Handbook for Supervisory Board Members

Dr. Thomas Altenbach provides a comprehensive guide to the key issues for supervisory boards. In particular, he also takes into account the current draft legislation on association sanctions and whistleblower protection. The handbook provides a comprehensive presentation of the tasks of the supervisory board as well as the rights and duties of its members and imparts the knowledge necessary for the diligent performance of office.

From the election of supervisory board members, to the competencies and duties of the supervisory board, the work of the supervisory board in detail, remuneration and reimbursement of expenses, internal investigations, conflicts of interest, liability and damages including D&O insurance.

Esports – a booming industry with unique legal needs

Through its rapid growth in the last few years Esports has shifted into the public focus and has become a new relevant industry generating revenues of $1.1 billion globally in 2019.

Home to one of the Esports leagues ESL – Electronic Sports League, and other relevant Esports companies, leading teams and players, Germany has played a vital role in this development. Besides its rapid growth, the esports ecosystem has also evolved in terms of professionalism, economically as well as legally.

A significant milestone in this regard was the establishment of the German esports association ESBD – ESPORT-BUND DEUTSCHLAND e.V. in 2017 which was initiated in the offices of act legal Germany. Since then, major legal steps have been taken, such as the introduction of the German esports visa in 2020, a dedicated visa category for esports.

When Robots decide!

The robot as your „boss”

“My boss is a robot”, the employees of the investment company Deep Knowledge Ventures in Hong Kong must have thought when a computer algorithm was appointed as a full member of the board of directors. And in fact, robots are conquering our working world at record speed. They order goods, work hand in hand with human colleagues on assembly lines, distribute products on the Internet and dictate high-frequency trading. Technological progress is enabling employers to use intelligent systems not only to supplement human labor, but also to replace it in certain areas, including supervisory functions. It is therefore high time to deal with the (labor law) legal framework.

It is agreed that the appointment of a computer algorithm to the supervisory board or the board of directors of a German stock corporation is not (yet) possible (sects. 76 para. 3 sent. 1, 100 para. 1 sent. 1 German Stock Corporation Act – AktG). However, the assumption of the supervisory function by a robot is not a future dream. The Japanese electronics group Hitachi, for example, has work instructions executed by intelligent systems in its German branches. Legally, there is nothing to prevent the delegation of the right to issue instructions from a human to a machine if the employer ensures, by means of suitable programming, that the essential circumstances of an individual case are balanced before issuing the instruction and that affected interests are taken into account appropriately (sects. 315 German Civil Code – BGB, 106 German Trade Regulation – GewO). The only apparent limit for the “robot boss” is found in article 22 para. 2 of the GDPR, according to which decisions which have “legal effects” or “significant adverse effects” on the person concerned must not be based on automated processing of personal data. Thus, the robot boss may not (yet) fire. Already reality and after a thorough evaluation in terms of data protection law, it is legally permissible for humans to make personnel decisions prepared by algorithms, especially in the case of fully automated application procedures and selection tools. (“People Analytics”).

So, robots replace workers. But can they also be qualified as employees under labor and company law? Do they count towards the thresholds that determine how many employees are required to install a co-determined supervisory board, how large the works council has to be or whether the German Dismissal Protection Act applies? Are robots to be considered on an equal footing with human employees during social selection? Even if some authors demand this, it must be denied in each case. All threshold values (still) presuppose a natural person and social selection would be taken ad absurdum. Instead of the dismissal of two employees, the “young” robot without alimony obligations is likely to be less worthy of social protection. This would cancel out the constitutionally protected entrepreneurial freedom to optimize work processes by using modern technologies. Robots remain things.

Is the machine „liable”?

Consequently, even humanoid robots are not liable for injuries to employees/customers and/or damage to the company’s reputation that they cause. In order to determine the person responsible, it depends on whether the damage caused is due to incorrect programming or incorrect operation of the robot. The legislator has not yet taken action. It is currently being discussed whether the use of intelligent systems should be subject to the legal reservation of taking out compulsory insurance. The following precautions are particularly recommended: Carrying out risk assessments (sect. 5 German Working Conditions Act – ArbSchG), observance of the safety precautions mentioned in the Industrial Safety Ordinance as well as the ISO standard 10218-2011 and involvement of the works council (sects. 90, 87 para. 1 No. 7 German Works Constitution Act – BetrVG).

Robotics policy required!

But how does a board of directors / supervisory board control self-learning systems that work on the principle of trial and error and automatically change themselves? How does a board of directors act dutifully on the basis of “appropriate information” if it has no insight into the black box that lies between the input and output levels? Company management is expected to balance the potential risks in each individual case, closely monitor developments in the robots they use and implement compliance systems to protect against (legal) violations. It also appears to be legally necessary to lay down the aforementioned legal framework conditions in a written “robot policy”. Company management is well advised to communicate the use of artificial intelligence transparently, especially to investors, employees and business partners. No one is prevented from investing their money in risky projects, working with robots and/or trading with them. But they should know.

New guide of the US Department of Justice – Requirements for a Compliance Management System

On April 30, 2019, the U.S. Department of Justice (DOJ) published new guidance on the requirements for compliance management systems, a revised and expanded version of a document of the same name published in February 2017, which collected more than 120 test questions to identify the criteria that DOJ prosecutors should use to assess compliance programs when assessing penalties or entering into a deferred or non-prosecution agreement. This article provides a brief overview.

#MeToo? – Relevant answers

Social interaction at work or sexual harassment?
What employers must do and when.

A short, too tight hug for a birthday, a quick follow-up mail after a nice lunch, a random touch while looking at the screen together: Are these scenes examples of good social interaction at work or sexual harassment? What employers must do and when.

Bridge part time: right to return full time

The legislator has once again provided companies with a provision whose unclear interpretation could in practice be contested in court. In addition to “normal” part-time employment, bridge part-time employment will apply from 2019.

Travel time = working time?

In practice, there are always questions as to the extent to which time spent travelling is to be remunerated as working time. Recently, a decision by the Federal Labor Court in this context has attracted a great deal of attention. With this ruling, the Erfurt judges have laid down a number of principles regarding the obligation to remunerate travel time modified. However, it will still be necessary to differentiate between working time law and remuneration.

Who does not know the own Compliance rules, is unsuitable for the guidance of the company?

The topic of compliance is moving even further into the foreground for managing directors after a ruling by the OLG Hamm 1 in May of this year. In the overall view with the law for the fight against corporate crime (“Association Sanctions Act”), the draft of which was recently presented by the Federal Ministry of Justice and Consumer Protection (“BMJV”), it is foreseeable that all managing directors will promptly – if they have not already done so – familiarise themselves with the compliance management system (“CMS”) in their company and with the compliance management system (“CMS”) in their company and have to deal more intensively with their own range of duties.

Your boss, the roboter – Robotics from a labour law perspective

Dr. Thomas Block, MBA claims that the technological progress does not only allow employers to support human workforce by intelligent systems, but also to replace it in specific areas, inter alia in superior positions. That is why it is about time to address the legal framework respectively.