Business Law Articles
By Jan Dop, LL.M.
Russell Advocaten, B.V.
When does a company have to reveal its motivation for a decision to the works council? Can an insufficiently motivated decision be fixed at the Enterprise Chamber?
The Works Council’s Right to be Consulted
The works council (ondernemingsraad, OR) of a company, has the right to be consulted before certain decisions are taken by the management of the company. If the management does not follow the (negative) advice of the works council entirely or partly, the management has to inform in writing the works council of this decision as soon as possible and explain why the advice is derogated from. The works council can appeal the decision at the Enterprise Chamber within one month after the decision was taken. Therefore, an entrepreneur has to wait one month before implementing a decision which differs from the advice of the works council.
Failure to State Reasons
A recent decision of the Enterprise Chamber shows how important it is for entrepreneurs’ decisions derogating from the advice of the works council to be sound and well-timed.
What was going on? Svitzer EUROMED B.V., part of Svitzer Group, which, in turn, is part of the logistics giant Maersk Group, requested its works council about an intended decision, where, among other things, the position of warehouse administrator was to disappear. The works council’s advice was negative: the position would be necessary and its disappearance would not yield the claimed savings. Svitzer took the decision nevertheless, while only marginally addressing the works council’s objections.
Thus, the works council claims at the Enterprise Chamber that Svitzer could not have taken its decision reasonably, as Svitzer did not reveal its motivation and improperly addressed the objections of the works council. During the hearing, Svitzer explained that the decision was partly related to the interest of the Maersk Group. At group level, a favourable contract had been concluded by which the savings could be realized that were doubted by the works council, so that there was indeed good reason for the disappearance of the position.
Can Svitzer save the decision by means of this explanation? No, according to the Enterprise Chamber, the entrepreneur has to disclose his motivation to the works council during the employee participation procedure so that the works council can take the motivation into account in its advice. The entrepreneur will have to address the arguments of the works council in its decision at the latest. Therefore, Svitzer cannot confine itself to explaining its decision (in detail) at the Enterprise Chamber. Svitzer has to revoke the contested decision and make reparation for the consequences.
If your company takes a decision which is based on the interests of the group you are part of, your works council will have to be informed of these interests in time. If you do not (wholly) follow an advice of the works council, you will have to provide a careful motivation as to why the advice is not followed ultimately in the decision. You cannot fix a flawed decision by an additional explanation during the proceedings before the Enterprise Chamber.
Do you have further questions regarding the relationship between an international works council and the works council of a subsidiary or regarding the right to issue advice of your works council? Or would you like to learn whether you are required to set up a works council? Please contact us.