BAG: Pension change without formal works council vote invalid

German court rules that a pension change agreement was invalid because the works council never formally voted on it. The employer must now pay the difference in pension benefits.

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BAG rules pension change invalid without formal vote

The Federal Labor Court (BAG) ruled on January 27, 2026 (Case 1 AZR 147/24) that a pension change agreement was invalid because the works council never formally voted on it. The employer must now compensate the employee for the difference in pension benefits. Courts must investigate Betriebsvereinbarungen (works council agreements) on their own initiative when their validity is questioned.

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Courts must verify works council agreements

A rule is only valid if the works council formally approves it through a vote. The court had to decide whether the employer could rely on the works council chair’s signature alone without a formal resolution.

Pension system changed without proper approval

A worker’s pension was transferred from one fund to another in 2007. The works council chair signed the new agreement, but the full council never formally voted on it. The employer argued the change was valid because the council had discussed it. The court disagreed.

The content focuses on the key legal principle established by the ruling while making it understandable for employees and employers without legal training.