17 June 2024
Companies with 50 or more employees are required by law to have a Works Council. In December 2023, the Minister reported that only 69% of such companies have established a Works Council.
In other words, 1/3rd of employers fail to comply with the law. There is currently no penalty for failing to establish a Works Council. The Minister has announced that she will investigate the possibility of stricter enforcement of the Works Councils Act (Wet op de ondernemingsraden) in this regard. Ultimately, it is also up to the employees themselves to establish a Works Council and to take the initiative to do so; if necessary, this can be enforced through the courts. For example, having a Works Council helps involve employees in the working conditions in the company.
The law, by providing the Works Council with the right of initiative and its statutory incentive role, offers ample opportunities for the Works Council to raise issues that concern the workplace or more broadly concern society in a consultation with the company. In this way, the Works Council can use its influence for the benefit of the workforce. Consider topical issues such as equal pay for men and women, undesirable behaviour, the shortage in the labour market, hybrid working and working from home and, last but not least, corporate social responsibility (sustainability). Incidentally, some of the topical social issues mentioned here are explicitly covered by the Works Council’s statutory right to endorse decisions, i.e. working conditions and appointment policies. In late 2023, the Minister drew attention to raising such social issues in Works Council meetings. The Works Council therefore already has statutory opportunities to do so!
Works Council members have a legal right to attend training about employee participation at the company’s expense. Legislative and regulatory developments relevant to Works Council members are evolving at a rapid pace. It is crucial that Works Council members remain up to date in order to perform their work in the best interests of the workforce and the proper functioning of the company. The Minister announced at the end of 2023 that the Works Council Act would be amended to make a training plan on the issue of working conditions mandatory. Works Council members should therefore make use of the training budget!
Almost all pension schemes will be subject to changes in the near future as a result of the Future of Pensions Act (Wet Toekomst Pensioenen). The Works Council has a major role to play in this respect, especially with regard to pension schemes that are administered by a pension insurer. After all, the right to endorse decisions applies to changes in the pension agreement and in part also to changes in the administration agreement between the company and the pension administrator.
The Future of Pensions Act introduces many changes. For example, arrangements must be made regarding compensation for (certain groups of) employees. The role of the Works Council in the transition plan should also be considered. We expect that Works Councils and their legal pension advisers will have a lot of work to do in 2024 to amend pension schemes in order to comply with the Future of Pensions Act on time.
The economic situation in various industries is uncertain, in part because of international developments. The effects of the corona period, such as the repayment of subsidies, are also still noticeable by many companies. Many companies are forced to cut costs through restructuring. The Works Council has a big role to play in this regard. As the Works Council, make sure to be informed and involved in restructuring plans as early as possible. This will create the best chance to exert substantial influence on these plans. With regard to restructuring plans, the Works Council is obviously entitled to provide advice and often also has the right to endorse decisions.
Would you like to know more about Works Councils in 2024? Or do you have another legal question? Please do not hesitate to contact us.
