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COUNTRY OVERVIEW

A third of supervisory board members in the Netherlands are nominated by the works councils in larger companies, although the arrangements mean that the influence of employees is very indirect. This, together with the large number of multinational companies based in the Netherlands, meant there was interest in the directive. Both unions and employers were consulted on legislation implementing the directive through the Social and Economic Council, but, although a number of technical issues were taken up, there was no wider public debate.

For further information on the SE legislation, such as the choice of SNB members, click on the more button.

In companies with issued capital of more than €16 million, at least 100 employees and a works council (obligatory where there are more than 50 employees) the works council has the right to nominate one third of the members of the supervisory board. (Different arrangements apply to groups with the majority of their employees outside the Netherlands.) The arrangements are complex, with works council nominations going through the supervisory board and the general meeting of shareholders. In addition, employees of the company or of a union involved in collective bargaining with it are specifically excluded from being members of the supervisory board. The result is that the interests of the employees are only very indirectly represented at supervisory board level.

Despite this, the fact that the Netherlands already had a system of employee involvement at board level, together with the possibility that some of the Netherlands’ many multinational companies might choose to become European companies, made the directive of greater interest than in some other countries. The discussions on its introduction also broadly coincided with a change in the national system of supervisory board representation, which came into force in October 2004.

The government’s proposals on legislation to implement the directive were discussed in the Social and Economic Council (SER), in which both unions and employers are represented, and it produced an opinion on the proposal in June 2003.

The bill to transpose the directive was presented to the parliament in November 2003 and during its passage, which lasted a year and a half, there were a number of comments on the proposals in the specialised press. There is, however, no evidence of a wider public debate.

Form of transposition

Directive was transposed by law in March 2005, five months after the deadline of 8 October 2004.

The directive on employee involvement in European companies was transposed through the following legislation: Act of 17 March 2005 implementing Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees (Involvement of Employees

(European Companies) Act) (Wet van 17 maart 2005 tot uitvoering van richtlijn nr. 2001/86/EG van de Raad van de Europese Unie van 8 oktober 2001 tot aanvulling van het statuut van de Europese vennootschap met betrekking tot de rol van de

werknemers (Wet rol werknemers bij de Europese vennootschap )). A separate decree of 23 March 2005 brought it into effect on 1 April 2005.

Separate legislation adapting company legislation in the Netherlands to the Regulation on European companies was passed on the same day, 17 March 2005. It also came into effect on 1 April 2005.

The legislation on the involvement of employees in European companies was later consolidated with legislation implementing the directive on employee involvement in European Cooperative Societies to produce a new text – Involvement of Employees in European Legal Entities Act (Wet rol werknemers bij Europese rechtspersonen). This had no substantive impact on the wording of the legislation but it changed the Article references – for example Article 2:4 of the original legislation becomes Article 1:10 in the consolidated legislation. The following sections use the original Article references.

Special negotiating body (SNB)

Selection of national members

SNB members from the Netherlands are appointed by the works councils.

The basic principle underlying the choice of SNB members from the Netherlands is that they are appointed by works councils in the companies and workplaces involved.

The legislation provides rules setting out the role of the different levels of the works council structure. Under Dutch law a works council (OR) should be set up in every company with at least 50 employees – it is voluntary between 10 and 50 – but, where several companies belong to a single group, a central works council (COR) must be set up if the majority of company works councils desire this. It is also possible to set up an intermediate level works council (GOR) where several disparate businesses are grouped together in a single holding company.

If there are only works councils involved, it or they make the appointment. However, where there is one or more central works council, the appointment is made by it or them. Where there is no central works council but one or more group works council, the appointment is made by it or them. Where not all works councils are represented in the group or central works council the appointment is made by the central or group works council(s) and the works councils that are not represented.

If there are works councils but also some employees who are not represented by them – perhaps in a separate small company – these workers should in the wording of the legislation “be given an opportunity to express their opinion about any persons to be appointed as members of the special negotiating body”.

In addition, where no works council exists, the Dutch members of the SNB are elected by all employees. Unions which have members in the companies involved may make nominations, as may employees who are not union members (Article 2:4).

External trade union representatives

The presence of external union representatives on the SNB is neither specifically prohibited nor specifically permitted by the legislation in the Netherlands.

The section of the Dutch legislation on the choice of members of the SNB from the Netherlands makes no reference to the issue as to whether or not they may be external union representatives (Article 2:4).

Financing of experts

Funding is not limited to a single expert.

The legislation states that the SNB may draw on the assistance of “one or more experts of its choice”. It does not go on to limit the costs borne by the companies to the costs of a single expert. However, it does state that overall the costs should be those which are “reasonably necessary for the fulfilment of the tasks” of the SNB and that in the case of experts, as in the case of legal actions, their costs will only be borne “where the participating companies are notified of the costs in advance” (Article 2:10).

Standard rules under the fallback procedure

Allocation of national seats on SE representative body

The method for choosing members of the SE representative body from the Netherlands is the same as that for members of the SNB, in other words, they are appointed by the works councils.

The legislation states that Dutch members of the SE representative body, known in the legislation as the SE works council (SE-ondernemingsraad) should be chosen in exactly the same way as members of the SNB, although in this case their period of office is limited to four years. This means that they are appointed by the works councils, with direct elections by the employees only if there is no works council (see section on SNB). One difference, however, is that in this case the legislation is clear that membership of the representative body is limited to employees (Article 3:3).

Budget of representative body

The company should bear the costs of the representative body, although in the case of experts, the company can be asked to pay for an expert for each agenda item.

The company is obliged to bear the costs which are “reasonably necessary for the fulfilment of the tasks of the European works council [SE representative body]”, although in the case of experts this is limited to “one expert per agenda item”. The company can also be required to pay for legal actions, although the costs of these should be notified to the company in advance (Article 3:11)).

National procedure for the allocation of board seats

The method for choosing employee board-level representatives from the Netherlands is the same as that for members of the SNB, in other words, they are appointed by the works councils.

The legislation states that employee board-level representatives from the Netherlands should be chosen in exactly the same way as members of the SNB. This means that they are appointed by the works councils, with direct elections by the employees only if there is no works council (see section on SNB) (Article 3:13).

Misuse of procedures and structural change

Misuse of procedures

There is no specific reference to the misuse of procedures in the legislation but the sections on renegotiation provide a partial protection in some circumstances.

There is no specific reference in the legislation to misuse of procedures but the possibility that the agreement must be renegotiated in some circumstances (see section on structural changes) gives employees an instrument to deal with some forms of misuse.

Structural change

Where new companies are brought into the European company and their employees represent at least one fifth of the company’s total European employment there is a right to new negotiations in certain circumstances.

The Dutch legislation goes beyond the requirement in the directive which states that where an agreement is reached, it should include the circumstances in which a new agreement should be negotiated as well as a procedure for doing so. It goes on to say that where these provisions are not included in the agreement, or where they are not such, in circumstances where new companies and employees are brought in to the company, as to guarantee the right over two years either to renegotiate the agreement or to include these new employees in the structures of involvement, there is a right to new negotiations. This right is dependent on at least 100 employees, or their representatives requesting it, and only applies where the employees brought into the company in this way make up at least 20% of the European company’s European employees (Article 2:13.)

Position of trade unions and employers

Unions and employers were consulted on the introduction of the legislation and there were differences of opinion. However, these related primarily to the role of the board in a European company, rather than the details of employee involvement.

Unions and employers were involved in discussions on the introduction of the legislation in the Social and Economic Council (SER), in which both sides are represented.

The main points of division between the two did not relate to the details of employee involvement, such as the composition of the SNB or the funding of experts. Instead the disagreements were on issues linked to the changes adapting existing company law to the requirements of the Regulation on European companies – in particular the role of the board.

The unions were concerned about the powers of the supervisory board to ensure that important decisions could not be made without its involvement, about the arrangements for a single-tier board, again to ensure that management alone was not able to take decisions, and about the extent to which the exemption rules, which mean that the normal rules on board-level representation do not apply to international groups, which have the majority of their employees outside the Netherlands, should apply to European companies.

L. Fulton (2008) Anchoring the European Company in National Law - Country Overviews (online publication, prepared for worker-participation.eu)

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