What are threshold values?
Thresholds in the context of employment law refer to certain limits in the number of employees above which additional legal obligations or rights apply to employers. The legislator links many regulations to such employee numbers in order to ensure the protection of employees without placing a disproportionate burden on smaller companies. For employers, this means As the workforce grows, new co-determination rights, occupational health and safety obligations or other requirements may take effect. It is therefore important to have an overview of the relevant thresholds and to keep an eye on when these thresholds are reached. The following section explains two key criteria that are important when assessing such thresholds and explains why they are important in practice.
Establishment or undertaking – scope of the threshold
Labor law thresholds can refer either to the individual business or to the entire company. This distinction is crucial: an establishment is the organizational unit in which business decisions are practically implemented (e.g. a branch or subsidiary), while the company is the overarching entity in which strategic decisions are made. Larger companies often consist of several operations.
Thresholds are measured differently depending on the law: Some regulations include the number of employees of the entire company, others are based solely on the employees of a single company. When the law refers to “employer”, this usually means the company as a whole.
Why is this important?
Because it determines how the workforce is counted. If threshold values are considered company-wide, all employees at all locations must be added together. This means that a company with several small branches must fulfill a certain obligation as soon as the total number of employees is exceeded – even if none of the individual sites is that large on its own. Conversely, company-specific thresholds apply separately for each location. An employer with several small establishments could possibly remain below the thresholds and avoid certain obligations as long as none of the establishments reaches the relevant size. In practice, this means that in the case of statutory obligations, it must be clear whether the size of the individual establishment or the entire company is taken into account in order to determine the correct number of employees. For example, the Works Constitution Act (BetrVG) relates many co-determination rights to the company, whereas the mandatory quota for the employment of severely disabled employees is calculated company-wide (see table below).
Period under review vs. reporting date – how is the number of employees counted?
Another criterion is when and how the number of employees for a threshold value is determined: Do you look at a longer period of time or a specific cut-off date? Most laws are based on the regular number of employees – in other words, the usual, average number of employees is taken into account, not snapshots. Formulations such as “usually employs more than X employees” indicate that an average or regular number of employees is meant. Only in a few cases is explicit reference made to a specific reference date.
Why is this relevant?
If a threshold value is defined as “usually X employees”, this protects against random fluctuations: Short-term over- or underruns on individual days have no effect. The decisive factor is how many employees are typically employed. For example, the Dismissal Protection Act only applies if more than 10 employees are permanently employed – a temporary shortfall would not immediately invalidate the application once achieved. Conversely, an employer cannot avoid obligations simply by, for example, temporarily employing fewer staff on the cut-off date if more people are otherwise regularly employed. In the case of thresholds based on annual averages, such as the obligation to employ severely disabled persons, the number of employees is averaged over the year and used, for example, for the notification on March 31 of the following year (annual average number of employees).
In addition, some laws differentiate which persons count: Full-time employees count in full, part-time employees on a pro rata basis according to their working hours (e.g. half-day = factor 0.5). Temporary workers are also often taken into account if they have been employed for more than six months. These rules ensure that the calculation of the “regular” workforce is realistic. Overall, it is important to take into account the period under consideration or a cut-off date in order to have planning certainty: Employers should recognize early on when they are about to permanently exceed a threshold value and prepare for the obligations that then take effect.
Overview: Important thresholds in German employment law
The following table summarizes some of the most important thresholds and the associated regulations in German employment law. The table shows the minimum number of employees above which a regulation applies, which obligation then arises, the legal basis and whether the number of employees is to be determined per company or per company. It also indicates whether the regular number of employees (period under review) or a reference date is used as a basis and provides practical advice.
Note: Depending on the law, part-time employees are usually counted on a pro rata basis; trainees and long-term temporary workers are counted in many cases (see notes).
| Minimum number of employees | Regulation/obligation | Applicable legal standard | Applies to | Period under review or reference date | Standard industry information / additions |
|---|---|---|---|---|---|
| 5 (permanent employees entitled to vote) | Works council: election of an employee representative in the company possible (1 member for 5-20 employees) | Works Constitution Act, Section 1 (1); Section 9 BetrVG | Operation | as a rule (permanent ≥5) | At least 3 of the 5 must be eligible (non-executive, >18 years); does not apply to executive employees (these have their own representation, see below) |
| 5 employees < 18 yrs (or trainees < 25 yrs) | Youth and trainee representation (JAV): Election of a representative of young employees/trainees | Works Constitution Act, Section 60 (1) BetrVG | Operation | as a rule (permanently ≥5 trainees/young people) | Only possible if a works council already exists in the company |
| 5 severely disabled employees | Representation of severely disabled employees: Election of a representative of severely disabled employees in the company | SGB IX, § 177 para.1 | Operation | as a rule (permanently ≥5 severely disabled) | Applies to companies in which at least 5 severely disabled people are employed on a more than temporary basis |
| 10 senior executives | Speakers’ Committee: Election of a representative of senior executives (management) | Speakers’ Committee Act, § 1 SprAuG | Operation1 | as a rule (permanent ≥10) | Applies to senior executives who are excluded from normal works council representation. Committee initially consists of 1 member. |
| > 10 employees (more than 10) | General protection against dismissal: Dismissal Protection Act (KSchG) fully applicable; dismissals must be socially justified | Dismissal Protection Act, Section 23 (1) KSchG | Operation | as a rule (>10 regular employees) | Part-time employees are counted pro rata (e.g. 0.5 for ≤20 hours per week); temporary employees >6 months are also counted. (<5 Existing employees before 2004 may enjoy grandfathering) |
| ≥ 15 employees (company) | Part-time entitlement: employees’ right to reduce working hours (permanent job) | Part-Time and Fixed-Term Employment Act, Section 8 (7) TzBfG | The company | as a rule (>15 regularly) | Employer can only reject part-time request if there are urgent operational reasons; threshold also applies to entitlement to part-time work during parental leave (BEEG). |
| ≥ 15 employees (company) | Care leave: entitlement to up to 6 months unpaid leave to care for a close relative | Caregiver Leave Act, Section 3 (1) PflegeZG | The company | as a rule (>15 regularly) | Applies to caring for a dependent relative at home; employers <16 employees are exempt from the obligation to provide care. |
| ≥ 20 workplaces (company) | Employment of severely disabled persons / equalization levy: Employment obligation for 5% of jobs with severely disabled persons, otherwise equalization levy | SGB IX, Section 154 (1); Section 160 SGB IX | The company | Annual average (over calendar year) | At least one severely disabled person from 20 workplaces; quota increases in stages (e.g. 2 for ≥40 employees). Authority levies annual equalization levy, calculated on 31 March for previous year. |
| ≥ 20 employees (company) | Data protection officer: obligation to appoint a company data protection officer if ≥20 people are regularly employed with automated data processing | Federal Data Protection Act, Section 38 (1) BDSG | Operation | as a rule (regularly ≥20) | Applies across all sectors if personal data is processed internally. Threshold does not apply if a data protection impact assessment is required (then DPO already from 1 person). |
| > 20 employees (company) | Extended co-determination of the works council: employer must involve the works council before every recruitment, transfer, grouping, etc. and obtain its consent; in the event of operational changes, right to negotiations on reconciliation of interests/social plan | Works Constitution Act, §§ 99, 111 BetrVG | Operation | as a rule (>20 regularly) | These rights only apply if a works council exists in the company. Below the threshold, the works council has less say in individual personnel measures. |
| ≥ 20 employees (company) | Occupational health and safety committee (ASA): Establishment of an occupational health and safety committee consisting of employer, works council and specialist employee representatives | Occupational Safety Act, § 11 ASiG | Operation | as a rule (always >20) | Committee for Occupational Safety and Health Protection; in addition, as a ruleR. safety officers must be appointed (regulation of the employers’ liability insurance associations). |
| ≥ 25 employees (company) | Family care leave: entitlement to up to 24 months of partial leave (with at least 15 hours of work per week) to care for a relative | Family Caregiver Leave Act, Section 2 (1) FPfZG | The company | as a rule (>25 regularly) | Combination of part-time work and caring for relatives over a longer period of time (“family care”). Employers <26 employees are exempt from the statutory obligation. |
| ≥ 50 employees (company) | Internal reporting office (“whistleblower”): Obligation to set up an internal reporting office for whistleblowers | Whistleblower Protection Act, Section 12 (2) HinSchG | The company | Reference date: as soon as threshold value is reached (permanently exceeded) | Applies to companies in all sectors with 50 or more employees. Reporting office for the protection of whistleblowers; under 50 voluntary, but not mandatory. |
| > 100 employees (company) | Economic Committee: Establishment of an Economic Committee to discuss economic matters with the Works Council | Works Constitution Act, Section 106 (1) BetrVG | The company | as a rule (>100 regularly) | Applies if there is a general works council in the company. The Economic Committee serves to exchange information on the economic situation/planning. |
| > 200 employees (company) | Pay transparency information: Employees’ individual right to information on equal pay (median comparison) | Remuneration Transparency Act, Section 12 (1), Section 10 EntgTranspG | Company (or office) | as a rule (>200 regularly) | Applies in companies/departments with 201 or more employees. Employees can request information on the median pay of comparable colleagues of the opposite sex. Applies to employers with >200 employees per site. |
| ≥ 500 employees (company) | One-third participation in the Supervisory Board: 1/3 employee representation on the Supervisory Board required by law | One-Third Participation Act, § 1 DrittelbG | Company (corporation) | as a rule (>500 regularly) | Applies to companies in the legal form of AG, GmbH, etc. (not applicable e.g. to family companies with >50 % family ownership). Threshold excludes executive employees from the count. |
| > 2000 employees (company) | Parity co-determination: Supervisory Board must be made up of an equal number of employee and shareholder representatives | Co-determination Act 1976, Section 1 (1) No. 2 MitbestG | Company (corporation) | as a rule (>2000 regularly) | Applies to large corporations (>2000 domestic employees). Temporary workers >6 months count as well. Many groups circumvent this obligation by choosing a legal form (SE) – to be observed in practice. |
1 Speaker committees can be formed in individual companies or company-wide, provided there are at least 10 senior executives in total.
Why these thresholds are important for employers
Depending on the number of employees, the legal rights of employees and the organizational obligations of the employer change considerably. For example, above a certain size, an employer must involve a works council and possibly other committees, is then subject to strict protection against dismissal for its employees or must employ a certain number of severely disabled persons or pay compensatory levies. If a company unknowingly exceeds a threshold value and fails to comply with new obligations, there is a risk of legal consequences – from ineffective dismissals to fines. Companies should therefore keep an eye on their personnel development and take measures in good time if it becomes apparent that a relevant threshold will be reached. Forward-looking HR planning and internal reviews can ensure that all legal requirements are met and surprises are avoided. In this way, the company is equipped for growth and remains legally compliant at the same time.
Digital support with time recording solutions from ZMI
Compliance with labor law thresholds requires a precise overview of the number of employees regularly employed – especially if part-time employees, trainees or temporary workers need to be correctly taken into account. ZMI’s time recording solutions help companies to map their personnel structure transparently and in compliance with regulations. Automated working time recording, flexible reporting functions and integrable evaluations enable HR managers to reliably track whether relevant threshold values are reached or exceeded. This allows legal obligations to be identified in good time and fulfilled with minimal administrative effort – regardless of whether the data is required for the business or the company as a whole.