Thematic feature - works councils and other workplace employee representation and participation structures

This article examines the Dutch situation, as of September 2003, with regard to works councils and similar workplace employee representation and participation structures. It looks at the regulatory framework, statistical data, evidence on practice and the views of the social partners.

The issue of works councils and similar workplace employee representation and participation structures is topical at present, with the EU Member States required to implement the recent Directive (2002/14/EC) establishing a general framework for informing and consulting employees in the European Community (EU0204207F) by March 2005 (though countries which currently have no 'general, permanent and statutory' system of information and consultation or employee representation may phase in the Directive's application to smaller firms up until 2008). The Directive applies to undertakings with at least 50 employees or establishments with at least 20 employees (the choice is left to the Member States). It provides employees with the following rights to information and consultation:

  • information on the recent and probable development of the undertaking's or the establishment's activities and economic situation;
  • information and consultation on the situation, structure and probable development of employment within the undertaking and on any anticipatory measures envisaged, in particular where there is a threat to employment; and
  • information and consultation, with a view to reaching an agreement, on decisions likely to lead to substantial changes in work organisation or in contractual relations.

Information and consultation arrangements set out in agreements between management and labour, including at undertaking or establishment level, may differ from those laid down in the Directive.

While the Directive does not stipulate that information and consultation must be provided through any particular channel or structure, it defines such information and consultation as taking place between the employer and the employee representatives provided for by national laws and/or practices. It is these representatives, who in most EU Member States sit on standing 'works council'-type structures (and in many countries already enjoy all or most of the information and consultation rights laid down in the Directive) that are the focus of this article. The existence of workplace employee representation and participation structures, based on law or widespread collective agreements, is seen in some quarters as a distinctive and important feature of the (mainland) European industrial relations model. Indeed, the idea has been raised of using the coverage of such worker involvement arrangements as an indicator of 'quality' in industrial relations (as suggested, for example, by the European Commission’s June 2001 Communication on Employment and social policies: a framework for investing in quality).

In this context, in September 2003, the EIRO national centres in each EU Member State (plus Norway), were asked, in response to a questionnaire, to provide information about the current situation with regard to national (rather than European level) works councils and similar bodies – the regulatory framework, statistical data (or estimates where not available), evidence on practice and the views of the social partners. The Dutch responses are set out below (along with the questions asked).

Regulation

What is the legislative framework in your country concerning works councils and/or other workplace employee representation and participation structures? Please include here: definition; workforce-size threshold for establishment; composition/election; subjects for information, consultation and co-determination; conditions under which information, consultation and co-determination should take place (ie timing, methods, contents, level of representation, type of response by employees, form of interaction etc); meetings; confidentiality; protection of employees’ representatives. If there is no legislation on this issue in your country, please refer to widespread systems of works councils etc based on collective agreements.

Works council s (ondernemingsraden) and personnel delegations (personeelsvertegenwoordigingen) are regulated by the Works Councils Act (Wet op de ondernemingsraden, WOR) originally adopted in 1950, with major alterations in 1971, 1979 and 1998 (NL9802162N and NL9709130F). Employers are obliged to establish a works council if they employ 50 or more workers. A personnel delegation (a kind of 'mini-works council') must be set up in companies with between 10 and 50 employees, if required by the majority of workers. Some collective agreements stipulate that works councils must be set up when more than 25 or (more commonly) 35 employees are present. It is possible to create coordinating works councils for groups of establishments.

The law applies to both profit and non-profit organisations, and since 1995 also to the government sector, with only a few exceptions (NL0004189F). There is a separate law for the education sector (in the future this distinction will be abolished).

Works councils consist only of employees. Members are elected by the workforce, with all employees with at least six months' service entitled to vote and candidates requiring at least one years' service. Candidates may be nominated by trade unions with a presence in the establishment, or by groups of employees. The size of the works council is between three and 25 members, depending on the size of the workforce. Meetings are held on request of the employer or the works council when deemed necessary. Twice a year, a meeting should be held on the general situation and prospects of the company.

The main rights given to works councils by the law are: the right of access to information; advisory powers; the right of consent; and the right to propose initiatives

With regard to information, the works council has relatively strong rights. Part of the information required must be provided by the employer, on top of which the works council has the right to ask for addition information. The employer is not allowed to hold information back on the grounds that it might damage the interests of the company.

With regard to advisory powers, since 1979, works councils have had the right to lodge appeals against employers' strategic planning decisions, including those on takeovers and mergers, reorganisations, business closures, relocations and changes in investment strategies, both domestic and foreign. Since March 1998, the list of decisions on which works councils' advice is compulsory has been expanded to include the introduction of new technology and the provision of security systems, for example in banks (NL9709130F).

When a company takes a planning decision of the above kind, listed in Section 25 of the Works Councils Act, it must seek advice in advance from the works council. It must state the grounds for its decision, the consequences for the workers and the measures to be taken to deal with these consequences. After the works council has given its advice, consultation between the works council and the company must take place at least once. Should the employer and the works council fail to reach agreement, three options exist. The employer can: withdraw the decision; try to reach a compromise through negotiation; or decide to continue with the plans.

Should the employer decide to adopt the last option, it is obliged to postpone implementing the plan for one month. Within this period, the works council is then able to lodge an appeal against the decision. The competent court of appeal is the Enterprise Chamber of the Amsterdam Court of Appeal, which assesses whether the decision is reasonable. If it decides against the employer, it can force the employer to withdraw the plan, cease its implementation and adopt measures to reverse the consequences as far as possible (NL0004188F).

The employer and the works council may also negotiate a compromise. For example, the works council may agree to a reorganisation or a merger on condition that the employer agrees to keep the business in question open for several years. In the case of complex plans, the compromise is sometimes set out in a separate agreement. Since March 1998, the Works Councils Act has explicitly referred to the possibility of entering into agreements of this kind. Barring exceptional circumstances, the employer is bound by such an agreement.

On so-called 'social' issues - the introduction, cancellation or amendment of regulations pertaining to labour matters - the works council has the right of consent (a kind of qualified veto-power). To the extent that these issues are not (fully) covered by collective agreements, the employer must ask the works council for its consent. If the works council refuses, the employer can go to court, but requires strong arguments to succeed.

The works council also has the right to give its opinion on the appointment of dismissal of the manager in charge of the production process. In practice this often means a right to give an opinion on the chief executive. In this matter, the works council has no right of appeal.

Finally, it should be noted that works councils also have rights stemming from other laws, like those on: working time (NL0110102F); the Civil Code in terms of nominating or opposing members of supervisory boards (NL0011112F); and work and care (NL9903128F).

Works council members (including former members), candidates and employees taking the initiative to create a works council enjoy protection against dismissal and unfavourable treatment by the employer. They have the duty to keep confidential information secret.

The works council has rights to: use normal facilities in the company; a minimum amount of training; and consult employees (within reasonable limits). The employer must meet the expenses of the works council, eg for training and consultation of outside experts ( within reasonable limits), and allow the works council and its members to do their work during normal working hours.

Statistics

Please provide the most recent available statistics (in absence of statistics please provide estimates referring to sources) on the following (referring to other workplace employee representation and participation structures where works councils are not present and to widespread collective agreements on the issue where there is no legislation):

  • the total number of employees and undertakings/establishments in your country;

The total number of undertakings with one or more employees in 2003 stands at 332,810 (excluding the government sector, agriculture, fishing and gas/electricity/water). The total number of employees was 8,349,000 in 2002.

  • the total number of undertakings/establishments covered by the works councils legislation in your country and their total employment (data should be as much as possible disaggregated by gender, company size and sector);

The total number of undertakings covered by the obligation to set up a works council (ie with 50 employees or more) stands at 15,700 in 2003. The number of employees covered is estimated at around 3,500,000. These figures again exclude the government sector, agriculture, fishing and gas/electricity/water. In a broader sense, however, establishments with fewer than 50 employees are also covered by works councils legislation (see above under 'Regulation'), especially if there are more than 10 employees.

  • the total number of undertakings/establishments in your country which have established works councils and their total employment (data should be as much as possible disaggregated by gender, company size and sector).

Please provide any other national data indicating the number/diffusion of works councils.

In 2001, a works council existed in 71% of the establishments with 50 employees or more. The larger a establishment, the higher the compliance with the law. For establishments with 200 employees or more, compliance was 94%, and for those with under 100 employees 58%. About one third of establishments with under 50 employees had a personnel delegation, while in addition 37% had a (voluntary) normal works council. There are no official figures on the proportion of employees covered by a works council or personnel delegation, but research undertaken in 2002 suggests a rate of 68.8%.

Practice

If there are any other statistical sources or recent research on the current practice of works councils or other workplace representation/participation bodies, please give details of the results paying attention to the issues covered by Question 1 (Regulation). Please provide as much quantitative data as possible - eg how many meetings and how often, chair, agenda, composition (eg how many representatives of management, if any, workers, proportion of women members, proportion of women as head of works councils etc) and identify factors of success. Please indicate how the works councils (or works council-type bodies) institution has evolved over the years.

Recently, it has become a problem to find members of works councils (ie employee representatives) - about a third of councils have one or more empty seats (NL0203102F). Underrepresented in the works council are women (who make up 25% of works council members and 42% of the workforce), young employees, employees with less than five years' service in the company, people from ethnic minorities, employees with disabilities and employees with a low level of education. Overrepresented are trade union members, employees with a higher level of education and higher staff. As yet, there are no nationwide election campaigns for works councils. The present government has issued proposals to change this, with the main aim being to make works councils more attractive to employees.

The average works council holds 14 meetings per year and meets 8.5 times a year with management (the frequency increases with size). Slightly less than half of works councils (45%) have their own budget. Many works councils have created subcommittees for different subjects, with 62% having set up subcommittees on working conditions. The most important issues on the agenda of works councils are, in descending order, reorganisations, working conditions, working time arrangements, mergers and acquisitions, and pay systems.

Research indicates that many works councils have 'grown up' over the years, and that the attitude of the majority of the employers has become more positive (NL0010109F). At the same time, only a minority of works councils (15 %) seem to function really well. There is a large 'middle' group (around 40%-50% of councils) while the rest function (very) poorly.

Social partners

Please summarise the views of trade unions on works councils etc and their operation, and outline relations between works councils and trade unions.

While in the 1970s trade unions considered works councils as a threat to their operations, this view has fundamentally changed, and unions now wholeheartedly support the operations of works councils, both in words and in practice. They support the strengthening of works councils’ rights and facilities. As far as regulating terms of employment is concerned, the unions do not want to change the present system in which unions have a primacy over works councils (NL9703106F). While collective agreements 'carry over' into individual employment contracts, agreements with the works council do not. Especially in the case of company reorganisations, relocations or other decisions with a negative impact on employees, there is often a division of labour: the works council uses its right of advice to try to influence the decision itself; while the unions concentrate on negotiating a social plan to alleviate the consequences of the decision.

Unions have set up information services and training centres for works councils. A large proportion of works council members are union members (around 60%, while the overall union density is only 25%).

Please summarise the views of employers’ organisations on works councils etc and their operation.

In general, employers’ organisations take a positive stance towards works councils as an institution. They are of the opinion that works councils now have sufficient rights and possibilities to operate, and have in the recent past (eg in 1998) opposed proposals to extend the rights of works councils.

For employers' organisations an important issue is that of works councils' role in setting the terms of employment, especially wages and the duration of the working week. From time to time, they hint at the lack of representativeness of trade unions and suggest that works councils might take over their role in negotiating collective agreements. However, there is no unanimity on this subject within the employers’ organisations, though they are proponents of the 'carry over' of agreements between works council and employer into individual employment contracts. (Robbert van het Kaar, HSI)

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