Works council and employee participation law

Many (large) employers have to deal with employee participation. Employee participation law ensures that employees are heard and involved within the company where they work. The most well-known form of employee participation is the works council (OR). The employer consults with the works council in the interest of the proper functioning of the company. In doing so, the employee participation council looks after both the company’s and the staff’s interests.

At how many employees is the establishment of a works council mandatory? What are the powers of a works council? What are an employer’s obligations? And in which cases must a works council be asked to give its opinion?

Works Council Act (WOR)

Employee participation law is mainly regulated by the Works Councils Act (WOR). The Works Councils Act stipulates that employees employed by an enterprise are entitled to participation within the enterprise through a so-called works council (OR) or co-determination council. A company with at least 50 employees is obliged to establish a works council. For a company with fewer than 50 employees, the obligation to establish a works council does not apply and a staff representation or staff consultation may suffice.

What does employee participation law entail?

Employee participation law includes the advisory right, the right of consent and the information right of the works council (OR), central works council (COR) and group works council (GOR). In smaller companies where there is no obligation to set up a works council, participation rights provide the employee representation body (PvT) or staff meeting with a say and influence on important aspects and regulations for employees within companies.

The duties of a works council

The main duties of a works council or co-determination council are to conduct consultations regarding the policy of a company and the interests of its employees. Other responsibilities that fall under the works council are:

• Ensuring adequate consultation;
• Encouraging good working conditions;
• Monitoring compliance with rules on working conditions, working hours and rest periods;
• Monitoring equal treatment and equal pay for employees;
• Promoting diversity and inclusiveness within the workforce;
• The rights of the employee participation council;
• The Works Council Act gives the works council various rights.

The powers of the works council include the right to advise, right of consent, right of initiative and right to information. This means that for important financial, economic or organisational decisions, the employer must ask the works council for advice. The council may also contribute ideas on social issues within a company and may make unsolicited proposals to the employer on all relevant matters. An employer and the council may choose to make their own agreements regarding the details of cooperation and the council’s powers and facilities. These agreements should be recorded in writing.

Consultation with management or board
The management or board of a company must discuss the general course of business of the company with the works council (OR) at least twice a year. During these meetings or consultation meetings, the company informs the works council which important decisions are in preparation. In addition, the board or management and the works council make agreements on how the works council will be involved in these decisions.

Consultation with employees and experts

To properly perform its task, the council has the right to all information necessary for this purpose. In case of major (business-economic or organisational) decisions or issues, the Works Council may consult with employees. The employer must give the staff council room to discuss this with all employees and must give employees the opportunity to respond to proposals or issues. If necessary, the works
council is free to engage an expert to obtain advice. This may involve either an internal or external expert.

Advisory right of the Works Council and right of consent of the Works Council

When an entrepreneur wants to take important decisions within the company, the Works Council has an advisory right. Important decisions include transfer of control, mergers or reorganisations, downsizing or expansion of operations, moving location, making significant financial investments or selling a company. Section 25 of the Works Councils Act establishes the right of the works council to advise. If a company intends to make a decision that relates to one of the components subject to the duty to advise, the director must request advice from the council in writing.

In the field of employment conditions, such as working hours, holiday arrangements, job evaluation and training, the works council has no advisory right. However, there is a right of consent for the adoption, amendment or withdrawal of personnel regulations. The moment the staff council does not agree with the employer’s plans, they may not be implemented. If an employee decides not to comply, the council can go to the subdistrict court. In the event of a dispute, the employer can also go to court and ask the subdistrict court to approve the decision anyway.

• Advisory right of the Works Council covers topics such as:
• Transfer of control;
• Reduction or expansion of activities;
• Mergers or reorganisation;
• Making major investments;
• Obtaining credit.

Right of consent of works council relates to topics such as:

• Working and rest times;
• Working conditions;
• Holiday scheme;
• Sick leave and reintegration policy;
• Job evaluation;
• Staff training;
• Pension agreement;
• Profit sharing;
• Processing of personal data;
• Information right of works council (Section 31, WOR).

One of the most important rights of the works council is the information right. This right, laid down in Section 31 of the Works Councils Act, gives the Works Council the opportunity to request information from the employer itself. Section 31 also sets out the basic information the employer must provide to the works council.

Section 31a of the WOR describes which financial-economic information an employer must transfer (unsolicited) to the Works Council twice a year. Examples of this information are general data on operations and results, the company’s financial statements, annual accounts, investment planning and the budget. The entrepreneur must also inform the participation council annually in writing about the employment situation and the company’s social policy.

Advice from Social and Economic Council (SER)

In the Netherlands, the Social and Economic Council (SER) has the legal task of contributing to the protection and promotion of co-determination within companies and enterprises. Within the advisory body, entrepreneurs, employees and independent experts work together. The SER not only advises the government and parliament on national socio-economic policy, the body also supports works councils and employee representatives, for example in drafting regulations. Directors or supervisory directors who have contact with works councils can also contact the Social and Economic Council for information and useful tools.

European Works Council

International companies often deal with a European Works Council. This cross-border employee participation body has a special role and powers. It often concerns very specific employment law issues. Because many of our entrepreneurial clients have dealt with this before, Fruytier Lawyers in Business also has extensive experience in international labour law. The attorneys at Fruytier Lawyers in Business can advise you on all aspects of co-determination law, both within and beyond our national borders, and will be happy to assist you in this complex matter. Contact us directly for no-obligation advice.