If you’re planning to operate a business in the Netherlands, understanding the role of the Works Council (Dutch: Ondernemingsraad, OR) is essential. This employee-elected body plays a vital role in representing the interests of staff and fostering a collaborative relationship between employees and management.
What Is a Works Council?
A Works Council is a legally mandated group of elected employees who represent the collective interests of the workforce within a company. Members typically serve terms of 2 to 4 years and are chosen from various departments to ensure broad representation. To be eligible to vote or stand for election, employees must have been with the company for at least three months. The council elects a Chairperson and Secretary (and sometimes a Deputy Chairperson) to manage its daily operations. Due to the nature of their role, council members are protected against unfair dismissal under Dutch law. It’s important to note that the Works Council is distinct from trade unions or collective labour agreements (CAOs). While unions represent industry-wide interests and HR handles individual employee matters, the Works Council focuses on company-wide issues that affect groups of employees.
Is a Works Council Required?
Yes—under Dutch law, any company with 50 or more employees must establish a Works Council. If your business operates through multiple legal entities, each with 50 or more employees, each entity must have its own council. For companies with fewer than 50 employees, formal staff representation is not legally required but is highly recommended. Alternatives such as staff meetings (personeelsvergaderingen) can be used to maintain open communication.
How does a Works Council fulfil his role in practice?
The Works Council plays a crucial role in Dutch companies by facilitating dialogue between employees and management. Its primary responsibility is to consult with the company’s executive leadership on business policies and employee interests. To fulfil this role effectively, the Works Council is entitled to access all information necessary for carrying out its duties. The Works Council is granted two major legal rights under the Dutch Works Councils to ensure they can influence decision making:
- Right of Advice: The council must be consulted on significant financial, economic, and organizational decisions.
- Right of Consent: The council must approve decisions related to employee arrangements, such as working hours, rest periods, and pension schemes.
It is the council’s responsibility to engage in meaningful consultation and to exercise these rights thoughtfully. To do so, the council often needs to discuss major proposals with the broader workforce. For example, if the employer proposes changes to working hours or pension plans, the council must gather input from employees to ensure their interests are properly represented. In most organisations the Works Council has a multifaceted role that can vary significantly depending on the topic at hand. At times, the council acts as:
- A sounding board for management or HR, offering feedback and suggestions.
- A supervisory body, reviewing and assessing proposed decisions.
- A bridge between leadership and employees, helping to refine decisions by incorporating insights from both sides.
This flexibility allows the council to adapt its approach based on the situation, always aiming to
improve outcomes for the company and its staff.
Rights of the Works Council
To safeguard employee interests, the Works Council is granted several legal rights:
Right of advice: Management must consult the council on decisions that significantly affect employees.
Right of Consent: Changes to working conditions require the council’s approval.
Right of Initiative: The council can propose ideas or changes that management must consider.
Right of Information: The council has the right to all information it needs to be able to fulfil its role.
To fulfil these responsibilities, the council may conduct employee surveys, hire external experts, or organize inspections. Employers are required to provide training for council members and allow them sufficient time—at least 60 hours per year during working hours—to carry out their duties.
Additionally, the council should meet with management at least twice a year to discuss upcoming topics in the next 6 to 12 months that will require advise or consent from the Works Council. This enables the Works Council to be proactive and prepare themselves for the upcoming topics.
When Should You Consult the Works Council?
You should engage with the Works Council whenever making decisions that could significantly impact your workforce. The Works Council has the right to advise on certain topics, and this advice is not without obligation. Proactive consultation, especially on topics that require advise or consent, helps ensure smoother implementation and fosters trust. Common scenarios include:
- Major changes to the organisation or to the distribution of powers within the enterprise
- Organizational restructuring or layoffs
- Making major investments on behalf of the enterprise
- Introduction of new IT systems (technological provisions)
- Changes in executive leadership
- Modifications to employee wellbeing programs
- And more.
Certain HR related decisions also require formal approval from the Works Council before implementation.
These include:
- Changes to pension schemes or savings plans
- Modifications to working hours, rest periods, or leave policies
- Adjustments to pay structures or performance evaluations
- Policies on hiring, promotion, and dismissal
- Training and appraisal procedures
- Support programs for employees facing social challenges
- Complaint and whistleblower protection procedures
- Rules for consultation meetings between staff and management
- Monitoring of employee behaviour, attendance, or performance
- Handling and protection of personal data
More information on the Works Council Act? Read this article for a more complete overview or the complete Works Council Act