What are the implications of the German Federal Labour Court's decision on the voting rights of matrix managers in matrix organisations?
Matrix structures are widespread in the modern working world. In matrix organisations, employees and executives from different establishments and/or group companies work together across traditional establishment or corporate boundaries.
Matrix organisations raise numerous legal questions, not least from the perspective of employment law. A lot of questions revolve around so-called matrix managers, who manage employees of another establishment or company. The German Federal Labour Court (BAG) has made an important decision regarding these managers (decision dated 22 May 2025 – 7 ABR 28/24) and has now also published its reasons. It concerns matrix managers' active voting rights. The decision is of great importance in view of the works council elections scheduled for spring 2026, as it affects, among other things, how the voters' lists are drawn up, preparations for which have already begun in many establishments. However, it extends far beyond the works council elections.
Matrix managers' right to vote in works council elections: The Higher Labour Courts' inconsistent case law
All employees of an establishment who are 16 years of age or over and are not top executive staff have voting rights in a works council election. The same is true for temporary agency workers if they are assigned to the establishment for more than three months. One of the prerequisites therefore is that the respective employee is assigned under works constitution law to the establishment in which the election is to be held.
To date, matrix managers who (also) manage employees from another establishment or several other establishments have usually only been assigned to one establishment, namely the establishment to which their employment contract refers or in which their work is focused (often referred to as the "Stammbetrieb" or "main establishment"). Following the last works council elections, several Higher Labour Courts have had to consider the question of whether matrix managers' voting rights are limited to one establishment or whether they may have voting rights in multiple establishments and, if so, in which ones.
The courts across Germany have so far been inconsistent in answering this question: Baden-Württemberg Higher Labour Court took the view that matrix managers could be integrated into multiple establishments but active voting rights only exist in the main establishment. Meanwhile Hesse Higher Labour Court and Munich Higher Labour Court assumed that the managers in question have voting rights in all establishments in which they were integrated. They held that it is sufficient for the matrix manager to contribute to the realisation of the establishment's work-related purpose by performing their management tasks.
German Federal Labour Court: Right to vote in multiple elections possible
The German Federal Labour Court (BAG) has now resolved the legal uncertainty resulting from the diverging decisions: In its decision dated 22 May 2025, the Seventh Panel ultimately concurred with the opinion of Hesse Regional Labour Court and Munich Regional Labour Court. In the view of the German Federal Labour Court
voting rights are linked to the employee's affiliation with the establishment, which is justified by their integration into the establishment's organisation. The fact that an employee is already integrated into an establishment and therefore has voting rights in this establishment does not preclude their voting rights in another establishment. It is possible to have voting rights in several establishments.
With this decision acknowledging the possibility of an employee to have voting rights in multiple establishments, the German Federal Labour Court has now created legal clarity:
It is now clear that matrix managers must be included in the voters' list in all of the employer's establishments in whose organisation they are actually integrated and may vote for the works council. In its reasoning, the German Federal Labour Court stated that the German Works Constitution Act (BetrVG) does not expressly exclude voting rights in multiple elections. It is not justifiable to deny voting rights to matrix managers who are affiliated with the establishment solely because they are also affiliated with another establishment. If the works council has influence over the legal status of an employee within the scope of codetermination (as in the case of a matrix manager in the event of their integration), there is a need for representation and legitimisation, with the consequence that the employee must also have voting rights. The fact that codetermined matters may also or exclusively arise in another establishment with which the matrix manager is affiliated does not preclude voting rights in multiple establishments.
It all depends on the manager's integration into the establishment
As expected, the German Federal Labour Court also commented in its decision on the requirements for the relevant integration of matrix managers. The decisive factor is whether the employer is pursuing the work-related purpose of the establishment with the help of the matrix manager. To this extent, in the view of the German Federal Labour Court
the manager's professional authority to issue instructions can be taken into account. However, this presupposes that performing these instructions involves fulfilling of the operational tasks to be performed by the employees in the establishment or in the work processes there. In any case, the location where the work is done is not the decisive factor in determining integration into and hence affiliation with an establishment. It is not mandatory for the manager to perform their work on establishment premises, nor do they have to be "on site" for a certain minimum amount of time, nor do they have to be bound by instructions from a person who is also working in the establishment and who is their superior.
In addition, the German Federal Labour Court points out that a manager is typically integrated if they must regularly cooperate with the employees working in the establishment to perform the tasks within their responsibility and thus they actually exercise their professional authority to issue instructions. However, occasional preparatory or additional work for the work-related purpose of an establishment is not sufficient for integration.
Depending on the specific structure of the matrix organisation, reviewing it can be extremely time-consuming. Employers should therefore generally identify matrix managers in the respective establishments and start checking the integrations in dispute now so that they can respond appropriately to requests from the election committee for the information required for the voters' list. As there is a risk of time-consuming and cost-intensive proceedings disputing the election in the event of a breach, particular care is required.
In addition, the German Federal Labour Court stated that the concept of an establishment,
is not to be understood in exclusively geographical terms (establishment premises), but (primarily) in functional terms (establishment purpose), meaning that neither individual employment contract agreements on a place of work nor the place of work itself is decisive.
This also expressly applies to employees who fulfil a consistent work-related purpose in teams operating across multiple locations. This also applies to the affiliation of employees with organisational units under works constitution law formed on the basis of a collective bargaining agreement or a works agreement pursuant to section 3 (1) no. 1 to 3 German Works Constitution Act (BetrVG), which are deemed to be an establishment pursuant to section 3 (5) sentence 1 German Works Constitution Act (BetrVG). It is not the place of work that is decisive, but the integration.
Works council elections in matrix structures: What applies in matrix organisations across multiple companies?
The German Federal Labour Court's decision dated 22 May 2025 relates to internal matrix structures within companies. It remains to be seen what applies to matrix managers who are employees of another group company or even – within the framework of international matrix structures – of a foreign company, i.e. when it comes to matrix organisations across multiple companies and matrix managers' affiliation with an establishment that is not a contractual employer. Do they also have voting rights and are they to be included in the voters' list?
Case law from the Higher Labour Courts on matrix structures across multiple companies – German Federal Labour Court case law does not yet exist – does not address voting rights (section 7 German Works Constitution Act (BetrVG)) but rather the works council's right of codetermination in individual personnel measures (section 99 German Works Constitution Act (BetrVG)) and is inconsistent. However, most recently, the German Federal Labour Court overturned a decision made by one Higher Labour Court which affirmed the works council's right of codetermination pursuant to section 99 German Works Constitution Act (BetrVG) for a matrix manager who is employed by a foreign group company and has their place of work abroad. The German Federal Labour Court ruled that a right of codetermination requires that the matrix manager be bound by instructions from the owner of the establishment and that the owner of the establishment have at least a partial right to issue typical instructions of an employment relationship, i.e. with regard to work content, work location and working times (decision dated 23 September 2025 – 1 ABR 25/24).
Against this background, often there are good arguments that matrix managers who are employed by other group companies do not have voting rights.
This is all the more true because they are not employees of the establishment owner, meaning that the requirements of section 7 sentence 1 German Works Constitution Act (BetrVG) are not met. The employees are also typically not hired out for work, meaning that the right to vote does not generally follow from section 7 sentence 2 German Works Constitution Act (BetrVG). The view, which we share, is that the prerequisites for "application by analogy" are not met. This is not (yet) confirmed, however. In the case of matrix managers in foreign group companies, according to recent case law the "territoriality principle" does not provide an argument against the application of the German Works Constitution Act (BetrVG) to matrix managers abroad.
What else applies to matrix managers from the perspective of works constitution law? There are still unanswered questions regarding voting rights, the works councils' composition and responsibilities, codetermination and works agreements.
Against the background of the decision dated 22 May 2025, there is much to suggest that the German Federal Labour Court will also apply the established principles to other matters of works constitution law relating to matrix managers' potential affiliation with an establishment. In line with this, matrix managers can now also be assumed to be eligible for election if they are integrated into the respective establishment. In addition, they are also likely to be counted towards the threshold values that are used to determine, for example, the size of the works council and the number of members to be released from work duties, as well as the weighting of votes in the central works council and group works council.
This is important not least for the proper preparation of the election notice in the run-up to the works council election. This must ultimately contain the correct number of works council members to be elected. Otherwise the election can be disputed.
It will also be interesting to see how matters that follow from this are dealt with in practice: Which works council is responsible when matrix managers are affected? Is it the local works councils or is it the central or group works council? It is right that a differentiation must be made here.
In addition, affiliation with multiple establishments – as the German Federal Labour Court correctly acknowledges in its decision dated 22 May 2025 – raises further questions, in particular relating to delimitation in the area of substantive codetermination: Which works agreements are applicable to matrix managers? What happens if works agreements conflict with each other? In this respect the German Federal Labour Court is limiting itself to stating that these questions must be resolved in individual cases by determining the scope of application of the respective works agreement. The formulation of the scope of works agreements will therefore be (even) more important in future.
The question of the scope of application and other questions are often anything but trivial. In practice, pragmatic solutions can often be found. However, when this does not succeed, various disputes are inevitable.
Employers should be proactive, not reactive
Companies with matrix structures are well advised to carefully analyse their operational structures, chains of command and reporting lines and to make adjustments where appropriate and possible, and not just in view of the upcoming works council elections. Ultimately, according to the German Federal Labour Court's decision, it is no longer sufficient to only assign matrix managers to their main establishment and only place them on the voters' list there. Instead, employers must now examine on a case-by-case basis which establishments the manager is integrated into. This is important not just for the upcoming works council elections – employers must also face up to all the other pressing questions fuelled by the German Federal Labour Court's decision on matrix managers' voting rights.
