The works council in collective redundancy plays a crucial role in protecting employees and in decision-making within a company. Employers who wish to dismiss staff for business-economic reasons must not only inform the UWV but also consult the works council (OR) in a timely manner. The employment law attorneys at Arslan Advocaten explain what the legal rules are, how the procedure works and what consequences non-compliance may have.
What is collective redundancy?
There is a collective redundancy when an employer wants to dismiss at least 20 employees within three months within one work area. This falls under the Notification of Collective Redundancies Act (Wmco). The purpose of this law is to protect employees, trade unions, and the Works Council against sudden mass layoffs and to give them the opportunity to influence decision-making.
Obligation to notify the UWV and consult with the Works Council
Before an employer may carry out a collective dismissal, they must notify the UWV, the trade unions and the Works Council. The notification includes, among other things:
- The reasons for the dismissal;
- The number of employees involved;
- The positions that will be eliminated;
- The period during which the dismissals will take place;
- The criteria for selection and redeployment.
Without notification to the OR or UWV the dismissal not legally valid. Employers who skip this step risk that the dismissal is annulled by the court.
The role of the works council (OR)
The OR has a statutory right to advise on important decisions of the employer (Article 25 Works Councils Act). A collective dismissal unmistakably falls under that. The employer must therefore first submit the proposed decision in writing to the Works Council, with all relevant information.
What must the Works Council assess?
- The necessity of the dismissal (economic or organizational)
- The chosen selection criteria for dismissed employees
- The measures to enable redeployment or training
- The social consequences for the staff and the social plan
The Works Council may then issue advice. The employer may proceed with the dismissal only after this advice has been issued and the waiting period of one month has passed. If he does so earlier, he acts in breach of the law.
Advisory right and appeal to the Enterprise Chamber
If the employer ignores the advice of the Works Council, the Works Council can lodge an appeal with the Enterprise Chamber of the Amsterdam Court of Appeal. The Enterprise Chamber can suspend or annul the employer’s decision if it conflicts with the principles of reasonableness and fairness.
The judge looks, among other things, at:
- The care taken in the decision-making process;
- The justification for the business-economic necessity;
- The involvement of the Works Council and employee representatives;
- Any agreements in the social plan.
Social plan and negotiation with trade unions
In a collective dismissal, a social plan drawn up. It sets out the agreements on redeployment, transition payment, outplacement, training budgets and support towards new employment. Often the trade unions and OR jointly negotiate with the employer about the content of this plan.
A social plan is not legally required, but in practice it is essential. It shows that the employer takes their duty of care seriously and prevents lengthy legal proceedings.
Employer obligations
- Timely notification to UWV, OR and trade unions (at least one month before the dismissals)
- Conducting consultations on alternatives to dismissal
- A written justification of the business-economic necessity
- Respecting the OR’s advisory right
- Compliance with the social plan
Consequences of non-compliance
If the employer violates the works council’s right to advise or ignores the notification obligation, this can lead to:
- Annulment of the dismissal decision by the court
- Fines imposed by the UWV
- Reputational damage and unrest within the organization
- Additional costs due to reinstatement of employment contracts
Practical example
In a recent case, the court ruled that an employer had to reverse the decision to reorganize because the works council had not been consulted in time. The company had already dismissed staff before the works council’s advice had been issued. The court found this to be contrary to the Wmco and ordered the reinstatement of the employment contracts with payment of wages.
Frequently asked questions about the role of the works council in collective dismissal
What is the difference between the right to be consulted and the right of consent?
The right to be consulted means that the Works Council may give advice before a decision is made. The right of consent applies only to specific subjects, such as working hours or working conditions. In cases of collective dismissal, the right to be consulted applies.
Can an employer ignore the Works Council’s advice?
Yes, but the Works Council can then file an appeal with the Enterprise Chamber within one month, which can suspend or annul the decision.
When is there a case of collective dismissal?
When an employer wants to dismiss twenty or more employees within three months in the same work area. This applies regardless of the size of the company.
What should a social plan include?
A social plan contains agreements about compensation, guidance, and redeployment. This plan is often drawn up in consultation with trade unions and the Works Council.
Arslan Advocaten helps with collective dismissal
The employment law specialists at Arslan Advocaten assist employers and works councils with reorganizations and collective redundancies. We help with drafting social plans, conducting consultations, and complying with statutory obligations. Would you like to know whether your company complies with the rules of the Wmco? Contact us for legal advice.
