All you need to know about Dutch works councils.

Know what the works council does, and what to do with it.

Many organizations operating in the Netherlands are not familiar with the powers of Dutch works councils (Dutch: “ondernemingsraad” or “OR”). This can lead to nasty surprises. For example, if the OR was not asked for consent for the new GPS tracking system, which leads to the investment made having to be reversed. The list of subjects where “you must consult the works council”, is quite long. Is your organization aware of this?  

The works council: An introduction

First, what exactly is a works council in the Netherlands? And what are its main functions? A works council (Dutch: “ondernemingsraad” or “OR”) is a formal consultative body within a company or organization who holds the task to represent the interests of employees. As such, a works council is an important means of employee participation. It aims to improve working conditions and represent employees in company decision-making.  

Dutch works councils are composed of elected employees who represent the interests of the workforce. They have a legal power to give advice and to give consent on important decisions of their employer. These decisions can relate to, for example, the reorganization of a department or changes in working conditions.  

A well-functioning works council can contribute to better cooperation between employer and employees. It can also ensure a higher level of employee involvement and the improvement of working conditions. By actively participating in decision-making, employees can have their voices heard and influence the course of events within the company.  

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When is a Dutch works council (“OR”) mandatory?

So, a works council usually has a positive influence on the relationship between management and staff. But is a works council also mandatory in the Netherlands? And if not, are there alternatives to the works council for companies that are not obliged to establish a works council?  

In the Netherlands, a works council is in principle mandatory for companies with at least fifty employees. The purpose of the works council is to represent the interests of employees. In some cases, a works council can also be mandatory for a smaller company, for example, when it is part of a group with over fifty employees. In addition, a collective bargaining agreement may also require a works council. Even if there are fewer than fifty employees. Wondering if a Dutch works council is mandatory for your organization? Contact the labor law specialists at Crowe Peak.  

Incidentally, if no works council is in place or required in a Dutch company, other forms of employee representation can be established. Such representation will have fewer powers than an OR but can discuss certain matters with the employer. You can read all about the differences between these more informal bodies and the works council below. 

OR vs. employee representation vs. staff meeting

Staff meeting (PVG)

Even if your organization is not required to establish a works council, it might still have obligations under the Dutch Works councils Act (Dutch: Wet op de Ondernemingsraden). For example, you might have the obligation to meet regularly with the staff in a so-called “staff-meeting” (Dutch: “personeelsvergadering” or “PVG”). A PVG must be held if the company employs at least ten but fewer than fifty people and no works council or staff representative body (Dutch: “personeelsvertegenwoordiging” or “PVT”) has been established.  

As an entrepreneur, you are required to convene a staff meeting at least twice a year. During this meeting, you discuss with the employees “matters concerning the company, […] in respect of which the entrepreneur or persons working in the company consider consultation desirable.” In other words: You give room for discussion on matters that are considered important by the organization and the employees. Dutch law requires that during one of these meetings, also the general course of business and the annual accounts will be discussed with the employees.  

The staff meeting must also be convened when at least one-fourth of the staff makes a reasoned request in this respect. Please note that the PVG has the right to advise on a proposed decision that may result in the loss of employment or that may impose a notable change in the work, terms and conditions of employment or working conditions of at least one-fourth of the persons employed by the company. These are therefore items that must be put on the agenda no matter what. Would you like to know more about this advisory right? Our specialists will be happy to assist you. Click here to make an appointment. 

Staff Representative Body (PVT)  

If at least ten but less than fifty people work in your company, you can also establish a staff representative body (Dutch: “personeelsvertegenwoordiging” or “PVT”). Companies must do this if most employees request this. Advantages of a PVT over a PVG include efficient consultation and creating support for important management decisions. The PVT consists of at least three people, directly elected from among those working in the company.  

A PVT has several rights:  

• Right of consent: Regarding working time regulations, regulations on working conditions, sick leave or reintegration policy, and a whistleblower regulation.  
• Advisory rights: Regarding proposed decisions to divest jobs, major changes to the work, terms and conditions of employment or working conditions of at least 25% of the employees working in the company (unless a collective bargaining agreement already contains mandatory rules on this subject); and  
• Right to all information: Regarding all topics concerned with the tasks of the PVT. 

Works council  

As noted above, setting up a works council is mandatory if there are, as a rule, more than fifty people working in the company. The extent of the working hours of these employees is not important here.   

How to establish a Dutch works council?

According to Dutch law, employers are responsible (and liable!) for “having” a works council. Therefore, as an employer, you cannot point the finger at the employees if there is no works council established.  

So, as an organization with an obligation to establish a works council, it is best to take the initiative yourself. The first step is to inform yourself properly about what exactly a Dutch works council is and does, and what to expect (reading this article is a good start!). A logical second step is to set up a “project group” or “preparatory committee”. Do you need help with this? Feel free to contact the specialists of Crowe Peak. Are you still in the orientation phase? Then read on for a step-by-step route towards a Dutch OR.

Preparation: The preparatory committee

In the prelude to establishing a works council, a preparatory committee should be established. The preparatory committee’s main task is to shape the works council by drafting preliminary works council regulations. Such regulations are required by law. The minimum number of council members is three (for companies with up to fifty employees). The minimum number of works council members increases with the size of the enterprise. Dutch law contains extensive rules on the content of the works council regulations, and on the method of election and filling vacancies. A works council usually also has committees. These are “standing committees,” “component committees” and “preparation committees.”  

• A standing committee deals with a specific subject, such as a working conditions committee.  
• A component committee is a committee associated with an organizational unit, such as a region.  
• A preparation committee meets for a specific task, such as reorganization.  

Does one of your works council committees need advice? Or would you like to know more about setting up a preparatory committee and then a works council? Crowe Peak is happy to provide advice.  

Implementation: The consultation meeting

The time has come! A first meeting with your works council is about to take place. An exciting and important moment for the company. From now on you will meet at least twice a year. Such an official semi-annual consultation between the works council and the employer (or the company management) takes place in the so-called “consultation meeting”. In these consultation meetings, the “general state of affairs” of the business will be discussed. The employer must also discuss the subjects for which he is preparing a decision that requires approval or consultation (see below). Furthermore, a consultation meeting is also mandatory if requested by the works council (or the employer). Informal consultation – outside of consultation meetings – is also possible, but no decisions can be taken during informal consultation.

What should you submit for the works council’s approval?

Right of consent

In the Netherlands, the right of consent is the most far-reaching power of the works council. The management of the company cannot implement decisions to which the right of consent applies without the works council’s consent.  

The right of consent applies – in summary – to the adoption, amendment or withdrawal of regulations concerning the following subjects:  

1. Pension.  
2. Working hours and vacations.  
3. Remuneration and job evaluation systems.  
4. Working conditions, sick leave, and reintegration policy.  
5. Appointment, dismissal, or promotion policies.  
6. Training.  
7. Assessment.  
8. Company social work.  
9. Work consultation.  
10. Managing complaints. 
11. Privacy: processing employee personal data.  
12. Employee monitoring or control systems; and  
13. Whistleblowers.  

There is much more to say about each of these categories. However, in this article, we limit ourselves to the most important ones. Want to know more about the works council’s right to consent considering any of the above topics? Contact the lawyers at Crowe Peak.  

Not covered by the right of consent

Primary conditions of employment, such as wages, are not covered by the right of consent. It also does not include, for example, a change to a regulation on expense reimbursement. This can be confusing because, according to the law, a remuneration system does fall under the right to consent. Think, for example, of a job structure with salary scales. A decision taken without the consent of the works council is invalid. The works council can then nullify the decision. In practice, this means that the decision and its consequences (must) be annulled. 

The right of assent and the right of advice concern “intended decisions.” An “intended decision” is a concrete intention to make one that affects employees. This can include a pilot project. Furthermore, a (permanent) line of conduct by the board can also fall under the right to consent. For example, not acting on an existing profit-sharing scheme for several years. A decision about an individual employee does not fall under the right to advice and consent. These are decisions concerning a group or all employees. If a collective bargaining agreement already contains an exhaustive regulation for a subject, that subject no longer falls under the right of consent.

Advisory right

The works council also has an advisory right. This relates – in summary – to proposed decisions that concern the organization of the company, such as:  

1. Transfer of control over the company or a part thereof.  
2. Entering or changing control of another company, a lasting cooperation (joint venture) or a financial participation.  
3. Cessation of operations of the company or a major component thereof.  
4. Major downsizing, expansion, or other changes in the activities of the company. 
5. Major change in the organization of the company. 
6. Change in the company’s place of business.  
7. Group recruitment or hiring of workers.  
8. Making a major investment for the benefit of the enterprise.  
9. Attracting significant credit for the benefit of the enterprise.  
10. Extending significant credit and providing security for significant debts of another entrepreneur unless this is done in the ordinary course of business in the enterprise. 
11. Introducing or changing a major technological feature.  
12. The adoption of an important environmental measure.  
13. Adoption of a regulation relating to self-insurance in the event of illness or incapacity for work.  
14. Issuing an advisory assignment to an expert regarding a decision requiring an advisory opinion; or  
15. Appointing or dismissing a director.  

In other words, these are “important” decisions. That is, non-ordinary decisions with important consequences.  

The advice must be requested at least so sufficiently far in advance that the advice can have “a substantial influence” on the decision to be taken. Thus, the time in which advice is requested must be long enough. This means weeks or months, not days. This further means that a request for advice from the board to the works council must be substantiated. It must also be accompanied by documentation that enables the works council to issue an opinion. All foreseeable (significant) consequences of the decision – such as the consequences for staff – must be described.

Right of initiative

Furthermore, keep in mind that the works council also has a right of initiative. This means the works council may submit written, reasoned proposals of its own choosing. The employer must then consult with the works council about the proposal, and then respond to it in writing. 

Right to information  

Finally, the works council has a right to information on several matters. It would stretch too far to discuss all the specific issues involved here. As an employer, you should at least know that the works council has a general right to information. The employer is thus obliged, upon request, to provide the works council and its committees in a timely manner with all the information and data they need to perform their duties. The information and data will be provided in writing upon request.  

What rights do Dutch works council members have?  

As you may already know, in the Netherlands, works council members have so-called “dismissal protection” (ontslagbescherming). Works council membership should also not adversely affect promotion opportunities and the like. Also, remember an OR member must also be enabled to perform his/her duties. This includes preparing for and participating in meetings during working hours.  

Furthermore, the costs of the works council must be paid by the company. This includes reasonable (external) advisory costs. It also includes (reasonable) training costs for works council members. 

Crowe Peak for all questions about works councils, PVT and PVG 

It is clear from the above that setting up a works council and implementing a correct (Dutch) works council policy is a lot of work. This makes it even more important that you as an entrepreneur, member of the managing board or HR director take this seriously. Of course, it is understandable that you do not want to or cannot do this job alone. That is why Crowe Peak employs enthusiastic labor law experts who are ready to assist you. Would you like to know more about the rights and obligations of and towards Dutch works councils? Do you like practical support in the form of drawing up standard documentation or designing an OR structure? Would you like to stay up to date with the latest news on works councils and case law regarding this topic? Then contact us or subscribe to our newsletter.