Works Council Members Bear Costs of Legal Proceedings
A discussion of the Court of Leeuwarden 10 December 2008 (JAR
2009, 33)
Costs Works Council
Pursuant to Section 22 of the Work Councils Act (WCA) normal
costs connected to the activities of the Works Council must be
borne by the employer. These costs include, inter alia,
the costs that the Works Council makes when conducting a legal
action against the employer. Disputes in this respect can be
presented to the Subdistrict Court by any interested party after
mediation and advice of the joint sectoral committee. In the
present case, the law firm that had assisted the Works Council in
an earlier legal action claimed payment from the (alleged) employer
of the costs that this Works Council had made during the conducting
of the legal action.
The Facts
As of 1 January 2007 the transport company Arriva was granted
various concessions, including De Meijerij and Brabant Oost. These
concessions were previously taken care of by BBA Personenvervoer
('BBA'). As a result of the transfer of the concessions,
the personnel within these concessions were also transferred.
Within BBA there was a separate Works Council for the De
Meijerij/Brabant Oost region ('Works Council De
Meijerij/Brabant Oost'). A dispute arose between this Works
Council and Arriva regarding its status within Arriva after the
transfer. According to the Works Council, on the basis of the
transfer of undertaking regulations it had been transferred to
Arriva together with the personnel it represented. Arriva took the
position that this was not the case, amongst other things because
within Arriva's public transport branch a separate Works
Council already existed and also a Branch Commission for each
branch. Subsequently, the Works Council De Meijerij/Brabant Oost
claimed in preliminary relief proceedings before the Subdistrict
Court of Den Bosch to be recognized as Works Council within Arriva
for the De Meijerij/Brabant Oost region.
The Judgment of
the Subdistrict Court of Den Bosch and the Joint Sectoral
Committee
In its judgment of 4 May 2007 (JAR 2007/172) the Subdistrict
Court of Den Bosch ruled that the transfer of the concession had
not resulted in a transfer of undertaking. Apart from the personnel
and the customers, no buses - which the Subdistrict Court deemed
vital for the performance of the transport - or other material
assets had been acquired. The Subdistrict Court therefore concluded
that the Works Council had ceased to exist as a result of the
transfer of concession.
According to the Subdistrict Court the Works Council De
Meijerij/Brabant Oost would not have been transferred to Arriva,
even if there had been a transfer of undertaking. In the
Subdistrict Court's view, in the event of a transfer of
undertaking a Works Council will only be transferred if after the
transfer the undertaking continues to exist as an independent
unity. In the present case, however, the acquired personnel became
part of the public transport branch of Arriva and there was no own
management board, no own purchase department and no own competence
to hire personnel. The personnel was represented by the Works
Council of Arriva's public transport branch.
After the judgment of the Subdistrict Court in preliminary
relief proceedings, the joint sectoral committee - which had been
requested to mediate by Works Council De Meijerij/Brabant Oost a
number of weeks before - issued a report of findings, in which it
was considered that there was indeed a transfer of undertaking and
that it had to be assumed that the Works Council had also been
transferred.
Legal Costs
In the proceedings before the joint sectoral committee as well
as before the Subdistrict Court, the Works Council De
Meijerij/Brabant Oost was assisted by a law firm. Subsequently, a
dispute arose between this Works Council and Arriva about who had
to pay the legal costs incurred by the Works Council. In legal
proceedings the law firm then instituted, the Court of Leeuwarden
ruled, in the same sense as the Subdistrict Court of Den Bosch,
that the Works Council De Meijerij/Brabant Oost had ceased to exist
after the transfer of the concession. Therefore, pursuant to
Section 22 of the WCA, the Works Council De Meijerij/Brabant Oost
could not claim payment of the costs incurred against Arriva. After
all, the Works Council had not been transferred to Arriva, as a
result of which it did not formally exist anymore at the time of
the legal action. The members of the (former) Works Council De
Meijerij/Brabant Oost therefore had to pay the legal costs out of
their own pockets.
Tips
- This judgment shows that members of a Works Council must be
well aware that the institution of legal proceedings in the
event of an alleged transfer of undertaking (with Works
Council) entails a serious procedural risk. If after these
proceedings it is ruled that the Works Council has ceased to
exist, the members of this Works Council will have to pay
themselves the (legal) costs incurred.
- A decisive criterion for the answer to the question of
whether in the event of a transfer of undertaking the Works
Council is also transferred, is that the acquired undertaking
itself must continue to exist as an independent unity.