Insights

Does the Works Council have an advisory right when only one management position is eliminated?

The Works Council has an advisory right for any “important change in the organisation”. The law does not clarify what is meant by “important”. The Enterprise Chamber recently ruled on a case in which the employer had cancelled only one management position in its organisation. According to the employer, this change was not important and therefore it had not sought the advice of the Works Council. The Works Council thought otherwise, saying the employer wrongfully did not ask for advice. Who is right?

What does the law say?

Under the Dutch Works Councils Act (“Wet op de Ondernemingsraden”), the employer must seek advice on any intended decision to make an important change to the organisation. The employer must then:

– Submit a request for advice to the Works Council. This must be done at a time when the Works Council can still exercise substantial influence on the final decision;

– Explain in the request for advice the reasons for the decision, the consequences for the organisation and the measures the employer will take, such as a social plan;

– Hold at least one consultation meeting with the Works Council;

– Awaiting the advice before taking any implementing actions (such as submitting a dismissal request or offering a termination agreement);

– In case of a positive advice, the employer may take the decision and start implementation. In case of a negative advice, the employer must wait one month before starting implementation. Within this month, the Works Council can go to the Enterprise Chamber to challenge the decision. If the Works Council starts proceedings, the employer must suspend its decision for as long as the proceedings last.

For employers, it is therefore important to determine whether or not the Works Council has a legal right to advise. According to case law, the cancellation of several positions will readily require a request for advice, but a clear line cannot be drawn. With the cancellation of only one job, the choice is often made not to seek advice, assuming that such a decision cannot be seen as ‘important’.

The case

The case before the Enterprise Chamber on 29 March 2023 involved an international IT company with around 187 employees in the Netherlands. The employer planned to eliminate the position of Senior Solution Sales Manager, this role being held by only one person. This person manages 10 sales managers, who in turn manage a total of 60 employees. The employer informs the chairman of the Works Council of the plan. The employer already submits an application for dismissal to the UWV. Meanwhile, the employer and the Works Council discuss whether this is a decision that requires a request for advice. The employer does not consider the decision “important” within the meaning of the law because only one position is affected. The Works Council disagrees. Ultimately, the employer decides not to submit a request for an advice and to go ahead with the plans. Next, the employee accepts a termination agreement (settlement agreement) to end his employment by mutual consent.

The Works Council appeals the decision at the Enterprise Chamber. The Enterprise Chamber rules in favour of the Works Council. According to the Enterprise Chamber, the decision did require a request for advice. The following is of relevance here:

– The employee nominated for dismissal was the head of a large department employing a third (70) of the total number of employees;

– A management layer is being removed;

– Because of the removal of the position, the employee’s duties are transferred to others. Their jobs become more demanding as a result. The question is whether enough time remains for managing, training and customer meetings within the sales department.

According to the Enterprise Chamber, there was therefore a significant change in the set-up and duties and responsibilities within the sales department. Despite only one position being eliminated, the decision is still subject to advice of the Works Council.

The Enterprise Chamber ruled that the employer must still seek the advice of the Works Council on the elimination of the position of Senior Solution Sales Manager. The outcome of that advisory process may result in the employer having to reverse the changes it has already made. Please note that this may also affect the termination agreement that has since been signed with the employee.

Conclusion

The fact that no advice was sought is costly for the employer in this case: the employer is back to square one and still has to follow the advice procedure. In this case, the Enterprise Chamber mainly looks at the consequences of the decision for the (rest of the) organisation and the distribution of work as a result of the cancellation of one job. Employers are therefore advised to carefully assess the consequences of their intended decision, even if only one position is cancelled.

Should you have any questions about this ruling or about your own organisation, please do not hesitate to contact us.

Alain Hardy

Published On: 4 July 2023