HR and AI glossary: German HR terms explained in English

Restructuring, carve-out and integration

Restructuring

A planned change to an organisation's size or structure, in Germany governed by fixed steps with the works council, from reconciliation of interests to social plan to individual notices.

Social plan (Sozialplan)

An agreement with the works council that compensates or mitigates the financial and social disadvantages of an operational change for the workforce, typically through severance and transition rules.

Reconciliation of interests (Interessenausgleich)

An agreement between employer and works council on whether and how an operational change is carried out, usually negotiated alongside the social plan.

Social selection (Sozialauswahl)

The legally required, traceable selection of which employees are affected by redundancies, based on length of service, age, maintenance obligations and disability.

Mass redundancy notification

A mandatory notification to the Federal Employment Agency when a certain number of dismissals is issued within 30 days. Without it, the dismissals are invalid.

Conciliation committee (Einigungsstelle)

An arbitration body with a neutral chair that decides bindingly when employer and works council cannot reach agreement on a co-determined matter.

Carve-out

Separating a business unit from its parent to continue as a standalone company, including its own HR processes, contracts and systems from day one.

Section 613a BGB (transfer of undertakings)

The German rule under which employment relationships transfer automatically to a new owner when a business or part of it is transferred, central to every carve-out and acquisition.

Post-merger integration

Merging two organisations after an acquisition, including HR processes, contracts, pay bands, systems and co-determination, into one rulebook.

Entity setup

The legal and operational build-out of a new company, including HR processes, in a new country or after a carve-out.

Outplacement

Support for departing employees on the way to their next role, offered by the employer as part of a fair separation, personally delivered rather than as an agency programme.

Dismissal protection (KSchG)

The Protection Against Dismissal Act applies from ten employees onwards and requires a justified reason for every termination: conduct, personal capability or operational necessity.

Co-determination and employment law

Works council (Betriebsrat)

The elected employee representation in a German establishment, possible from five employees onwards, with statutory rights to information, consultation and co-determination.

Works Constitution Act (BetrVG)

The German statute that governs works councils, their election, their rights and the procedures employer and works council have to follow.

Co-determination

The works council's right to agree, not just to be informed, on certain matters. Without agreement, the employer cannot implement the measure.

Section 87 BetrVG

The list of matters with mandatory co-determination, including working time, pay principles and technical systems that can monitor performance or behaviour, which covers most HR software and AI tools.

Works council agreement (Betriebsvereinbarung)

A written agreement between employer and works council that regulates a workplace matter bindingly for all employees, for instance the use of AI in HR.

Works council hearing (Anhörung)

Before every dismissal the works council has to be heard under Section 102 BetrVG. A dismissal without a proper hearing is invalid regardless of the reason.

Collective agreement (Tarifvertrag)

An agreement between a trade union and an employers' association or single employer that sets pay grades, working hours and other terms for the covered workforce.

Fixed-term contract (TzBfG)

Under the Part-Time and Fixed-Term Employment Act, contracts may be limited to two years without a specific reason, with stricter rules for repeat hires and longer terms.

Temporary agency work (AÜG)

Agency workers are governed by the Temporary Employment Act with an 18-month maximum assignment per client and equal-pay rules after nine months.

Data processing agreement (Art. 28 GDPR)

The contract between a controller and a processor, required whenever an external provider, including an AI vendor, processes personal data on the company's behalf.

AI in HR

AI policy

A document issued unilaterally by the employer that governs AI use in HR: permitted tools, data that may be entered, responsibility and human final decisions. An interim step before or substitute for a works council agreement.

EU AI Act

The EU regulation that classifies AI systems by risk and imposes additional duties on high-risk uses, several of which sit in HR: hiring, promotion, task allocation, monitoring.

High-risk AI

The EU AI Act classification for AI used in candidate selection, promotion or performance decisions, with documentation, human oversight and registration duties for the deploying company.

Human final decision

The principle that every personnel decision is taken by a person. AI prepares, summarises and drafts; it does not reject, rank or grade people on its own.

Use-case inventory

The list of every AI use in HR, official and unofficial, that starts a works council agreement process: what tool, what data, who decides, what for.

Shadow AI

AI tools used in the team without approval, typically private accounts of consumer chatbots with real employee data in the prompts. The first thing an AI policy ends.

HR routine

A recurring HR task built once as a repeatable AI-assisted workflow in the tools the team already uses: job ads, screening criteria, reference letters, onboarding, employee questions.

Screening criteria

Written, job-related criteria against which applications are assessed, defined before AI or a person reads the first CV, so that the assessment is consistent and defensible.

Reference letter (Arbeitszeugnis)

In Germany every departing employee is entitled to a written reference with a coded, benevolent language. A frequent HR routine and a good first AI use case.

Metrics and HR operations

Time-to-hire

The time from opening a role to signed contract, a central HR metric. In Germany often eight to twelve weeks for specialist roles, longer for HR leadership itself.

Cost of vacancy

The estimated cost of an unfilled role: lost output, overload of the existing team, delayed decisions. The number against which a day rate is compared.

HRIS

Human Resources Information System, the central software for employee master data and HR processes. Its selection and rollout are subject to co-determination in Germany.

Global mobility

The process around international assignments of employees, including social security, tax and residence law, and the payroll consequences in both countries.

Onboarding

The structured process for new employees in their first weeks and months, from contract to first-day setup to a manager who owns the first year.

Talent management

Systematic processes for developing, retaining and succession-planning employees and managers, including performance reviews built to fit the workforce they apply to.

Payroll governance

Steering payroll with a provider or in-house: inputs on time, special cases handled, year-end closed, and a monthly check that what was paid is what was owed.

Frequently asked questions