No abuse of law due to new Central Works Council
A group of companies that establishes a Central Works Council, whereby the regular Works Council of a subsidiary appears to be circumvented, does not constitute an abuse of law. This has been ruled by the Enterprise Chamber of the Amsterdam Court of Appeal on 18 June 2015.
Relevant facts
A group of companies has two subsidiaries, i.e. A and B. Each has a Works Council and the shareholder of these subsidiaries installs a Central Works Council for the benefit of the group interest. The Central Works Council consists of two employees of the smaller subsidiary A and three employees of the larger subsidiary B. Right after the Central Works Council has been established,, the group requests its advice regarding the closing of the plant of subsidiary A. The three employees of subsidiary B vote for the closing and the two employees of A vote against.
Request to the Enterprise Chamber
The Works Council of subsidiary A feels side-lined and it petitions the Enterprise Chamber to rule that the group could not reasonably have come to the decision of the closing of the plant of subsidiary A. It requests the Enterprise Chamber to order the group to revoke its decision and to undo all the consequences thereof. One of the arguments is that the Central Works Council has been installed solely to circumvent the regular Works Council. The Enterprise Chamber of the Amsterdam Court of Appeal is quite a unique form of dispute resolution in the Netherlands on for instance shareholder conflicts, and it can also address certain formal request of a Works Council.
Ruling of the Enterprise Chamber
The Enterprise Chamber has issued its ruling on 18 June 2015. The court considers that, although question marks may be raised regarding the course of action taken by the group, the Central Works Council itself could have raised objections at the time when it needed to give its advice. However, there is no room for such objections in these proceedings by the regular Works Council of subsidiary A.
The Enterprise Chamber is of the view that under these circumstances the installation of a Central Works Council can not lead to an abuse of law. Although the Central Works Council had been installed mainly with the purpose of employee participation in the decision-making process of the reorganisation at hand, the Enterprise Chamber does not see how the new Central Works Council and the following request for advice on the decision to close the plant could be unlawful. The establishing of a Central Works Council and requesting its input on proposed decisions that are of common interest to the subsidiaries are a manner of employee participation as foreseen by the Dutch Works Council Act. Also, the Enterprise Chamber considers that it cannot see why a structure of employee participation in a corporate group, as in this case, could be abusive in relation to rights of employee participation.
BWK Partners Attorneys
Uri Aloni and Esther van der Meulen have represented the group in these proceedings with the Enterprise Chamber of the Amsterdam Court of Appeal. Meanwhile, a so-called Social Plan has been agreed upon in relation to the employees of the subsidiary that has closed its plant.