Multinational corporations and the blocking of trade unions in Germany

Abstract

Purpose This study aims to analyze the effect the liberalization of industrial relations in Germany has had on trade unions’ influence on companies’ decisions. Particular attention is given to European measures of flexibilizing company law and how they affect industrial relations in Germany. Design/methodology/approach After presenting a theoretical basis regarding industrial relations and corporate governance, the paper then demonstrates, via a case study, the effects of the flexible European company law. It examines the strategic avoidance of trade union activity at SAP, a case that ended up before the European Court of Justice. Findings The flexibility of European company law allows companies to limit the influence of trade unions on company decisions. Limiting trade unions' internal participation weakens their position overall. Precautionary measures to protect employees’ rights help to reduce the dangers of this process. Originality/value The influence of European law brings a new perspective to the transformation of the German industrial relations model. The analysis of the strategy of using the legal type of the European company (Societas Europaea) to limit the internal activity of trade unions demonstrates the connection between institutional settings and corporate governance.