Is this impression misleading, or are strikes becoming more common? Which industries are hardest hit? And how well prepared are medium-sized companies? “In my experience, not well at all,” reports Thomas Wahlig, specialist lawyer for labor law, “but the unions are just as bad.” This could make companies vulnerable to blackmail very suddenly. And this at a time when German SMEs are in the midst of an unprecedented wave of restructuring. Thomas Wahlig is a partner at Pusch Wahlig Workplace Law and specializes in collective bargaining and works constitution law, particularly restructuring. He says that companies planning restructuring should check their strike resistance very carefully in advance. How? With due diligence. We interviewed him.
The whole world is watching as the willingness to strike in Germany increases exponentially, said Reinhold Würth in an interview with Capital. Last March, the entrepreneur warned that Germany was becoming a “strike-happy nation.” How do you perceive the situation, Mr. Wahlig? Are we becoming more strike-happy?
The number of strike days per 1,000 employees increased in 2023 and 2024 compared to previous years. But if we look at the exceptional strike year of 2015, the number of days lost was even higher, at more than one million. And the level of strikes in Germany remains well below that of other countries, such as France. It is also important to distinguish between perception and reality: strikes in local public transport, for example, affect a large number of people. Think of the GDL strike in passenger transport or the recent BVG strike in Berlin: it felt like everyone was affected, even if they didn't use the BVG.
You mention local public transport: which other sectors are most affected by strikes?And what is the issue in most cases: Is it the demand for a four-day week with full pay? Or is it job security?
Statistically, most strike days occur in the transport sector. But there are also more strikes in the metal and electrical industries. In the transport sector and many other industries, the issue is classic wage increases in collective agreements. The intensity of the strikes was also higher here recently because inflation was particularly high. In the metal and electrical industry, the focus is increasingly on collective social plans. These in turn affect various industries, as we are currently in the midst of a massive wave of restructuring with numerous layoffs.
Corporations and small and medium-sized enterprises are equally affected by the wave of restructuring. The German automotive and supplier industry alone reports massive restructuring and job cuts almost daily. Do strikes hit medium-sized companies harder?
Yes, because large corporations have other ways of organizing themselves and cushioning the impact of strikes. They usually have several production sites—the automotive supplier industry typically has sites outside Germany, especially in Eastern Europe. If one of their German plants is affected by a strike, they can use their professionalism and a certain amount of preparation—because that's not always easy—to relocate production abroad. In the end, relocation in the event of a strike even anticipates the business decision to relocate production. The strike thus even leads to faster implementation of the desired outcome. This makes larger corporations less susceptible to strikes than medium-sized companies. They have to restructure very quickly and efficiently in order to avoid getting into a difficult situation.
You are a specialist lawyer for labor law and have been advising national and international companies on collective bargaining issues for more than 20 years. How do you experience medium-sized companies in strike situations?
Often unprepared and therefore completely at the mercy of the situation. I have seen many cases where medium-sized companies undergoing restructuring have not considered the possibility of a collective social plan and a strike at all. They are then unable to implement their business decision to restructure, or at least not in the desired form. The result is often disastrous because the risks of a prolonged strike are enormous. Many, for example, have not produced in advance and are unable to deliver from the second or third day of the strike. As a result, they often have to pay high penalties to their contractual partners. This then means that medium-sized companies are unable to uphold their original business decision.
What are the causes? What do medium-sized companies underestimate in advance?
My impression is that they assume their restructuring plan will proceed normally: they make a business decision, negotiate a reconciliation of interests with the works council, and conclude a social plan. This is only about appropriate compensation payments for employees who lose their jobs. And even if the works council is against their plans, there is no obligation to agree to the business decision. Only the social plan is enforceable. Ultimately, it is up to the employer to decide whether, when, and how operational changes will be implemented. In case of doubt, the social plan is drawn up by a conciliation committee, which must take into account the economic disadvantages incurred by the employees affected. As soon as the union enters the picture with a collective bargaining social plan demand, everything changes. The union is not required to base its demands on compensation for disadvantages and can effectively prevent the implementation of the company's decision by making exorbitant demands. The means of enforcing these exorbitant demands is strike action. The company's susceptibility to strikes determines whether the company's decision can be upheld. The union will calculate it in such a way that implementation is no longer profitable for the company because the restructuring costs exceed the economic benefits associated with implementation. This is precisely what many small and medium-sized companies underestimate. They are then completely taken aback and, in my opinion, are also at a disadvantage in terms of negotiation tactics.
On negotiation tactics: If the union demands a collective agreement social plan with a factor of 5.0, what then?
Theoretically, it could also demand a factor of 150. The usual factor is between 0.3 and a maximum of 1.8 gross monthly salaries per year of employment. A union demand of 5.0 is a so-called “prohibitive factor.” It serves solely to prevent the implementation of the company's decision. IG Metall has been doing this more frequently lately. From their justified point of view, this is to prevent the deindustrialization of Germany and to preserve jobs. If you want to cut jobs in Germany that are no longer profitable here, for example by relocating them to Slovakia, then IG Metall can try to prevent this. The way to prevent this is to draw up a prohibitive collective bargaining social plan and enforce it by means of strike action.
Does that actually require the company being struck to be bound by collective bargaining agreements?
No. If employers are in a sector covered by collective agreements – and most are – then the union responsible can approach them with a collective bargaining demand. An employer not bound by collective agreements, for example in the automotive supply industry, operates in a sector covered by collective agreements. This is because there are collective agreements – in this case IG Metall – that would apply to them if they were bound by collective agreements.
Are companies aware of this?
Often not at all. They think they have nothing to do with the union. But every union represented in a company has union rights. This means that it is not the employer who decides whether a collective agreement is negotiated, but the employees by joining the relevant union. If they join the union responsible for them and this results in a certain level of organization within the company, then the union will also take action. Because that is its job: to represent the interests of its members.
And according to Article 9, paragraph 3 of the German Constitution, striking is a fundamental right in Germany.
A labor lawyer friend of mine even says, “Striking is a human right.” However, only union members are allowed to strike in a company. And from a union's point of view, a strike only makes sense if it has a certain number of members in a company: if the level of unionization is greater than 50 percent, the risk of a collective bargaining agreement being demanded and enforced by strike action is much higher than if only 20 percent of the employees are in a union.
In Germany, the legality of strikes is governed by case law: labor courts decide on the legality and proportionality of a strike. Is there any legal protection at all for companies to reduce the potential for strikes?
Companies cannot speculate that a strike will be declared illegal. They can only prepare for the situation of a strike. They can carry out due diligence on their strike resistance, consider scenarios that could arise, and think about whether there are counter-scenarios. They then have various options they can consider to prepare themselves and significantly reduce their susceptibility to strikes.
So the first question in due diligence is: “How high is the risk of a strike in my company?” What is the best way to determine this?
By first clarifying whether a union is present in the company, i.e., whether it could play a role in the upcoming negotiations. Does the works council coordinate closely with the union? Is the local district secretary of the union perhaps even the negotiator for the works council? Next: How high is the level of unionization among the workforce? The applicable collective bargaining situation must also be clear: Are there, for example, collective bargaining agreements that establish a peace obligation with regard to collective bargaining social plan requirements? If so, the union cannot simply make a corresponding demand. Are there collective bargaining agreements on severance payments in the event of restructuring measures? If so, a collective bargaining social plan demand cannot simply be made. This is because if the employer is bound by a collective agreement, the union is subject to a peace obligation with regard to issues regulated by the collective agreement. These are the basic questions.
To what extent can companies take proactive measures? What questions should companies answer when developing operational measures?
First, these three: How hard could a strike hit me? What would a day of strike action cost me? And how long could I sit out a strike? This leads to preventive measures to maintain a certain level of production. In this way, companies can avoid becoming unable to deliver during a strike. For example, could the company produce in advance in the weeks before the restructuring is announced? Could it relocate production? Can it temporarily outsource work to subcontractors? Could it make greater use of temporary workers before a strike? These are all operational measures that can maintain production capacity, even in a strike situation.
What legal issues arise from this?
How are delivery obligations structured? Are penalties payable in the event of non-delivery? Every company should examine its contractual situation with its clients very carefully. My experience in the automotive supply industry shows that contracts can vary greatly: For example, there are contracts in which strikes are expressly recognized as force majeure. This means that failure to deliver due to a strike does not result in penalty payments. In other cases, penalties must be paid even if delivery is impossible due to a strike. The contractual situation can therefore be of crucial importance. Often, numerous contracts have to be reviewed because there are numerous clients. This raises the following questions: To what extent can I increase temporary staffing in advance? According to the law, temporary workers may not be used as replacements for striking employees. However, if I have already increased temporary staffing in advance, the temporary workers who continue to work do not replace the striking employees. However, they cannot be forced to work, and there are even collective agreements in the temporary work industry that prohibit temporary workers from working in companies affected by strikes. This must be checked in advance. Can I or am I willing to use so-called “strike breakers” and offer strike-breaking bonuses? Up to what amount are strike-breaking bonuses reasonable and effective? Companies should definitely prepare for all these issues.
In the preliminary discussion, you also mentioned strategic options—more specifically, two political options for averting an impending strike.
Yes. Let's assume that a supplier to a large OEM is threatened with a strike by IG Metall and will lose its ability to deliver. However, IG Metall, the major opponent, sits on the OEM's supervisory board—and this is typically the case: In case of doubt, the deputy chairman of the supervisory board is the head of IG Metall in the respective federal state or even the head of IG Metall as a whole – then political pressure can also be exerted. How? By the supplier communicating to the OEM at an early stage that there is a threat of delivery failure due to strikes. That, for example, just-in-time delivery will then no longer be possible. In doing so, they can ask to influence the negotiators through direct contact with IG Metall. That can help.
The second political option?
Is to involve politicians directly. This can be a win-win situation, because in case of doubt, politicians will also have an interest in ensuring that companies are not closed down and jobs are not lost, and may be willing to subsidize this. There are funds available at state and federal level that can be activated for this purpose. Such subsidies can be used, for example, to invest in forward-looking new technologies and thus avoid job cuts. In this way, companies can be restructured and made competitive again. However, this political commitment only works if the companies themselves are also prepared to invest.
There are certainly many exciting developments and cases in labor law. Which ones are you particularly interested in at the moment?
Legally, it's the developments in the law on default of acceptance, the evidential value of certificates of incapacity for work, and the discretion of the parties to collective agreements. The issue of working time recording is a perennial topic. I'm also closely monitoring developments in the labor market, because this plays a significant role in restructuring. We currently have 2.99 million unemployed people in Germany and, at the same time, around 700,000 job vacancies. This shows a huge mismatch. When it comes to staff reductions, it is an essential task for the negotiating parties to provide employees who lose their jobs with good opportunities for new, preferably equivalent jobs.
What solutions are you aiming for?
When negotiating restructuring, I try to work with the social partners to develop solutions that will quickly get employees who lose their jobs back into new employment. This requires investment in employee training, and sometimes retraining for occupational fields where there is high demand. In my view, this money is better invested than in high severance payments. We must play a direct role in the necessary transformation of our economy. We are facing a massive labor shortage in numerous sectors and industries. At the same time, there will continue to be restructuring and layoffs because business models no longer work or human labor can be replaced by digital solutions or AI. Shaping this process intelligently will secure our prosperity in the long term.
Thank you very much for talking to us, Mr. Wahlig.
