead to an increase in the number of works council members in establishments.  

Review operational structures in good time and plan the election accordingly 

The term “establishment” pursuant to Art. 1 (1) BetrVG is an undefined but well-established legal term. Despite modern forms of organization, it remains viable if the uniformity of management, technical purpose, and organization is maintained. 

If the definition of “establishment” is misunderstood and/or eligible voters are not correctly assigned, the election can be contested. Employers should therefore carefully review their company structures in order to compile accurate voter lists and thus ensure legally compliant elections.  

Art. 3 BetrVG gives companies the opportunity to agree on alternative solutions with the works council in good time, e.g., the combination of establishments or the formation of a uniform works council for the entire company. 

Learn more about the employer's obligations when conducting works council elections in this article.