Works Agreement (Betriebsvereinbarung) – Definition, Types & Practical Tips

A works agreement (Betriebsvereinbarung) is a written agreement between the employer and the works council (Betriebsrat) that sets binding rules for working conditions within a company – covering everything from working hours and remote work to data protection. It is governed by § 77 of the Works Constitution Act (Betriebsverfassungsgesetz, BetrVG) and applies directly to all employees within the company, without the need for individual employment contract clauses. HR professionals should understand when a works agreement is mandatory, what it must contain, and how to conclude one in a legally sound way.

What Is a Works Agreement?

A works agreement (Betriebsvereinbarung, BV) is a written contract between the employer and the works council of a company. It governs collective workplace matters and – unlike individual agreements in employment contracts – applies automatically and directly to all employees within its scope. No separate consent from individual employees is required.

The legal basis is § 77 BetrVG, which requires that works agreements be concluded in writing, signed by both parties, and made accessible to all employees at an appropriate location within the company. Alongside legislation and collective bargaining agreements (Tarifverträge), works agreements are among the most important legal instruments in German employment law.

One important practical note: a works agreement requires an existing works council. Companies without a works council cannot conclude works agreements – any equivalent arrangements must then be made individually in employment contracts.

What Types of Works Agreements Are There?

Mandatory Works Agreement (Erzwingbare Betriebsvereinbarung)

On certain matters, the works council has a statutory right of co-determination (Mitbestimmungsrecht). This means that if no agreement is reached, the works council can force a decision through an arbitration board (Einigungsstelle) – a parity body comprising representatives from both sides and a neutral chairperson, whose ruling is binding.

Mandatory co-determination rights are set out in § 87 BetrVG and cover, among other things:

• Start and end of daily working hours and their distribution across the working week
• Regulation of overtime
• Introduction and use of technical systems for monitoring employee conduct and performance
• Leave policies and holiday scheduling
• Questions relating to in-company pay structures (e.g. piece-rate work)

Voluntary Works Agreement (Freiwillige Betriebsvereinbarung)

On matters outside the statutory right of co-determination, the works council cannot force a works agreement. However, employer and works council may agree to regulate such matters voluntarily. § 88 BetrVG gives examples such as additional accident prevention measures, voluntary social benefits, or employee savings schemes.

In practice, remote work policies and data protection agreements relating to the use of digital HR tools have become common subjects of voluntary works agreements.

Distinction from Collective Bargaining Agreements (Tarifvertrag)

A common misconception: a works agreement and a collective bargaining agreement are not the same thing. The key difference:

• A collective bargaining agreement (Tarifvertrag) is concluded between a trade union and an employers' association (or a single employer) and often applies across an entire industry.
• A works agreement is concluded between the employer and the works council of a single establishment and applies only there.

Under § 77 Abs. 3 BetrVG, the primacy of collective bargaining agreements also applies: matters already regulated – or typically regulated – by a collective bargaining agreement may not be supplemented or replaced by a works agreement, unless the collective agreement expressly permits this.

What Must a Works Agreement Contain?

Formal Requirements

Under § 77 Abs. 2 BetrVG, written form is mandatory. This means:

• The works agreement must be set out in writing.
• It must be signed in person by both the employer and the works council.
• It must be posted at a suitable location within the company or made accessible to all employees.

Verbal or informal arrangements have no legal effect as a works agreement.

Required Contents

A legally sound works agreement must contain at minimum:

• Scope of application: Which employee group does it cover (e.g. all employees, only hourly workers)?
• Subject matter: What is specifically being regulated (e.g. working hours, remote work, data protection)?
• Substantive provisions: The concrete rights and obligations of both parties
• Duration and notice periods: Does the agreement apply indefinitely or for a fixed term? What notice period applies for termination?
• Signatures: From both parties, with date

How Is a Works Agreement Concluded?

In practice, concluding a works agreement follows a clearly defined process:

Step 1 – Initiative: Either the employer or the works council signals the wish to regulate a particular matter through a works agreement. Both sides have the right to initiate negotiations.

Step 2 – Negotiation: Both parties negotiate the content and conditions. The goal is a mutually agreed solution. Important: for voluntary works agreements, there is no obligation to reach agreement – if negotiations fail, no works agreement comes into effect.

Step 3 – Arbitration board (mandatory works agreements only): If negotiations fail on matters subject to statutory co-determination rights, either party may refer the matter to the arbitration board (§ 76 BetrVG), which then makes a binding decision.

Step 4 – Written form and signature: Once agreement is reached, the works agreement is set out in writing and signed by both parties. Formal defects (e.g. a missing signature) render the agreement invalid.

Step 5 – Publication: The signed works agreement is posted within the company or made accessible to all employees. It only takes legal effect from this point.

Current Practical Topics

Works Agreement on Remote Work

Since the pandemic, remote work agreements have become among the most common voluntary works agreements. While there is no statutory entitlement to remote work in Germany, companies can create or restrict such entitlements through a works agreement. Typical provisions include: the right to and scope of remote work, equipment obligations, availability hours, IT security and data protection, and cost allocation (e.g. for internet or office furniture).

Works Agreement on Data Protection

When using software solutions that process employee data – such as HR tools, time-tracking systems, or digital communication platforms – a data protection works agreement is strongly recommended. It governs which data is collected, who has access, and how long data is retained. Such agreements can serve as a legal basis for data processing in the employment context under § 26 of the Federal Data Protection Act (BDSG). Experts also recommend a clarifying works agreement when introducing digital HR tools such as aptitude assessment platforms, to ensure transparency for employees and legal certainty for the company.

Works Agreement on Working Time Recording

Following the Federal Labour Court ruling of 13 September 2022 (1 ABR 22/21), employers in Germany are obliged to record their employees' working hours. A works agreement is well-suited to set out the specific time-recording system to be used (e.g. digital, stationary, mobile), define responsibilities, and govern how the collected data is handled. Since working time recording falls under the works council's co-determination rights (§ 87 Abs. 1 Nr. 6 BetrVG), works council involvement is in any case mandatory.

Frequently Asked Questions about Works Agreements

What is a works agreement?

A works agreement is a written agreement between the employer and the works council under § 77 BetrVG. It applies directly and bindingly to all employees within its scope – without any individual employment contract provision being required. Works agreements have normative effect, similar to a statute within the company.

What is the difference between a mandatory and a voluntary works agreement?

A mandatory works agreement covers matters on which the works council has a statutory right of co-determination (§ 87 BetrVG). If no agreement is reached, the works council can refer the matter to an arbitration board. A voluntary works agreement (§ 88 BetrVG) involves no such right – it only comes into effect if both parties consent.

What must a works agreement contain?

At minimum: written form, signatures from both parties, scope of application, subject matter, and duration and notice periods. It must also be communicated to the workforce (§ 77 Abs. 2 BetrVG).

What is the difference between a works agreement and a collective bargaining agreement?

A collective bargaining agreement is concluded between a trade union and an employers' association and often applies industry-wide. A works agreement is concluded between the employer and the works council of a single establishment. Under § 77 Abs. 3 BetrVG, the primacy of collective agreements also applies: matters covered by a collective agreement may generally not be modified by a works agreement.

Can a works agreement be terminated?

Yes. A works agreement can be terminated with the agreed notice period or – for good cause – without notice. For mandatory works agreements, the so-called continuing effect (Nachwirkung) applies under § 77 Abs. 6 BetrVG: even after termination, the provisions remain in force until a new agreement is reached. This continuing effect generally does not apply to voluntary works agreements.

What happens if there is no works council?

Without a works council, it is not possible to conclude a works agreement. Matters that would otherwise be governed by a works agreement must then – where legally permissible – be agreed individually in employment contracts.

What does a remote work agreement cover?

Typical provisions: whether and to what extent remote work is permitted, who provides what equipment, what availability hours apply, how data protection and IT security are ensured, and who bears costs (e.g. for internet). Since there is no specific statutory co-determination right for remote work, this is a voluntary works agreement.

Does a works agreement apply to senior executives?

No. Senior executives (leitende Angestellte) within the meaning of § 5 Abs. 3 BetrVG do not fall within the scope of the Works Constitution Act. Works agreements therefore do not apply to them as a rule – unless the agreement explicitly includes them, which is only possible within narrow limits.

Conclusion

The works agreement is a central instrument of workplace co-determination and an important regulatory framework for HR professionals. It creates binding conditions for working arrangements, protects both employees and the company from legal uncertainty, and builds trust between the workforce and management.

For practical purposes: know the difference between mandatory and voluntary works agreements, consistently observe the written form requirement, and involve the works council early – especially when introducing new technologies, working time models, or HR tools.

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Sources

• Works Constitution Act (BetrVG) – §§ 76, 77, 87, 88. Federal Ministry of Justice, 2024. https://www.gesetze-im-internet.de/betrvg/
• Federal Data Protection Act (BDSG) – § 26. Federal Ministry of Justice, 2024. https://www.gesetze-im-internet.de/bdsg_2018/
• Federal Labour Court, decision of 13 September 2022 – 1 ABR 22/21 (obligation to record working hours). https://www.bundesarbeitsgericht.de
• Federal Ministry of Labour and Social Affairs (BMAS): Co-determination in the workplace. https://www.bmas.de
• Hans Böckler Foundation / WSI: Guide to Works Agreements. https://www.boeckler.de