The renowned car manufacturer Porsche faces unexpected costs following a recent judgement by the Federal Labor Court (BGH). The corporation had reduced the benefits of works councils and has now been ordered by a labour court to make back payments.

In the dispute over salary adjustments for employee representatives, the works council chairman Harald Buck had taken legal action. The labor court decided on Thursday that the reduction of the remunerations by Porsche was unlawful. Four other works council members were also successful with their lawsuits. However, these judgments are not yet legally binding.

The judge determined that the salary cut did not constitute a violation of the prohibition of favoritism, as is often claimed. The decision has a signal effect and could also impact other works councils in Baden-Württemberg. Lawsuits were filed to review the legality of salary adjustments according to the new Federal Court of Justice jurisprudence.

The background to the disputes is a criminal procedure against a VW manager, which led to the Federal Court of Justice declaring the long-standing practice of salary adjustments for works councils as inadmissible at the beginning of the year. Fearing accusations of disloyalty, other large companies have significantly cut the remuneration of their employee representatives. This is also the case for Volkswagen, where many works councils have filed lawsuits against the cuts. Often successfully, as a spokesperson for the group works council confirms: "In 95 percent of the cases, the works councils have won."

In the case of Porsche, the Stuttgart Labour Court emphasized that the works council chairman distinguished himself by his willingness for further education. Even though this was not in his original profession, but in connection with his activity as employee representative. Before his election as works council chairman, Buck worked as a car mechanic. After an internal review, he was promoted to service consultant, but this was reversed at the beginning of 2023. This resulted in substantial salary cuts.

Buck has been at the helm of the 41-member committee since May 2022. A spokesperson for Porsche emphasized that the labor court had dismissed the works council's lawsuit. "With this, the court confirmed that the salaries were legally set until the Federal Court of Justice's decision in January 2023." The company welcomes the verdicts and now also feels legally protected in this matter. However, Porsche has the option to appeal at the Regional Labor Court in Baden-Württemberg.