Case C‑677/20

Industriegewerkschaft Metall (IG Metall)
and
ver.di – Vereinte Dienstleistungsgewerkschaft

v

SAP SE
and
SE-Betriebsrat der SAP SE

(Request for a preliminary ruling from the Bundesarbeitsgericht)

Judgment of the Court (Grand Chamber), 18 October 2022

(Reference for a preliminary ruling – Social policy – European company – Directive 2001/86/EC– Involvement of employees in decision-making within the European company – Article 4(4) – European company established by means of transformation – Content of the negotiated agreement – Election of employees’ representatives as members of the Supervisory Board – Election procedure providing for a separate ballot in respect of the trade union representatives)

1. Questions referred for a preliminary ruling – Jurisdiction of the national court – Assessment of the need for and the relevance of the questions referred – Question relating to the interpretation of EU law – Obligation for the Court to assess the grounds of invalidity relied on by one of the parties to the dispute in the main proceedings, to which the referring court has not referred – None

   (Art. 267 TFEU)

   (see paragraphs 26, 28)

2. Social policy – European company – Employee involvement – European company established by means of transformation – Agreement on arrangements for the involvement of employees – Obligation to provide for at least the same level of all elements of involvement as those existing within the company to be transformed – Scope – National legislation providing, for the company to be transformed, for a separate ballot for the candidates nominated by the trade unions when electing employees’ representatives to the Supervisory Board – Obligation to preserve such a ballot in the European company following its transformation – Respect for the principle of equal treatment

   (Council Directive 2001/86, recitals 3, 5 and 18 and Arts 2(k) and 4(4))

   (see paragraphs 38-40, 43, 45, 46, 48-50, operative part)

Résumé

Before being transformed into a European company (SE) in 2014, SAP, a public limited-liability company governed by German law, had a supervisory board consisting, in accordance with German law, ( 1 ) of representatives of the shareholders and of the employees. Among the latter, the representatives nominated by the trade unions were elected on the basis of a ballot that was separate from that established for the election of the other Supervisory Board members representing the employees. ( 2 ) The agreement on arrangements for the involvement of employees within SAP, following the company’s transformation into an SE, provides, in turn, for different rules in cases where a reduced supervisory board is established. In that case, the trade unions may nominate candidates for some of the seats for representatives of the employees allotted to the Federal Republic of Germany and elected by the employees employed in Germany, but without a separate ballot being envisaged for the election of those candidates.

Industriegewerkschaft Metall (IG Metall) and ver.di – Vereinte Dienstleistungsgewerkschaft, two trade union organisations, brought an action challenging that absence of such a separate ballot. Seised of an appeal on a point of law lodged by those trade unions, the Bundesarbeitsgericht (Federal Labour Court, Germany) decided to refer a question to the Court concerning the interpretation of Directive 2001/86. ( 3 ) According to the referring court, the agreement at issue does not meet the requirements under German law. ( 4 ) That court has doubts, however, as to whether Article 4(4) of Directive 2001/86 ( 5 ) provides a lower level of protection, in accordance with which it would have to interpret the national law.

The Court, sitting as the Grand Chamber, rules that the agreement on arrangements for the involvement of employees applicable to an SE established by means of transformation, as referred to in that provision, must provide for a separate ballot with a view to electing, as employees’ representatives within the SE’s Supervisory Board, a certain proportion of candidates nominated by the trade unions, where the applicable national law requires such a separate ballot as regards the composition of the Supervisory Board of the company to be transformed into an SE. In the context of that ballot, it is necessary to ensure that the employees of that SE, of its subsidiaries and of its establishments are treated equally and that the trade unions represented therein are treated equally.

Findings of the Court

In the present case, the Court begins with a literal interpretation of Article 4(4) of Directive 2001/86 and concludes from this that, as regards the definition of employees’ representatives and the level of their involvement that must be preserved, the EU legislature referred to the national law and/or practice of the Member State in which the company to be transformed into an SE has its registered office.

Thus, as regards, in particular, the participation of employees’ representatives, in order to determine both the persons empowered to represent the employees and the elements that characterise the participation enabling those representatives to exercise an influence on the decisions to be taken within the company, it is necessary to refer to the assessments made in that regard by the national legislature and to the relevant national practice.

Accordingly, if a procedural element established by national law, such as a separate ballot for the election of representatives of the trade unions, constitutes an element that characterises the national system of participation of employees’ representatives and is mandatory in nature, that element must be taken into account for the purposes of the involvement agreement referred to in Article 4(4) of Directive 2001/86.

According to the Court, the context of that provision bears out the literal interpretation. The EU legislature sought to reserve special treatment to SEs established by means of transformation in order to ensure that the rights as regards involvement enjoyed by employees of the company which is to be transformed into an SE under national law and/or practice would not be undermined.

The Court considers that that reading of Directive 2001/86 is also consistent with its objective. As is apparent from that directive, ( 6 ) the securing of acquired rights as regards involvement sought by the EU legislature implies not only the preservation of employees’ acquired rights in the company to be transformed into an SE, but also the extension of those rights to all the employees of the SE, even in the absence of any indication to that effect in the national law. Moreover, in order to ensure the equal treatment of the trade unions, the right to nominate candidates for election as employees’ representatives within a supervisory board, in the present case, cannot be reserved to the German trade unions alone.

According to the Court, the interpretation thus adopted is also borne out by the origins of Directive 2001/86. It is apparent from those origins that the system applicable to SEs established by means of transformation was the main point of controversy in the negotiations. It was only with the introduction of a provision, reproduced in Article 4(4) of that directive, covering specifically the case of the establishment of an SE by means of transformation with a view to avoiding a weakening of the level of employee involvement in the company to be transformed, that the process for the adoption of that directive was able to continue.

Lastly, the Court states that the right to nominate a certain proportion of candidates for election as employees’ representatives within a supervisory board of an SE established by means of transformation, such as SAP, cannot be reserved to the German trade unions alone but must be extended to all trade unions represented within the SE, its subsidiaries and establishments, in such a way as to ensure that those trade unions are treated equally in respect of that right.

( 1 ) Paragraph 7 of the Gesetz über die Mitbestimmung der Arbeitnehmer (Law on employee participation) of 4 May 1976 (BGBl. 1976 I, p. 1153), as amended by the Law of 24 April 2015 (BGBl. 2015 I, p. 642) (‘the MitbestG’).

( 2 ) Pursuant to Paragraph 16(1) of the MitbestG, the representatives of the trade unions in the Supervisory Board are to be elected by the delegates by secret ballot and in accordance with the principles of a proportional ballot.

( 3 ) Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees (OJ 2001 L 294, p. 22).

( 4 ) In particular, Paragraph 21(6) of the Gesetz über die Beteiligung der Arbeitnehmer in einer Europäischen Gesellschaft (Law on the involvement of employees in a European company) of 22 December 2004 (BGBl. 2004 I, p. 3675, 3686), in the version in force since 1 March 2020, pursuant to which, in the case of an SE established by means of transformation, the agreement on participation is to provide for at least the same level of all elements of employee involvement as those existing within the company to be transformed into an SE.

( 5 ) Article 4(4) of Directive 2001/86, relating to the content of the agreement on arrangements for the involvement of employees within the SE, provides that, in the case of an SE established by means of transformation, the involvement agreement is to provide for at least the same level of all elements of employee involvement as those existing within the company to be transformed into an SE.

( 6 ) In particular from recital 18 thereof, which states, inter alia, that the securing of employees’ acquired rights as regards involvement in company decisions is a fundamental principle and stated aim of that directive.