European Restructuring Monitor (ERM)
Eurofound's ERM database on restructuring-related legal regulations provides information on regulations in the Member States of the European Union and Norway which are explicitly or implicitly linked to anticipating and managing change.
Article 3, paragraph 2, article 4 and article 7a of Collective Redundancy (Notification) Act/Wet melding collectief ontslag (WMCO); Articles 25, 26, 31, 35b, and 35c of Works Council Act/Wet op de ondernemingsraden (WOR); Article 4 of Work and Security Act/Wet Werk en Zekerheid (WWZ)
Obligation to notify the public employment service
In case of intended collective redundancies (within 30 days dismissals of at least 20 employees in one or more plants of the same company employed within one and the same region of the public employment service), the employer has to notify the relevant unions and the public employment service or the social agreement committee (if installed). The aim of the notification to the unions is consultation aiming to avoid or mitigate the restructuring plan.
The public employment service will not start the procedure to issue the necessary dismissal permits if there has been no consultation with the unions (unless there is an immediate threat to the continuity of the enterprise or employment). In notifying the public employment service (UWV), the employer has to show to have considered alternatives that diminish the number of dismissals or alleviate the consequences of dismissal for employees. These alternatives have to include the possibility to provide education opportunities or placement in other companies. If the UWV does not accept the reasons or the scope of the collective dismissal, it can refuse to provide the necessary dismissal permits and thereby prevents the collective
Trade unions and work councils must be consulted on the need, the size of collective dismissals, and on the social assistance measures provided for the employees to be dismissed.
The term 'consultation' means that there must have actually been consultation unless these unions or councils (as specified in article 7a):
Obligation to notify the works council
All major strategic decisions with potential consequences for the employees are included by article 25 of the Works Council Act (Wet op ondernemindsraden). This article refers to the rights and obligations of enterprises towards their works councils. A key theme is the obligation to inform the works council so that the council may provide a formal reflection and advice on the proposed changes or dismissals. In the event that the council’s advice is not entirely or not followed, the enterprise must provide a formal response as to why the advice from the works council was not (fully) applied to the planned changes for the enterprise. The changes referred to in this article include both restructuring and business transfers (transfer of undertaking), but also major investments, closures and mergers and acquisitions. In case of restructuring, the employer has to consult the works council. The works council is entitled to at least one consultation meeting with the employer. In principle, a works council should be installed if there are 50 or more employees.
Furthermore, if the works council has given a negative advice on the intended dismissals after being consulted, the employer must abide by a one month waiting period before a permit for collective dismissal is given by the public employment service. A negative advice from the works council could also lead a court to invalidate any dismissals retroactively if employees contest their dismissal in the legal arena. If this happens, employees are entitled to reemployment or (additional) financial compensation.
In case of a disagreement, the employer has to postpone the decision for one month, during which the works council may go to court. If the advice is not followed by the employer, the works council can challenge the restructuring decision (and possible implementation measures already undertaken). Jurisprudence over the last 35 years shows that employers that have not taken their information and consultation duties seriously run the risk that the court rules the restructuring operation invalid. However, given sufficient care, the managerial prerogative prevails.
The employer has to motivate his/her intended decision and show that he/she has considered possible alternatives. These may include, for example, a reduction in the number of dismissals, starting up new production lines, mergers, sale of the company. In the consultation process, the works council may ask about alternatives or bring up alternatives of its own. If the employer does not answer the relevant questions on alternatives, the regional court, who together with the UWV are also involved in checking plans for collective dismissals, might rule that the restructuring plan is invalid.
The works council in smaller companies
In smaller companies employing between 10-50 employees, the Works Council Act obliges the employer to consult the workers' representatives (which may be a works council, but not necessarily so), or the staff meeting on any decision that could lead to job loss or a significant change in the employment, labour conditions or working conditions of at least one-fourth of the persons employed in the company. Contrary to the situation with works councils, decisions cannot be challenged in court. The articles do not specify the need to present alternatives.
Although employer organisations generally maintain that current rules regarding dismissal permits and considering alternatives are acceptable, they stress the importance of simplifying the dismissal process for small and medium enterprises. Furthermore, it is stressed that the process should be swift to ensure the continuity of the enterprise's activities. Currently, the employee is well protected within Dutch employment law, and collective dismissals require acceptance from the regional courts, the public employment service (UWV in the Netherlands), and an enterprise’s works council or body of employee representatives in the case of smaller enterprises. For small enterprises the requirements appear to be less stringent than for enterprises with 50 employees or more.
Eurofound (2015), Netherlands: Obligation to consider alternatives to collective dismissals, Restructuring legislation database, Dublin, https://apps.eurofound.europa.eu/legislationdb/obligation-to-consider-alternatives-to-collective-dismissals/netherlands
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