Works council and employee participation law

Many (large) employers have to deal with employee participation. Employee participation rights ensure that employees are heard and involved within the company where they work. The best-known form of employee participation is the works council (OR). The employer consults with the OR in the interests of the proper functioning of the company. In doing so, the employee participation council represents both the interests of the company and those of the staff.

How many employees are required to establish a works council? What are the powers of a works council? What are the obligations of an employer? And in which cases must a works council be asked to give advice?

Works Councils Act (WOR)

Employee participation rights are mainly regulated by the Works Councils Act (WOR). The Works Councils Act stipulates that employees working for a company are entitled to participation within the company through a works council (OR) or employee participation council. A company with at least 50 employees is obliged to set up a works council. Companies with fewer than 50 employees are not obliged to set up a works council and may suffice with employee representation or employee consultation.

What is the advantage of employee representation or employee consultation?

The advantage is that it increases employee involvement, strengthens communication between employer and employees, and allows potential bottlenecks or areas for improvement to be identified and discussed at an early stage. This not only promotes a healthy working environment, but also contributes to support for policy decisions and the timely identification of risks within the organisation.

What does the right to participation entail?

The right to participation includes the right to advise, the right to consent and the right to information of the works council (OR), central works council (COR) and group works council (GOR). In smaller companies that are not required to set up a works council, employee participation rights give the employee representative body (PvT) or staff meeting a say and influence on important aspects and regulations for employees within companies.

The tasks of a works council

The most important tasks of a works council or employee participation council are to consult on the policy of a company and the interests of its employees. Other responsibilities that fall under the works council include:

The rights of the works council

The Works Councils Act grants the works council various rights. The powers of the works council include the right to be consulted, the right of consent, the right of initiative and the right to information. This means that the employer must consult the works council on important financial, economic or organisational decisions. The committee 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 committee may choose to make their own agreements regarding the details of the cooperation and the powers and facilities of the committee. These agreements must be laid down in writing.

Consultation with management or the board

The management or board of a company must discuss the general state of affairs of the company with the works council (OR) at least twice a year. During these meetings or consultation meetings, the entrepreneur informs the works council of any important decisions that are in preparation. In addition, the board or management and the works council make agreements about how the staff council will be involved in these decisions.

Consultation with employees and experts

In order to perform its duties properly, the council is entitled to all information necessary for this purpose. In the event of far-reaching (business or organisational) decisions or issues, the works council may consult with the staff. The employer must give the staff council the opportunity 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 call in an expert for advice. This may be either an internal or external expert.

Works council’s right to be consulted and right of consent

When an entrepreneur wishes to take important decisions within the company, the works council has a right to be consulted. Important decisions include: transfer of control, mergers or reorganisations, downsizing or expansion of activities, relocation, making significant financial investments or the sale of a company. The right of the works council to be consulted is laid down in Section 25 of the Works Councils Act. If a company intends to take a decision relating to one of the areas to which the duty to consult applies, the director must request advice from the council in writing.

The works council has no right to be consulted on terms of employment, such as working hours, holiday arrangements, job evaluation and training. However, it does have the right of consent when it comes to establishing, amending or withdrawing personnel regulations. If 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 take the matter to the subdistrict court. In the event of a dispute, the entrepreneur can also go to court and ask the subdistrict court to approve the decision.

The works council’s right to be consulted relates to subjects such as:

The works council’s right of consent relates to subjects such as:

Works council’s right to information (Section 31, WOR)

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

Article 31a of the WOR describes the financial and economic information that an employer must provide to the works council twice a year (without being asked). Examples of this information include general data on activities and results, the company’s annual financial statements, annual reports, investment planning and the budget. The entrepreneur must also inform the works council in writing each year about the employment situation and the company’s social policy.

Advice from the Social and Economic Council (SER)

In the Netherlands, the Social and Economic Council (SER) has the statutory task of contributing to the protection and promotion of employee participation within companies and enterprises. Entrepreneurs, employees and independent experts work together within this advisory body. The SER not only advises the government and parliament on national socio-economic policy, but also supports works councils and employee representatives, for example in drawing up regulations. Directors or supervisory directors who are in contact with the works council can also contact the Social and Economic Council for information and useful tools.

Frequently asked question about works councils and employee participation rights:

As an employer, are you obliged to follow the advice of the works council?

As an employer, you are not obliged to follow the advice of the works council, but you cannot simply ignore it. According to the Works Councils Act, certain proposed decisions are subject to a duty to consult. If you choose to deviate from the works council’s advice, you are obliged to explain this to the works council in writing, stating your reasons. In addition, you must then wait another month before implementing the decision, so that the Works Council can lodge an appeal with the Enterprise Chamber if necessary. In practice, this means that ignoring the advice of the Works Council is not without risk and that it is both legally and strategically wise to take the advice seriously.

European Works Council

International companies often have to deal with a European Works Council. This cross-border employee participation body has a special role and powers. This often concerns very specific labour law issues. Because many of our entrepreneurial clients have had to deal with this issue, Fruytier Lawyers in Business also has extensive experience with international labour law. The lawyers at Fruytier Lawyers in Business can advise you on all aspects of employee participation law, both within and outside our national borders, and are happy to assist you in this complex matter. Please contact us directly for advice without obligation.

Authors: Employment law solicitors Judy Sliepen and Myrddin van Westendorp