When must companies grant their employees a say on the supervisory board? The Federal Court of Justice (BGH) answered this question in two rulings dated 23 June 2026, thereby establishing a practical threshold. The case numbers are II ZB 11/25 and II ZB 12/25.
What is the One-Third Participation Act about?
The One-Third Participation Act (DrittelbG) requires public limited companies with, as a rule, more than 500 employees to fill one-third of the seats on the supervisory board with employee representatives. The decisive factor is therefore whether a company reaches this threshold of 500 employees. This was precisely the issue at stake in both cases.
The facts of the case: A group comprising several small companies
The case centred on a group comprising several subsidiaries. None of the parent companies concerned employed more than 500 staff on its own. The works councils argued that the companies jointly operated what is known as a ‘joint enterprise’ and that, therefore, all employees working there should be counted together. If this were the case, the threshold would be exceeded and the companies would be obliged to ensure employee representation on the supervisory board.
The Federal Court of Justice’s ruling
The Federal Court of Justice did not accept this line of argument. The threshold is determined solely by the number of the respective company’s own employees, not by the combined workforce of a joint venture. According to the Federal Court of Justice, this follows directly from the wording of the law: the point of reference is the public limited company itself, not the business as such.
There is also a systematic argument: the Works Constitution Act expressly contains a provision regarding the mutual attribution of employees in a joint enterprise for the purpose of establishing a works council. The legislature deliberately did not include a comparable provision in the One-Third Participation Act. This difference in treatment demonstrates that the legislature intended to apply a stricter standard in the context of co-determination within companies.
Nor does the group attribution rule under the German Third-Party Liability Act (DrittelbG) apply here. Whilst it does allow employees of subsidiaries to be attributed to the parent company under certain conditions – for example, where a control agreement is in place – this exception is narrowly defined in the Act and cannot be extended to joint ventures.
What does that mean in practice?
For groups of companies that operate joint premises or joint businesses, this decision is of considerable importance. It is not sufficient for several companies to cooperate in practice or to use the same premises in order to trigger the obligation to grant co-determination. The workforce of each individual company is always taken into account.
Anyone within a corporate group who wishes to clarify issues relating to corporate governance, the composition of supervisory boards or co-determination obligations should seek legal advice. Particularly when establishing a European Company (SE) and considering agreements on employee participation, the decisions taken at this stage can have significant consequences.
Source: BGH press releases
This article was created with the help of AI and has been editorially reviewed.
