Collective redundancies, salary and paid holidays cut backs, ending the bonus scheme: these are all measures which can be taken by employers in an economic crisis. Measures which almost always (have to be) taken in consultation with trade unions and/or the Works Council (OR). Involvement of and contribution by the Works Council, as the representative of the employees within the company, is now even more important than ever.
Importance of the Works Council
The Works Council has rights. This is clear from case law. Our advice to each Works Council is to exercise these rights seriously. The employer may, moreover, profit from a Works Council that seriously utilizes the opportunities of the Works Council Act (WOR). After all, a proposal made by the employer which is endorsed by the Works Council has support within the company and makes implementation of for example the above unpopular measures easier.
Right to prior consultation
The Works Council has the right to be informed of important decisions to be taken by the entrepreneur at an early stage. The Works Council may advise on a wide range of financial, economic and organizational proposals made by the entrepreneur. It is important that the Works Council actually addresses any and all potential objections in its advice. From case law it follows that the Works Council cannot introduce new objections in court proceedings (the Enterprise Section [Ondernemingskamer] of the Amsterdam Court of Appeal has jurisdiction) at a later date.
Social plans are now increasingly being discussed. An employer often drafts a social plan in consultation with the trade union(s). However, the Works Council also has something to say about the social plan. The Works Council and the employer should both be aware of this.
Right to endorse
The Works Council has the right of endorsement. Employers who propose to change a bonus scheme, a lease car or a pension scheme need the Works Council’s approval. If the Works Council refuses to agree to a modification or withdrawal of such a scheme, the entrepreneur can still enforce endorsement by initiating proceedings before the sub-district sector. The Works Council can also apply to the sub-district sector if the entrepreneur acts in contradiction with the Works Council Act, for example by withdrawing such a scheme without consulting the Works Council first.
Additional powers of the Works Council
Besides the aforementioned and the cases described in the Works Council Act it has been generally accepted in case law that the Works Council has an independent competence. This is the case if this is in the interest of an effective performance of the duties of the Works Council. This could be the case in a situation where the Works Council sues on behalf of the employees for fulfilment of consultation agreements. The Works Council also has an independent competence in respect of the annual accounts procedure.
Costs Works Council
The Works Council may wind up as a party in proceedings or initiate proceedings itself with the Enterprise Section [OK] of the Amsterdam Court of Appeal or via the operating committee before the sub-district judge. In certain circumstances the costs of the Works Council for legal representation will be paid by the entrepreneur.
Do you have questions about the right to prior consultation or the right of endorsement of the Works Council or would you like to discuss a case? Please contact the section Employment & Pension.