Section 25 of the Works Councils Act (Wet op de Ondernemingsraden or ‘WOR’) provides a broad list of topics that grant a Works Council the right to prior consultation. In practice, this quickly results in a request for advice. The manner in which the consulting process is implemented is very important. A properly introduced consulting process will more often than not lead to a positive opinion; but also in the unlikely event that the entrepreneur and the Works Council end up being opponents in legal proceedings, a proper consulting process will work to the advantage of the entrepreneur.
If the Works Council issues a negative opinion, the entrepreneur may then still carry out his resolution after the month’s suspension period from Section 25(6) WOR. The entrepreneur may therefore treat a negative opinion for what it is and give the proposed resolution a definitive status. A following, logical step is then to proceed with the execution of the resolution. The WOR provides the Works Council with the means of recourse of appeal proceedings at the Enterprise Division of the Amsterdam Court of Appeal (Section 26 WOR). The Enterprise Division reviews the resolution for ‘manifest unreasonableness’ and may, among other things, stay the execution of the resolution or have it stayed. Proceedings at the Enterprise Division can therefore have far-reaching consequences and should not, in my opinion, be underestimated. Examples of this include a reorganisation that must be discontinued or an acquisition that cannot proceed.
Reaching agreement with the Works Council is the best ‘medicine’ against proceedings at the Enterprise Division. The reality is, however, that this is not always feasible. Whereas a proper consulting process will generally increase the chance of receiving a positive opinion from the Works Council, it is also absolutely critical in the unlikely event that a negative opinion is issued. Factors to be taken into consideration include submitting a request for advice in a timely manner, substantiated with thorough and sufficient information, with a reasonable period of time by which advice must be given and more generally taking the role fulfilled by the Works Council seriously. As regards the provision of information, it has been assumed in case law and legal literature for a while already that the Works Council – and not the entrepreneur – is the party that determines whether it has been sufficiently informed.
Whoever reads the opinions of the Enterprise Division on a regular basis will note that proceedings and the course thereof are reviewed much more than the factual content of the resolution in dispute. The number of decisions in which the Enterprise Division deems the resolution to be manifestly unreasonable due to its content is far behind the number of decisions in which the course of affairs in the consulting process is under discussion.
The decision of the Enterprise Division of 19 November 2011 (Jurisprudentie Arbeidsrecht 2012/8) illustrates once more that an entrepreneur has much to gain when opinion proceedings are properly introduced in a tidy manner. According to the Enterprise Division, this should also cover responding with substantiation to alternatives proposed by the Works Council. In this specific case, it concerned a childcare organisation that wanted to convert a foundation into a private limited company under Dutch law (besloten vennootschap or B.V.). The Enterprise Division considered that the conversion to a B.V. could be a good solution, but, in light of the opinion of the Works Council, the entrepreneur had not properly substantiated the choice between possible alternatives. The resolution had to be withdrawn – in spite of the fact that the resolution to convert a foundation into a B.V. need not be unreasonable in and of itself.
Whereas I am not aware of the details of the preliminary process, I can imagine that if the entrepreneur had responded with substantiation to the alternatives proposed by the Works Council, it might not have ended up in a negative opinion. Further, even if the Works Council had left its negative opinion unchanged, a more carefully conducted consulting process would have helped a lot in the proceedings at the Enterprise Division.
The entrepreneur, in my opinion, would do well to take the Works Council’s participation in the decision-making process seriously, as well as the corresponding position and rights thereof. Such a basic attitude certainly does not mean that the Works Council is in charge of the organisation. It is still the entrepreneur who sets the agenda, but he will still have to ‘navigate’ around the Works Council’s participation in the decision-making process. To that end, a good relationship with the Works Council is invaluable. Properly treating the consulting and consent processes is a very important first step in the process.