Supreme Court imposes limits on employee participation and right to strike

Download article in original language : NL0004189FNL.DOC

In two judgments in early 2000, the Dutch Supreme Court imposed a degree of restriction on the practice of employee participation. Government sector works councils do not enjoy the right of participation in reaching political decisions and, in general, works councils possess no authority if primary terms and conditions of employment are at stake. According to a third judgment, the right to strike is limited to cases in which it is used as a final measure.

The early months of 2000 saw two Supreme Court (Hoge Raad) judgments imposing a degree of restriction on the practice of employee participation, and a judgment limiting the right to strike.

Employee participation and the primacy of politics

In 1995, the Works Councils Act (Wet op de ondernemingsraden– WOR) was declared applicable to the government as part of a programme to "standardise" the terms and conditions of employment in the state sector, to conform as closely as possible to the market sector. In the run-up to the legislative amendment, much attention – in both the Upper and Lower Houses of the Dutch parliament – was devoted to what was dubbed the primacy of politics. A restriction was finally taken up in the law, to the effect that works councils enjoy no authority in terms of employee participation over decisions reached by democratically elected bodies (NL9904134F).

However, this provision provides a great deal of room for interpretation and resulted in a large number of legal disputes in the 1997/9 period. The works councils won virtually all the disputes that went to court. Amongst other matters, these cases related to dissolving the broadcasting/TV license fee service, a number of municipal reorganisations and the privatisation of the municipal waste disposal and sanitation service. The competent court, Enterprise Section (Ondernemingskamer) of the Amsterdam Court of Appeal (Amsterdamse gerechtshof), applied a limited interpretation of the "primacy of politics". According to the Enterprise Section, the advisory powers of the works council come into play if a decision threatens to affect employees. In practice, it is virtually impossible to draw a line between the political aspects of a decision on one hand, and the consequences for employees on the other. In this regard, it is of little importance that the decision in question is made by another government body. According to the Enterprise Section, an alternative interpretation would lead to situations in which government works councils would be seriously restricted in terms of influencing decisions, and that that could not have been the legislator's intention.

On 26 March 2000, the Supreme Court adopted a different interpretation of the primacy of politics to that of the Enterprise Section (JAR 2000/30). Although the Supreme Court recognised that the legislator acknowledged that a firm line cannot be drawn in all respects between decisions taken by a democratically elected body and the consequences thereof for employees, it nonetheless dismissed the broad interpretation adopted by the Enterprise Section.

Works councils' right of consent and primary terms and conditions

Based on Article 27 of the Works Councils Act, an employer must request works council consent concerning the introduction, amendment or withdrawal of provisions governing matters such as working hours and holiday leave.

Within the state tax authorities, a conflict arose around this subject. Following introduction of a 36-hour working week, the heads of units within the tax authorities reached a unanimous decision to withdraw forms of exceptional leave. The works councils of the units concerned wanted to exercise their right of consent. On 11 February 2000, the Supreme Court ruled (R99/194, publication pending) that the right of consent does not apply to decisions of this nature. According to the Supreme Court, the history of the law indicates that it was not the legislator's intention to award works councils the right of consent over primary terms and conditions of employment such as wage levels and working time. For example, while the right of consent does apply to the manner in which, or the period within which, holiday leave is taken, it does not apply to determining the number of days of holiday.

Strike deemed unlawful

In September 1997, the Sara Lee company announced plans for a sweeping restructuring, possibly involving the outsourcing of certain operations. The announcement fired employee uncertainties. In order to assuage such concerns, trade unions and employers are required to enter into consultation regarding the conditions under which outsourcing of this nature should take place. On 7 November 1997, a "wildcat" strike took place at Sara Lee. The unions made the strike official because the employer refused to comply with the demand that current employees be detached to a third party, thus remaining employed even in the event of outsourcing. The employer instituted preliminary relief proceedings in the courts in an attempt to force the unions to either withdraw their organisational support for the strike or to outlaw it altogether. The request was granted and reaffirmed in the course of appeal proceedings. The unions lodged an appeal to the Supreme Court.

On 28 January 2000, the Supreme Court ruled (C98/138, JAR 2000/63) that the strike was correctly deemed unlawful. Its main argument was that for a strike to be considered lawful it has to be used as a final measure. The Supreme Court did not believe this to be the case with respect to Sara Lee. Consultation related to a matter on which the employer had not yet taken a decision. The Supreme Court based its decision on the history of the development and structure of the Council of Europ e's European Social Charter.

Commentary

In general, the Supreme Court seldom deliberates on disputes in the area of employee participation or the right to strike, but within a period of less than two months it was involved in three such cases. In all three disputes, the court ruled in the employers' favour. The decision on the primacy of politics has by far the biggest consequences: employee participation in the government sector has been significantly restricted. Numerous decisions affecting employees are taken formally by democratically elected bodies within government, including the provincial states for example. Such decisions now fall beyond the scope of employee participation. The steadfast manner in which the Supreme Court refers to the history of the development of the law is somewhat surprising. The scales had seemed to be swinging heavily in the parliamentary debate in favour of a broad interpretation of the primacy of politics being replaced by a more restrictive interpretation from one moment to the next.

In its ruling on the decision to withdraw various forms of leave, the Supreme Court was similarly steadfast in its interpretation that the works council's right of consent does not apply to primary terms and conditions of employment. In this instance as well, different views were put forward in the parliamentary debate on the relevant legislation. In practice, the level of involvement of works councils regarding primary terms and conditions of employment is increasing, especially in sectors and companies within which the unions play a marginal role, if any. It is noteworthy that the tax authorities withdrew the holiday arrangement without consulting the unions. No such consultation takes place at the level of the units within the tax authorities. Consequently, employees now have no means at their disposal to influence implementation of the measure.

The grounds on which the Supreme Court based its decision on the strike at Sara Lee are open to question. The European Social Charter provides for the right to strike if conflicting interests are at stake. It is of course preferable for such a conflict to be resolved without having to resort to a strike, but this does not necessarily lead to the broad conclusion that strikes are lawful only if used as an ultimate remedy. (Robbert van het Kaar, HSI)