The employee suggestion scheme—also referred to as a suggestion system, company suggestion plan, or the continuous improvement process (CIP)—is a structured program within an organization for evaluating and rewarding employee ideas that contribute to operational improvement.
Its primary goal is to promote a culture of continuous improvement by motivating employees to voluntarily submit ideas that go beyond their regular job responsibilities. These suggestions aim to enhance company performance, encourage innovation, and increase employee engagement through participation and responsibility.
What Constitutes a Suggestion for Improvement?
Unlike patentable inventions, suggestions for improvement are typically not eligible for legal protection and are only relevant within the company. However, they are far from insignificant. In fact, under Section 20 (1) and (9) of the German Employee Invention Act (ArbNErfG), employees may be entitled to compensation if their idea provides the company with a significant advantage—comparable to the benefit of a protectable invention.
Employee suggestions can relate to:
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Optimization of operational processes
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Simplification of work methods and procedures
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Product design enhancements
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Cost savings in materials and labor
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Workplace safety and accident prevention
Evaluation and Implementation
To assess submitted ideas, companies typically establish a suggestion committee composed equally of employer and employee representatives. This ensures that both organizational and workforce perspectives are fairly considered.
The process for handling suggestions—along with rewards and compensation structures—is often outlined in collective agreements. If such agreements are not in place, it is advisable to formalize the system through works agreements. Importantly, the works council holds a co-determination right under Section 87 (1) No. 12 of the Works Constitution Act, meaning it must be involved in shaping the employee suggestion system.
Key Benefits
An effective employee suggestion system can:
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Foster innovation and continuous improvement
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Increase employee motivation and commitment
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Enhance productivity and efficiency
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Strengthen the employer-employee relationship
