Essentials of the Dutch Works Council Act
This annex aims to give an overview of the essentials of the Dutch Works Council Act (Wet op de ondernemingsraden, WOR). It is not meant to give legal guidance. A full text English translation of the Act can be found on this website: https://www.ser.nl/-/media/ser/downloads/engels/2022/works-councils-act.pdf
This Annex only covers the WOR, not employee right on board level representation and other participation arrangements covered by Dutch company law.
Every undertaking in the Netherlands with at least 50 employees is obliged to set up a works council (OR) with a range of information and consultation rights (each independent plant is classified as an undertaking in Dutch law) In addition, undertakings with between 10 and 50 employees are required to set up a personnel delegation (PVT), a body with some of the powers of the works council, if a majority of employees request it, although this is relatively rare. If no works council or PVT is in placet the employer is required to organize biannual personnel meetings. Setting up a works council is the responsibility of the employer.
The extent of the works council's powers varies according to the issue involved. In broad terms the works council must be informed and consulted about economic issues but on social issues it must approve any changes.
Works councils were first introduced by law in 1950 and their extent and powers have gradually been extended since then. The bulk of the current legal framework for works councils is set out in the Works Councils Act of 1979, which was extended to smaller companies in 1981 and revised again in 1998. There were also minor revisions in 2004 to take account of the EU’s framework directive on information and consultation (2002/14/EC) and the most recent legal changes were introduced in 2013 and 2016 (on training and pensions respectively).
Works councils do not exist in all the undertakings which should by law have them, although they are normally present. Figures published in 2018 in a study undertaken on behalf of the labour ministry show that 67% of workplaces with more than 50 employees had a works councils The study found that works councils are more common in larger than in smaller workplaces. Differences also exist across sectors.
In workplaces with between 10 and 50 employees, 16% had a works council and 12% had a personnel delegation. Where personnel delegations have been established this has normally been done voluntarily by the employer. The study found that only 22% had been set up entirely or partially because of a request of the majority of employees.
Works councils are not directly trade union bodies although most have a often a large share of trade union members. It is, however, very common to find that some of the works council members are not in a union and in some cases trade unionists are in a minority, or even not present at all.
Trade unionists have a basic right to organise at work but, unlike the situation in other European states, such as France, Spain or Italy, in the Netherlands they have no statutory right to specific facilities. However, in some areas unions have been able to gain additional rights through collective bargaining.
A works council should be set up once there are 50 employees. The number of members increases with the size of the company, up to 25 in very large companies.
The works council consists entirely of employees (up to the 1970s the employer took the chair), who are elected by the entire workforce. The works council elects its own chair and one or more deputies, it draws up its own rules of procedure, but management must have an opportunity to comment on them.
In terms of frequency, the only legal requirements are that the works council must meet the employer at least twice a year to discuss the overall state of the business in the presence of one or more members of the supervisory board, and that the works council must meet the employer within at least two weeks of either side expressing a wish to do so. In practice many works councils meet once a month or two months, and there is also a joint meeting with the employer once every one or two months.
The works council can also set up standing-committees to deal with specific issues, such as health and safety, sub-committees covering specific parts of the undertaking, and temporary or ad hoc committees, set up to deal with specific issues.
The purpose of the works council is not simply to represent the employees only. The legislation makes clear that ‘consultations with and representation of’ the employees are also ‘in the interests of the sound functioning of the enterprise in all its objectives’.
The law provides the works council with three main types of rights: information rights, consultation rights and approval rights. In addition the works council has powers to make proposals to which the employer must respond – the right of initiative. Works councils are not normally involved in collective bargaining, although there are some exceptions.
The information rights mean that management is obliged automatically to give the works council information on a range of financial, economic and legal issues. At the beginning of each terms of office for the new works council (every three years – see below) management must provide information on the legal form, the structure and organisation of the business, its links with other businesses and the power relations between them (extended to international links in the changes introduced in 2013) and the make-up of the management. On an ongoing basis, management must provide details of trends in employment and social policy and the company's own report and accounts (both annually); the company's prospects and trends in the company's activity particularly its investment plans (twice a year); and details of long term corporate plans (if prepared). The works council also has the right to ask for all the information it reasonably needs to carry out its tasks.
Consultation rights also relate to economic, financial and legal questions but in parctice concentrate often on those with more direct effect on the workforce.
Management must consult if it plans to: sell all or part of the company; take over other companies; end all or a large part of the company's activity; change the activity or organisation of the company; relocate the company; undertake large scale recruitment or the recruitment of temporary workers; make major investments; seek large loans; introduce new technology and make changes which will affect the environment.
On all these issues the employer must seek the views of the works council and delay taking action for at least a month if the works council disagrees with the proposal. During this period the works council can appeal to the Companies Chamber of the Court of Appeal in Amsterdam. The views of the works council must also be sought when a director is being appointed but the works council cannot delay this decision.
The approval rights relate to company/workplace regulations on a range of topics including: pension insurance (unless this is has been agreed by the unions in an industry-wide scheme), profit-sharing or savings schemes; hours worked and annual leave, ainly with regard to scheduling); salary and wage scales and job classification schemes; health and safety; recruitment, dismissal and promotion; training; staff assessment; social assistance for employees; consultation at shop floor level; the handling of complaints; the holding of personal data on employees; and systems to check on the presence of employees.
Regulations on these issues cannot be introduced, changed or ended without the approval of the works council unless they are covered by a collective agreement. If the works council fails to give its approval the employer can appeal to the district court.
These basic rights can be extended by collective agreements or an agreement between the works council and management.
In practice there are differences in how each of these types of rights are used. There seem to be fewest difficulties with the provision of information, at least in medium and larger undertakings. The consultation rights are more problematical with companies sometimes claiming that the changes they propose are not sufficiently important to warrant consultation or asking for the works council to respond too quickly. As, in any case, the Court is likely agree to the company's plans unless procedural mistakes have been made, or employees’ interests have not been sufficiently taken into account. The real importance of these rights is to enable the employer and works council to reach an agreement without a court case. The approval rights are also heavily used, particularly in dealing with working time arrangements, but sometimes a works council will fail to give its approval but then not take action when the company goes ahead with its plans anyway. It requires the works council to initiate legal action to nullify the company's plans.
The right to take the initiative and make proposals to which the company must respond is used relatively infrequently. This may well change with the Covid-19 crisis.
Works council members are elected as part of a list of candidates, with the choice made according to the percentage of votes which each list receives. Lists can be proposed either by the unions after consultation with their membership in the enterprise, or, in a change to the law introduced in 2013, by any employee or group of employees. The only stipulation is that employees making a nomination in this way may not be a member of a union that has submitted a list of candidates. Before the change, a third of the employees had to support the submission of a list for it to be valid.
Works council members normally serve for three years, although the works council's own rules of procedure can reduce the term of office to two years or extend it to four years.
Works council members can only be dismissed if the worker himself or herself agrees in writing, or if it has been authorised by a magistrate. This authorisation will only be given if there are serious reasons for immediate dismissal or the company, or part of it, closes. Any connection between the dismissal and works council membership makes the dismissal unlawful.
The exact amount of paid time-off for works council duties is left to be agreed between the works council and the employer. But as a minimum, works council members are entitled to 60 hours’ time off a year, in addition to time off for meetings. In practice in larger companies, some works council members have substantially more. Works council members have a further right to at least five days’ training a year, although again agreements can improve on this. Members of sub-committees of the works council also have a right to three days’ training a year and those who are both members of the works council and a sub-committee have a right to eight days’ training a year.
The 2013 amendments to the Works Councils Act left these rights untouched. However, it removed the obligation on employers of more than 50 people to contribute to a levy to fund training. The amount to be paid was fixed each year by the joint union-employer body SER as a percentage of each employer’s total wage bill. Under the 2013 arrangements the SER now only sets guideline amounts for training and the training is paid directly by each employer.
The employer is obliged to provide facilities necessary to enable the works council to function. These could include an office, photocopying, telephones etc. In addition the works council can call on outside experts to take part in meetings to give advice on a particular agenda point and/or to provide consultancy reports. These experts are paid for by the employer, provided the employer has been informed in advance.
Where several companies belong to a single group, a central works council (COR) must be set up if this is beneficial to the process of information and consultation of employees. It is also possible to set up an intermediate level works council (GOR) where several disparate businesses are grouped together in a single holding company.