What is a works council under Dutch labour law?
A works council in the Netherlands (in Dutch: ondernemingsraad) is a representative body within a business that protects and promotes employee participation. Under Dutch employment law, establishing a works council can be a strict legal requirement depending on the number of employees. As a foreign worker or entrepreneur in the Netherlands, it is important to be aware of the rules on employee representation, which are rooted in the obligations of employers under the Works Councils Act (Wet op de ondernemingsraden).
When is a works council legally required in the Netherlands?
If your business employs at least 50 workers, then you must establish a works council under the Works Councils Act (Wet op de ondernemingsraden). The 50-employee threshold is applied at the level of the "onderneming" (undertaking) as defined in the Act, which is not automatically the same as a physical branch or office.
Whether a particular branch counts as its own undertaking depends on factors such as whether it has its own management with real decision-making authority, not merely on the headcount at that location. Where an employer runs several undertakings that each meet the threshold, it may need to set up a works council for each one, but it can also establish a joint works council (gemeenschappelijke ondernemingsraad) for several undertakings together, or, within a group structure, a central works council (centrale ondernemingsraad) that coordinates matters affecting the group as a whole alongside the works councils of the individual undertakings.
A company that employs less than 50 people is under no obligation to form a works council. Instead, a voluntary council can be formed by the employees, or a representative body (in Dutch: personeelsvertegenwoordiging, PVT) can be created. This type of body would not hold the same powers as a legally implemented works council nor would it entail the same obligations. The employees can still exercise rights to consultation, which must be accomplished by holding staff meetings.
What rights exist in a works council in the Netherlands?
The works council promotes employee participation in both the daily operation of a company and the decision-making for the company's future direction, benefiting both employer and employees. In the Netherlands, the works council must be convened at least twice a year, within working hours.
The works council rights and interests are solely intended to protect employees in the working environment. Mainly, these are:
- the right to be consulted under Article 25 of the WOR when a decision is proposed that will substantially affect the company, such as a business reorganization
- the right of consent under Article 27 of the WOR concerning substantial changes to personnel regulations, such as working hours, pay or performance-assessment schemes
- and the right to render advice on matters dealt with in the meetings.
The topics up for discussion are generally limited to those on which the employees have the competency to render advice. Further, the issues discussed are expected to be events anticipated within a six-month period, such as a collective redundancy.
The rights of the works council in carrying out the objectives set at such meetings include working time available for training and consultation for the remaining colleagues. The Works Council Act imposes an annual minimum of five days for the training and sixty hours for consultation.
Key legal sources
- Wet op de ondernemingsraden (WOR) - statutory basis for the works council, including the 50-employee threshold
- Article 25 of the WOR - advisory right on significant business decisions
- Article 27 of the WOR - consent right on personnel regulations