Netherlands: Legislation to enhance works councils' rights

Legislation regarding worker participation in the Netherlands underwent some change in 2015.​

The year 2015 saw several changes (both actual and announced) in worker participation arrangements in the Netherlands. These involved information and consultation rights of unions with regard to mergers, works council rights on pension schemes, the position of works councils in the case of insolvency, works councils and pay (both equal pay issues and management remuneration), works council rights in the case of the take-over of a firm by private equity firms and works councils and occupational health.

SER Merger Code

The Social and Economic Council published a revised version of the Merger Code, valid from 1 October 2015. The essence of the Merger Code is that in the case of a merger or acquisition the respective employers have to inform and consult the unions in due time. The code is a code of conduct, not a legal act. Breaches of the code will be published, but there are no immediate legal consequences (unlike the Works Council Act). However, more indirectly, violation may have consequences through tort law and, more directly, when the merger code has been incorporated in the collective agreement. 

The main change is that the scope of the code has been broadened to include the not-for-profit sector, organisations of professions like accountants and lawyers, and the major part of the public sector. Also, an optional mediation procedure has been included. 

Pension schemes

In  December 2015, a bill was presented to extend the rights of works councils with regard to pension schemes, following a recommendation from Social and Economic Council. The bill clarifies that the influence of the works council covers the terms of the pension agreement between an employer and employee, and that it is not the employer’s choice of the pension fund or insurance company that is responsible for the execution of the pension scheme (the execution agreement, to which the works council is no party). However, the works council has gained the right to be informed on alterations in the execution policy of the fund or insurance company. When these alterations have an impact on the pension agreement, the works council may still claim their right of consent. In practice, it will often be hard to make a clear distinction between the pension agreement, as can be witnessed by a recent decision in December 2015 by the Rotterdam court.

Works councils still have no rights with regard to sector funds (which are dominant in the Dutch pension system): in these funds the employee interests are already represented by the unions, who occupy half of the seats on the board.

Employee rights and insolvency

In October 2015, the Minister of Social Affairs and Employment asked the Commission for Furthering Worker Involvement (Commissie Bevordering Medezeggenschap), a tripartite committee linked to the Social and Economic Council, for advice on worker involvement in insolvency cases. The committee gave its advice on 13 December 2015. The committee considers that works councils have no rights with regard to the actual filing of bankruptcy, but that they enjoy their full rights during the period of insolvency, acknowledging that time pressure in practice is a major problem. Besides an information campaign for works councils, the committee thinks it may be useful to also inform receivers and their organisations, and the judges who monitor the insolvency. The committee also recommends obliging the courts to check whether the works council has been informed and consulted on the major issues linked to the insolvency.

The fact that works councils rights have been neglected may be a warning signal for the relevant authorities to check for fraudulent behaviour.

Private equity and works councils

On 21 December 2015, the Cabinet has answered questions put forward by Social Democrat Member of Parliament Nijhof on private equity practices, especially debt financing. In the cabinet memorandum the cabinet announced it will consider giving works councils the right to contact the external accountant with regard to takeovers by private equity firms. This may assist works councils in using their existing rights with regard to such takeovers. 

Equal pay and remuneration

In March 2015, a bill was introduced to enhance works council rights with regard to equal pay between men and women. The bill proposes to give works councils the right of consent with regard to arrangements that promote equal pay, plus extra information rights on the present situation with regard to the pay (including pay gaps) of men and women. The bill also proposes an obligation to publish information on this issue in the annual accounts. 

In December 2015, the Cabinet announced that the bill to enhance works council rights on management remuneration has been postponed to 2016, with implementation foreseen for 1 January 2017. At present, works councils only have the right to be informed. To this the right of consultation will be added.