Social plans in Dutch employment law
A social plan (sociaal plan) is a collective agreement between an employer and one or more trade unions and/or the works council (ondernemingsraad) that sets out the arrangements for employees affected by a large-scale reorganisation or collective redundancy. Although not legally mandatory in all circumstances, a social plan is standard practice in significant restructurings in the Netherlands. It provides legal certainty for both employer and employees and facilitates the UWV dismissal process.
A social plan typically covers: the criteria for selecting employees for redundancy (selectieprocedure), the amounts of severance pay or supplementary transition payment, outplacement services, mobility measures, a voluntary departure scheme (vrijwillige vertrekregeling), retraining arrangements, and the applicable notice periods. A social plan negotiated with and signed by representative trade unions (vakbonden) has the legal status of a collective labour agreement (CAO) and is binding on all affected employees.
Role of the works council
Before implementing a major reorganisation, the employer must seek the works council's advice under Article 25 of the Works Councils Act (Wet op de ondernemingsraden, WOR). The works council must be consulted in time to be able to meaningfully influence the decision. A reorganisation implemented without proper works council advice can be challenged before the Enterprise Chamber (Ondernemingskamer) of the Amsterdam Court of Appeal, which may suspend the decision. The social plan is typically presented to the works council as part of this consultation process.
WMCO notification and the social plan
Where the reorganisation qualifies as a collective redundancy under the Collective Redundancy (Notification) Act (WMCO), the employer must notify the UWV and consult the trade unions before submitting individual dismissal applications. The social plan negotiated during this consultation process is submitted to the UWV as supporting documentation for the dismissal applications. UWV may refuse to process individual dismissal requests if the social plan contains selection criteria that deviate from the afspiegelingsbeginsel without adequate justification.
There are no statutory regulations governing the content of social plans in the Netherlands: their binding force and content depend entirely on how they are concluded. A social plan agreed with trade unions that meet the criteria for parties to a collective labour agreement - including at least two years of legal personality as an organisation with active members in the enterprise - has full CAO status and binds all affected employees. A social plan agreed only with the works council or an assembly of workers is treated with more caution by courts, as the equality of bargaining power may be questioned, and its binding force is uncertain. Since the Work and Security Act of 2015, the statutory transition payment also applies in collective dismissal situations, so social plan negotiations now focus on supplementary amounts above the statutory minimum rather than replacing the transition payment with a separate redundancy payment.