Works council: Formulating an advice

The works council has the right to be consulted on proposed decisions regarding certain business economic and organisational matters. But what does a sound advice include? And what requirements does an advice have to meet?

The importance of a sound advice

One of the important rights of the works council is the right to give advice (Article 25 of the Works Councils Act, “WCA”). The importance of a sound advice is twofold:

1. An entrepreneur has to take into account the advice in his decision-making process. Therefore, it is important to include all comments, conditions and/or recommendations the works council has on a proposed decision. In this way, the works council can convince the entrepreneur to follow its advice.
2. If the entrepreneur takes a decision which is not (completely) in line with the works council ‘s advice, the works council may start proceedings before the Enterprise Chamber at the Amsterdam Court of Appeal. The Enterprise Chamber will only consider the arguments included in the advice. No new arguments can be put forward during the proceedings.

The advice thus forms the final piece of the advisory process and, at the same time, the basis for potential proceedings before the Enterprise Chamber.

How to give shape to an advice?

The law does not prescribe any formal requirements with which the advice has to comply. The works council is therefore free to formulate an advice according to its own views. However, case law does provide a number of points of reference. We strongly advice the works council to take these into account:

1. Submit the advice in writing. In this way, discussions on the exact content of the advice can be avoided and it is more likely that the content of the advice will be relied on in legal proceedings. It makes it also easier to determine during proceedings to what extent the decision of the entrepreneur deviates from the advice. In addition, it can be examined to what extent the works council’s intention with the advice was sufficiently clear.
2. Ensure that the advice fully expresses any objections the works council may have against a proposed decision. Has the works council already raised objections against the proposal? If so, it is wise to include these objections in the advice. In this way, the entrepreneur can be prevented from not including these objections in his decision-making process. It also prevents the objections, which were not laid down in the advice, from having to be disregarded in any proceedings before the Enterprise Chamber.
3. Explain the works council’s point of view in detail in the advice. Case law shows that the entrepreneur must respond, with reasons, to what was put forward by the works council in its advice; a general statement of reasons is insufficient. The extent to which the entrepreneur must give reasons for his decisions is therefore to a great extent determined by the content of the advice.
4. The works council does not have to give a pure positive or negative advice. If the works council is not unanimously positive or negative about an advice, it would be wise to formulate the advice as a list of recommendations, alternatives and/or conditions. Ensure that these are precisely formulated and motivated. If an overall positive advice is given or there is a lack of substantiation, there is the risk that the entrepreneur neglects the considerations and considers the advice as an approval of the works council (and it will also be more difficult to substantiate in proceedings before the Enterprise Chamber that the decision taken by the entrepreneur is ‘manifestly unreasonable’).

Make arrangements!

To avoid discussions, it can be useful to make arrangements with the entrepreneur before the advice is given, for instance during the consultation meeting. In this way, the conditions that are important to the works council can be negotiated at an early stage and cannot be neglected by the entrepreneur. If any arrangements are made during the consultation meeting, ensure that they are recorded in writing.

Conclusion

When drawing up an advice, the following applies: be clear and precise in the formulation of recommendations, alternatives, and conditions for a proposed decision by the entrepreneur. Ensure a sound substantiation of the advice and, if possible, make good arrangements with the entrepreneur prior to the advisory process. In this way, the advice is more likely to be adopted by the entrepreneur and discussions and lack of clarity are avoided. It will also prevent arguments by the works council that were not fully recorded from being disregarded in proceedings before the Enterprise Chamber.

Works council lawyers

If you have any questions regarding the above, please contact us!