Group Emotion Recognition (GER) aims to infer collective affect in social environments such as classrooms, crowds, and public events. Many existing approaches rely on explicit individual-level processing, including cropped faces, person tracking, or per-person feature extraction, which makes the analysis pipeline person-centric and raises privacy concerns in deployment scenarios where only group-level understanding is needed. This research proposes VE-MD, a Variational Encoder-Multi-Decoder framework for group emotion recognition under a privacy-aware functional design. Rather than providing formal anonymization or cryptographic privacy guarantees, VE-MD is designed to avoid explicit individual monitoring by constraining the model to predict only aggregate group-level affect, without identity recognition or per-person emotion outputs. VE-MD learns a shared latent representation jointly optimized for emotion classification and internal prediction of body and facial structural representations. Two structural decoding strategies are investigated: a transformer-based PersonQuery decoder and a dense Heatmap decoder that naturally accommodates variable group sizes. Experiments on six in-the-wild datasets, including two GER and four Individual Emotion Recognition (IER) benchmarks, show that structural supervision consistently improves representation learning. More importantly, the results reveal a clear distinction between GER and IER: optimizing the latent space alone is often insufficient for GER because it tends to attenuate interaction-related cues, whereas preserving explicit structural outputs improves collective affect inference. In contrast, projected structural representations seem to act as an effective denoising bottleneck for IER. VE-MD achieves state-of-the-art performance on GAF-3.0 (up to 90.06%) and VGAF (82.25% with multimodal fusion with audio). These results show that preserving interaction-related structural information is particularly beneficial for group-level affect modeling without relying on prior individual feature extraction. On IER datasets using multimodal fusion with audio modality, VE-MD outperforms SOTA on SamSemo (77.9%, adding text modality) while achieving competitive performances on MER-MULTI (63.8%), DFEW (70.7%) and EngageNet (69.0).