How-to guide: How to work with works councils in the Netherlands

Introduction

This how-to guide was produced as part of a joint know-how initiative between Eversheds Sutherland and Lexology Pro.

This how-to guide will assist in-house lawyers and private practitioners with operations or clients in the Netherlands to understand and work with works councils. It provides information and guidance on the background, structure, organisation and rights of a works council.

This guide covers:

Background to works councils in the Netherlands
Structure and organisation of a works council
Key rights of a works council

This guide can be read in conjunction with Quick view: Key players in collective labour law – UK, Germany, Italy, France and the Netherlands.

Section 1 – Background to works councils in the Netherlands

Every business in the Netherlands that in general employs 50 or more individuals is required to set up a works council to govern employee participation in the management of the business. A works council is an independent body elected by and consisting of employees working in the business. The law relating to works councils in the Netherlands is found in the Works Council Act 1979 (WCA).

1.1 Requirement to establish a works council

Article 2 of the WCA states that:

‘Any entrepreneur carrying on an enterprise in which normally at least 50 persons are working shall, in the interests of the proper functioning of the enterprise with respect to all its objectives, establish a Works Council in order to ensure the proper consultation and representation of the persons working in the enterprise, and in order to be able to comply with any requirements of or pursuant to this Act that relate to the said Works Council’.

In order to establish whether or not the duty to establish a works council has been triggered, employers must ensure that they have a clear understanding of the terms used in article 2, namely:

an ‘Enterprise’, which is defined at Article 1c of the WCA as ‘Any organisation operating in the community as an independent entity in which work is performed on the basis of a private law or public-law employment contract’; and
an Entrepreneur’, which is defined at Article 1d of the WCA as ‘Any natural person or legal person carrying on an enterprise’.

An enterprise is therefore not always the same as an employing entity, or a legal entity. A legal entity could have multiple enterprises, or multiple legal entities could be one enterprise.

This guide uses the term ‘employer’ when outlining the duties of entrepreneurs under the WCA.

The WCA dictates a number of matters, including:

how to establish a works council;
key rights of the works council;
which topics require advice or consent of the works council; and
appeal procedures.

There is extensive case law to assist with interpretation of the WCA from the Enterprise Chamber of the Amsterdam Court of Appeal.

1.2 Decision making

Works councils in the Netherlands have a dual purpose to act in the interests of the enterprise and in the interests of the employees. This dual role is sometimes not very clear to works councils, as they tend to only take into account the interest of employees. However, Article 2 of the WCA refers to the ‘proper functioning of the enterprise’. This dual role is different to how, for example, a trade union operates.

1.3 The difference between works councils and trade unions

A works council is an internal independent body with its own rules and regulations, elected by the employees of an enterprise and with the right to promote and protect the interests of the employees. Works councils have no say on individual terms of employment and do not become involved in matters such as individual employee dismissals.

A trade union, by comparison, is a professional representation body that concludes collective bargaining agreements relating to matters such as salary and working hours for a whole industry or a specific employer. An employer may need to consult with a works council as well as with trade unions in some situations. On the other hand, it could be that collective bargaining agreements create additional rights for works councils on specific matters. The WCA is however clear that no consent is required from the works council if the matter in question has already been regulated for the enterprise in a collective labour agreement (Article 27(3) of the WCA).

1.4 Formation of a works council

While a works council is mandatory for enterprises with 50 or more employees, there is no automatic establishment of a works council once the threshold is met, which is the case in some other jurisdictions. In practice this means that the employer must give its employees the opportunity to set up a works council if it employs 50 or more employees on a regular basis, and the employer must assist with this process. However, the WCA does not go so far as to force the employer to organise works council elections if it is clear that employees are not willing to participate in, or become members of, a works council. There should be employees participating in the works council, and therefore without involved employees there would be no option to have a works council. In order to ensure the duty to establish a works council has been fulfilled, employers should take active steps to ask employees whether they want a works council.

There are no direct sanctions for employers that do not comply with the requirement to establish a works council, but employees are able to apply to court for a ruling that the employer must establish a works council. If an employer fails to take steps to establish a works council when employees formally request one, and, at a later date, the employer undergoes a process of change such as a restructuring or an acquisition, the employees can apply to court for a ruling that the change should be blocked, to give the employees a chance to establish a works council. Case law on this topic is rare but it remains a theoretical risk. Failure to take the required steps to establish a works council may therefore have significant implications for organisations, even if the implications might not be apparent immediately.

The key steps employers should follow when establishing a works council are set out in the table below.

Step 1	Explore whether employees are willing to participate. This can be done by approaching employees via a communication.
Step 2	Set up a Preparatory Committee. This is not a compulsory step but can be helpful in more complex cases or larger enterprises. The Preparatory Committee will usually be staffed by employees and representatives from HR and its role is to investigate whether or not employees want a works council.
Step 3	Draft provisional rules of procedure. These in general are based on the Social and Economic Council of the Netherlands Model Rules of Procedure for Works Councils. The model rules of procedure can be adapted as the WCA does allow deviations.
Step 4	Works council elections.

1.5 Works council elections

The election of an enterprise’s first works council takes place on the basis of the provisional rules of procedure, which include information on the election process.

The responsibility for organising the initial works council elections lies with the employer rather than with the employees, although the employer can ask employees to assist with the election process.

Employees who have been working in the enterprise for at least three months shall be eligible to stand for election and to vote.

A works council election process usually takes 13 weeks.

1.6 Joint works councils, central works councils and group works councils

The WCA contains a provision at Article 3 for entrepreneurs who carry on two or more enterprises in which a total of at least 50 employees normally work. In such circumstances, the entrepreneur must set up a joint works council for all or for a number of those enterprises together, if this is conducive to the proper implementation of the WCA within the enterprises concerned.

In the event of a partnership of enterprises (either managed by a single entrepreneur or forming part of a group of enterprises), the entrepreneur may, if it is conducive to the proper implementation of the WCA, establish a central works council (COR), with which the management of the partnership may discuss common policy with regard to all the enterprises involved (Article 33 WCA).

A COR is an overarching body covering all enterprises managed by an entrepreneur, or that form part of a group of enterprises. If the works council will only act for some of the enterprises concerned, then it is deemed to be a group works council (GOR).

A COR and GOR may consider only matters that are of interest to all or most of the enterprises covered by the COR or GOR in question, and in such matters the powers of the works councils are automatically transferred to the relevant COR or GOR.

1.7 Other types of employee representation

1.7.1 Employee representative body (PVT)

Enterprises that employ between 10 and 50 employees may establish a PVT and must do so if there is a request from a majority of the employees (Article 35c WCA).

PVTs have the following rights:

to render advice on major business proposals which affect at least 25 per cent of all employees; and
to consent to arrangements concerning working hours, working conditions and sickness absenteeism.

1.7.2 Employee’s meeting

In the event no works council or PVT is established within an enterprise employing between 10 and 50 employees, there is an obligation for the employer to meet with the employees at least twice a year at an employee’s meeting (Article 35b WCA).

Employees have the right to render advice in relation to major business proposals which affect at least 25 per cent of all employees, but have no right of appeal against eventual decisions taken by the employer that do not follow the advice.

Section 2 – Structure and organisation of a works council

2.1 Size of the works council

The number of members of a works council depends on the number of employees in the enterprise, as set out in the table below (Article 6 WCA).

Number of employees	Members
Less than 50	3
50–100	5
100–200	7
200–400	9
400–600	11
600–1,000	13
1,000–2,000	15
…	And so on with an additional two members for every further 1,000 employees, up to a maximum of 25 members.

2.2 Works council Rules of Procedure

The provisional Rules of Procedure of a works council cease to be effective from the moment the works council has established its new Rules of Procedure.

Rules of Procedure must not contain any stipulations which conflict with the WCA, or which hinder the proper implementation of the WCA. Prior to approving its Rules of Procedure, the works council must give the employer an opportunity to express their views on the rules. Once approved, the works council must immediately provide the employer with a copy of its Rules of Procedure

The Rules of Procedure must contain provisions regulating at least the following matters:

the occasions upon which the works council shall meet for the purposes of performing its duties;
the manner in which works council meetings are to be convened;
the number of members present constituting a quorum;
the ways in which the right to vote at meetings may be exercised;
the provision of a secretariat;
the manner in which the agenda for works council meetings is to be drawn up and the manner in which the entrepreneur, the members of the works council and other persons working in the enterprise are to be notified of it;
the latest date upon which the entrepreneur, the members of the works council and other persons working in the enterprise are to be notified of the agenda (this date being, except in the case of urgent matters, at least seven days before the meeting); and
the taking of the minutes of works council meetings and the drawing up of the annual report of the works council, and the manner in which these are to be made available to the entrepreneur, the members of the works council and other persons working in the enterprise.

(Article 14 WCA).

2.3 Members of the works council

The standard term of office for works council members is three years, with all members retiring at the same time (Article 12 WCA).

There are no changes in the number of members of the works council during the term of office, even if the enterprise has changed in size.

If, at any time subsequent to the establishment of a works council, there are normally fewer than 50 persons working in the enterprise, the works council shall automatically cease to exist upon the expiry of its current term of office, unless the employer agrees otherwise.

Section 3 Key rights of a works council

Works councils in the Netherlands have a number of significant rights, including the right to provide advice and the right to give consent in specified situations.

3.1 General rights of a works council

A works council has the following general rights.

The right to request expert advice, the cost of which must be reasonable and must be agreed in advance with the employer. The advice of both internal and external experts (eg, lawyers or accountants) may be sought; however, internal colleagues (eg, tax, finance, HR) are not required to cooperate (Article 16 WCA).
The right for members to perform works council tasks during paid working time and to undertake works council training during paid working time. Works council members are entitled to a minimum of 60 hours per year for their duties and five days per year for training (Article 18 WCA). Some very big enterprises have full time works council members.
The right to use facilities belonging to the employer, such as meeting rooms and IT equipment (Article 17 WCA).
The right to consult employees working in the enterprise (Article 17 WCA).
The right to consult with the enterprise on significant business decisions at least twice a year (Article 24 WCA).
The right to make proposals (eg, a works council can raise a proposal such as salary increases based on market trends and submit this to the employer). Once an initiative is identified, the employer must organise at least one consultation meeting to discuss it and should respond in writing to the proposal (Article 23 WCA).

3.2 Right to receive information

Article 31 of the WCA gives works councils the right to receive information from the employer.

It is for the works council to decide what information it needs for the performance of its duties, although it has been determined by case law that works council requests for information should be reasonable. Employers should find a balance between considering whether the works council genuinely needs the information it is requesting, with whether it would harm the employer to disclose it. Employers should also keep in mind the need to maintain good working relations with the works council, as well as the potential for precedent setting, when providing information to works councils.

3.3 Right to provide advice – Article 25 WCA

Works councils have the right to provide advice to the employer on any intended decision which may have important consequences for the enterprise, such as a transfer of control, a substantial reduction in headcount, expansion of activities or the implementation of technological facilities.

3.3.1 Matters on which a works council has the right to provide advice

The full list of matters on which a works council can provide advice is detailed in Article 25(a) to (n)) of the WCA, and is summarised below:

any significant reduction, expansion or other change in the enterprise’s activities;
major changes to the organisation or to the distribution of powers within the enterprise, such as a change to reporting lines (even one employee dismissal can be a major change if the impact is significant enough (eg, the dismissal of a very senior employee or if the dismissal of one individual will have an impact on the business));
any change in the location of the enterprise’s operations (even if the relocation is within the same city);
recruitment or borrowing of labour on a group basis (this can include a change of the labour supplier);
making major investments on behalf of the enterprise;
taking out major loans for the enterprise;
granting substantial credit to, or giving security for substantial debts, of another entrepreneur, unless this is normal practice and part of the activities of the enterprise; and
the introduction or alteration of an important technological provision.

3.3.2 Timing

The works council must be asked for advice at a stage it can influence the decision, so that it is still an intended decision. For example, in a global restructuring that involves a number of jurisdictions including the Netherlands, it can be difficult for confidentiality reasons to involve the works council at the very outset of the planning process, but in principle this is what is required under the WCA as the works council should be able to influence the decision. However, should the company insist on announcing the global restructuring, the announcement of the restructuring should state that the implementation in the Netherlands is subject to the advice of the works council (as applicable).

3.3.3 Process

The process for works council provision of advice is as follows.

1. Request for advice	The employer must send a written request for advice to the works council, including information about the background to the intended decision, the expected consequences and the measures taken. It is common for employers to initially let the works council know during a meeting that the request for advice is to be issued.
2. Meeting	At least one consultation meeting between the employer and the works council should take place after the request for advice. Depending on the complexity it is not uncommon to have multiple consultation meetings
3. Consultation and Q&A process	There are no legal timeframes for the consultation process and the works council determines the time it reasonably needs for consultation.
4. Works council advice	The works council provides its advice, which may be supportive of the employer’s proposal or may be negative.
5. Consider a compromise	If the works council advice is negative, the employer must consider whether it can change the advice or if a compromise can be reached.
6. Waiting period	If the advice of the works council is not followed, a one-month waiting period applies (from the date on which the works council was informed of the employer’s decision to go ahead) before the decision can be implemented. During this waiting period the works council may decide to initiate court proceedings.
7. Court proceedings	The works council may file a claim at court during the one-month waiting period if its advice is not requested or not followed, or if the one-month waiting period is not respected (ie, if execution took place regardless of the negative advice of the works council).
8. Final decision	After the one-month waiting period has lapsed, the employer can submit its final decision to the works council.

Examples – Right to provide advice

Scenarios where the right to provide advice would likely be triggered:

sale and purchase of all outstanding share capital in a company by way of a share purchase agreement (this would trigger the right unless it was a very high-level change, such as the sale of the shares of a US parent company with little local impact);
site closure or closure of a specific production line;
investment in a new business venture;
the implementation of an AI-tool (this would depend on the impact of the change, but could amount to an investment or a technological change);
relocation of the workplace.

Scenarios where it is unlikely that the right to provide advice would be triggered:

the offer of a voluntary leave scheme to a large group of employees;
changing the company car policy pursuant to which only or mainly electric cars can be leased (unless this amounted to an important measure relating to the environment);
introduction of pilot video surveillance on the work floor prior to the full introduction (likely to trigger the right to consent – see Section 3.4 below).

3.4 Right to give consent – Article 27 WCA

A works council’s right to consent relates to the social policies and environment of the enterprise. In these situations, prior consent of the works council is required in order to implement a decision, and if consent is not granted the employer must apply to court for consent.

If the employer should have asked for consent but did not, its decision is void. If an employer asks for consent and it is not given by the works council, but the employer proceeds with the decision regardless, the works council can apply to court to prohibit the employer from proceeding. The court will assess whether the works council was reasonable in refusing to give consent.

It should be noted that consent from a works council does not replace the consent of employees, in situations where this is required. Once an employer has works council consent, it will then need to obtain any applicable consent from the employees.

3.4.1 Matters on which a works council has the right to give consent

The full list of matters on which a works council has the right to give consent is detailed in Article 27(a) to (m)) of the WCA:

regulations pursuant to a pension agreement, a profit-sharing scheme or a savings scheme;
regulations relating to working hours and rest periods or holidays;
pay or job-grading systems;
regulations relating to working conditions, sick leave or reintegration;
regulations relating to policy on appointments, dismissals or promotion;
regulations relating to staff training;
regulations relating to staff appraisals;
regulations relating to industrial social work;
regulations relating to job coordination meetings;
regulations relating to complaints procedures;
regulations relating to the handling and protection of personal information of persons working in the enterprise;
regulations relating to measures aimed at or suitable for monitoring or checking the attendance, behaviour or performance of persons working in the enterprise; and
a procedure for dealing with a report of a suspected abuse, as mentioned in article 2(1) of the Whistleblowers Authority Act.

The right to consent is not triggered by individual employee matters.

3.4.2 Process and timing

Once an employer has asked the works council for consent, it must follow the specified process, even if the employer believes that consent is not actually required. Employers must therefore consider carefully whether to ask for consent at the outset of the process.

The process for works council consent is as follows.

1. Request for consent	The employer must submit its proposed decision in writing to the works council, including a summary of the reasons for the decision and the consequences that the decision is expected to have for persons working in the enterprise. It is common for employers to initially let the works council know during a meeting that the request for consent is to be issued.
2. Meeting	At least one consultation meeting between the employer and the works council should take place after the request for consent.
3. Consultation and Q&A process	There are no legal timeframes for the consultation process and the works council determines the time it reasonably needs for consultation.
4. Works council decision	The works council must notify the employer in writing as soon as possible of its standpoint and the grounds on which that standpoint is based.
5. Employer decision	After the works council has made its standpoint known, the employer shall notify the works council in writing of the decision it has taken and the date upon which the decision will take effect.
6. Employer application to court	If the works council declines to endorse the employer’s proposed decision, the employer may ask the court to rule on the matter. The court will only grant permission for the decision to be implemented if the works council’s refusal to endorse the decision is unreasonable, or if the employer’s proposed decision is required for important organisational, economic or social reasons relating to the enterprise.
7. Works council appeal	Any decision taken by the employer without the endorsement of the works council or the permission of the court will be invalid, provided that the works council submits a written appeal to the employer against the decision on the grounds of invalidity within one month of either: a) the employer having notified the works council of the decision; or b) in the absence of notification, of the works council having discovered that the employer has implemented or applied the decision.

Examples – Right to give consent

Scenarios where the right to consent would likely be triggered:

changes to a pension agreement;
amending a bonus scheme so that employees in certain grades are no longer eligible for a bonus;
a change to a new occupational health and safety provider;
the implementation of two or three shift working schedules.

Scenarios where the right to consent is unlikely to be triggered:

amendment of the number of holidays to which an employee is entitled;
reclassification of roles based on a new job-grading system, as prescribed by a mandatory collective labour agreement;
amending a bonus scheme so that the bonus is based on 50 per cent employer performance and 50 per cent employee performance, instead of a previous 70/30 per cent split.