All employees in the Netherlands have some form of terms of employment. But who decides and negotiates about these terms of employment? The Works Council also has a role to play in the negotiations of the terms of employment.
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Works Councils have the right to consent to several legally defined subjects dealing with terms of employment. Works Councils are increasingly involved in the negotiation of almost all terms of employment. However, there are still many companies that have a collective labour agreement. These collective agreements are the result of negotiations between employers and trade unions.
When does the Works Council play a role? And what exactly is that role? We will explain that in this article. First, we explain what terms of employment are, where they are laid down and who is negotiating about them. Next, we define the role of the Works Council and in which situations that role applies. We conclude with some tips for the Works Council.
what are terms of employment?
Terms of employment: a collective name for the agreements between the employee and the employer. The employee gives the employer ‘employment’ and the employer gives certain things in return, such as salary. In other words, we are talking about the ‘conditions’ or ’terms’ for which an employee comes to work.
Terms of employment are agreements on salary, holidays, education facilities, etc. The term ’terms of employment’ does not appear in the law. But we have agreed with each other what they are and who is negotiating about and deciding on them.
where are the terms of employment recorded?
The agreements about the terms of employment are laid down in several documents:
- the Dutch Civil Code
- the ‘CAO’ (collective labour agreement)
- the terms of employment arrangement (AVR)
- the staff manual or staff regulations
- the employee’s individual employment contract
There is a ranking: the agreements in the Dutch Civil Code take precedence; next, the collective agreement or the AVR, then the staff regulations and finally the individual employment contract. For example, in a collective agreement, it is usually not allowed to agree on less (e.g. fewer vacation days) than is provided for by law. Similarly, the staff regulations should not compromise on ‘less’ than the collective agreement. Improved agreements are (usually) allowed.
who negotiates about which terms of employment?
The collective agreement between employers/employer associations and the trade unions is set out in the collective agreement. They negotiate about this.
In recent years, however, it has become increasingly common for Works Councils to negotiate primary terms of employment and to have these agreements laid down in a terms of employment arrangement (AVR). Sometimes, the Works Council is a negotiation partner because there are provisions in the collective agreement that give the Works Council a certain amount of influence or consent about (certain) parts. The employer is increasingly negotiating with the Works Council, because there is no collective agreement or because the employer does not want to deal with the trade union due to the declining role of the trade unions and the customisation that the Works Council can offer.
However, the Works Council is not responsible for the primary terms of employment. The Works Council Act (WOR) leaves this task to the trade unions. The WOR does leave room to agree on primary terms of employment with the Works Council.
The individual employment contract contains the agreements between the employee and the employer. They negotiate the terms of employment that are included in that contract.
can the Works Council negotiate on behalf of the employees?
The Works Council has a right to consent to specific terms of employment that are laid down in the Works Council Act. The employer can also negotiate with the Works Council about other terms of employment. However, this means that the employer and the Works Council must comply with the agreements in the collective agreement.
Especially when there is no collective agreement, or when the collective agreement leaves a lot of room for other terms of employment, it is useful for the employer to lay down general agreements on the terms of employment. This prevents the employer from applying all kinds of different terms of employment. If the employer agrees with the Works Council, there is also more support in the organisation.
The Works Council has the right to consent (or not), and to negotiate about the terms of employment as laid down in (the right of consent of) the Works Councils Act.
This explains why the Works Council is often asked to be a representative. The Works Council is a legally elected representative of the employees. A Works Council is mandatory for organisations of 50 employees or more. It might seem as if the Works Council is taking over the role of the trade unions, but that is not quite the case.
The trade unions have the right to make agreements on behalf of the employees who are members of that trade union. The Works Council has a different position. It may represent the employees, but the agreements made by the Works Council with the employer are not, in principle, binding for the employees.
If the employer adjusts the terms of employment of all employees after agreement with the Works Council has been reached, the law says that the employer is unilaterally changing the terms of employment since there has been no consultation with the individual employee and the individual employee has not given the Works Council a mandate to negotiate on their behalf.
In this situation, an employee may not agree and not accept the change. The Civil Code (Article 7:613) (Dutch) and legal rulings (Dutch) give the employee all rights to do so.
enabling the Works Council to negotiate: two conditions
The Works Council can negotiate on behalf of the employees about the terms of employment in the staff regulations or the terms of employment arrangement (AVR). To achieve that, the Works Council and the employer must meet two conditions:
- there must be consultation between the Works Council and the employees
- the Works Council and the employer must draw up an enterprise agreement
condition 1: consultation between the Works Council and the employees
The Works Council ensures a fair and careful discussion with employees, asking them for permission (mandate) to negotiate on their behalf.
The arrangements made by the Works Council with the employees must clearly define how the employees are involved in the negotiations on the terms of employment. For example, through consultation, polls or voting on goals, starting points, intermediate and final results.
The agreements should also show that the Works Council is doing everything to best represent the opinions and interests of the employees. The employees must have confidence in this.
condition 2: the enterprise agreement
The Works Council and the employer shall establish an agreement (enterprise agreement) that confirms that the Works Council will be given more powers, such as the right to consent to the AVR or the staff regulations. Such an agreement also includes agreement on the procedures of the negotiations and how to deal with conflicts. The Works Council and the employer sign the covenant with agreements.
the employee may refuse
An employee may disagree with the outcome of the Works Council’s negotiations. They can refuse to accept the outcome, and keep their own terms of employment. This usually means that the employee’s terms of employment will be ‘frozen’ and will not change anymore. The employee can then enter into negotiations with the employer about their terms of employment. The question is whether the employer wants this to happen. They might prefer to leave the terms of employment ‘frozen’.
Ultimately, this could lead to a lawsuit whereby the employer and/or employee wants to win. It is essential that the Works Council consents to new terms of employment. This is an indication that the change in the terms of employment is reasonable and necessary. This means that the employee is always at a disadvantage if the matter is taken to court.
the Works Council negotiating collective terms of employment: tips
Are you, as a Works Council, in the position to negotiate about all terms of employment? If so, here are some practical tips.
TIP 1: provide knowledge
As a Works Council, be sure to gather knowledge in the form of training or coaching in the following areas:
- employment conditions in the broadest sense
- understanding negotiation strategies
- negotiation skills
- smart and strategic communication
TIP 2: provide good consultation with the employees
Involve the colleagues for whom you are negotiating.
- provide sounding board groups in all parts of the organisation
- distribute interim newsletters on the state of play
- hold surveys to identify opinions and wishes
- create support
- share outcomes
- announce what you want to achieve, what your goals are
- inform employees about draft agreements
TIP 3: use experts
A Works Council can ask experts to help in all fields. These can be employees of the organisation with specific knowledge and/or skills, or external experts who are hired by the Works Council. Management is required to pay the (reasonable) costs of an external party. Consider the following:
- investigation: to have reports from the Director investigated
- negotiation: to help you during the negotiations
- determining the position: ensuring that the Works Council does not get caught between the interests of the employees and the interests of the organisation
- head of delegation: to communicate well and in a business-like manner, without misunderstandings
- project director: to coordinate the negotiations for all parties en parts of the project
This article was written by Sander Vrugt van Keulen and verified for legal accuracy by Karen Maessen, LLM at De Voort Advocaten | Mediators.
Note: Please note that we are a Dutch organisation and that all our information is originally composed in Dutch. For the benefit of our English-speaking customers we have translated some of our online information. We are still in the process of translating even more of our information. It could therefore be that you will come across Dutch pages on CT2.nl. Please contact us if you would like more information.