Retrospective adjustment of works council remuneration: The question of the burden of proof

The remuneration of works council members is often a contentious issue. In March 2025 (7 AZR 46/24), the Federal Labour Court (BAG) ruled on a case in which, according to the employer, an excessively high salary had previously been paid to a works council member who was exempt from their regular duties.

An overview of the key provisions

Under Section 37(1) of the Works Constitution Act (BetrVG), the office of works council member is an honorary position. This means that the principle of unpaid service applies. However, under Section 37(4), first sentence, of the BetrVG, a works council member must be treated in the same way as comparable employees in terms of salary progression, in line with standard practice within the company. Furthermore, Section 78 of the Works Constitution Act (BetrVG) prohibits both discrimination against and preferential treatment on the grounds of works council activities. It is obvious that these provisions, as demonstrated in the Federal Labour Court (BAG) ruling, can lead to conflicts.

The facts of the case

The claimant had been employed by a car manufacturer for many years and was exempt from his regular duties in his capacity as a works council member. His remuneration had been increased on several occasions over the years. The defendant employer justified these adjustments by referring to the remuneration trends of comparable employees. Most recently, this corresponded to pay grade 20. However, following a further review of the remuneration of works council members, the employer concluded that the claimant’s previous classification had been too high. It therefore downgraded him to pay grade 18 and demanded the repayment of part of the remuneration already paid. The claimant considered the reduction to be unjustified and brought a claim in court for the difference in remuneration.

This raised, in particular, the question of who must demonstrate and prove that the remuneration adjustment originally made by the employer was correct or incorrect.

The Federal Labour Court’s ruling

The Seventh Senate ruled that, in principle, the works council member must set out and prove the conditions for a claim under section 37(4) of the Works Constitution Act (BetrVG). However, a different rule applies if the employer had previously determined the remuneration itself on the basis of the pay levels of comparable employees and had paid it accordingly over a prolonged period. In this case, the employer must set out and prove that the earlier adjustment was objectively incorrect.

The Federal Labour Court (BAG) thereby overturned the lower court’s judgement, in which the Lower Saxony Regional Labour Court (LAG Niedersachsen) (6 Sa 559/23) had rejected the claimant’s claim under Section 37(4) of the Works Constitution Act (BetrVG) on the grounds that the claimant had not sufficiently demonstrated the conditions for the higher remuneration.

No grandfathering clause for excessive remuneration

The Federal Labour Court (BAG) nevertheless made it clear that if a pay rise contravenes the prohibition on preferential treatment, the works council member’s expectation that it will continue is not protected. Consequently, works council remuneration that has been set once remains open to challenge. If a previous adjustment is found to constitute impermissible preferential treatment, the employer may, in principle, correct it. However, the employer must be able to provide a substantiated explanation as to why its previous assessment was incorrect.

Conclusion

This ruling does not lead to blanket protection of works council remuneration. However, employers wishing to reverse previous remuneration decisions bear the responsibility, under certain conditions, for proving that those decisions were flawed.