Is a Severance Arrangement a Remuneration Arrangement within the Meaning of Section 27 of the Works Councils Act?
Pursuant to Section 27(1) under c or e of the Works Councils Act
(Wet op de ondernemingsraden, "WOR"), the
employer requires the consent of the Works Council if he decides to
adopt or to amend an arrangement regarding a system of remuneration
or an arrangement regarding dismissal policy. This judgment
concerned the question of whether a severance arrangement that had
been adopted by the employer for a certain group of officers
working within the enterprise could be regarded as an arrangement
within the meaning of Section 27(1) under c or e of the WOR. The
employer was of the view that he could adopt the arrangement
without the consent of the Works Council.
The Facts
The employer's Supervisory Board created a scheme in early 2008
in order to prevent a number of key officers from leaving the
enterprise or being hired away in connection with the intended
privatization of the enterprise. To this end, an additional
provision ("the Arrangement") was added as an addendum to
the employment contracts of 18 so-called key officers. The
Arrangement gives the employee, whose employment contract is
terminated by the employer within 24 months of a "change of
control" (without the employee having committed an imputable
act), the right to lay claim to an additional indemnification on
top of the severance arrangement already set out in the employment
contract. There may be a "change of control" if a new
(minority) shareholder with a substantial interest arrives.
The Central Works Council (Centrale Ondernemingsraad,
"COR") has invoked the nullity of the resolution to adopt
the Arrangement because the consent of the Works Council to the
Arrangement had not been requested. Afterwards, the COR called in
the joint sectoral committee to mediate in August 2008. In October
2008 the joint sectoral committee judged that the question at issue
was only the purely legal question of whether or not the
Arrangement was within the meaning of Section 27 of the WOR, so
that there was no room for mediation. Eventually, the COR applied
to the Subdistrict Court in Haarlem.
The COR argued that there had been a projected decision to adopt a
remuneration arrangement or to adopt an arrangement regarding
dismissal policy, for which consent should have been requested.
According to the COR, the Arrangement concerns 18 persons working
in the enterprise (so-called key officers), and creates new
relationships between groups of employees within the enterprise.
Moreover, in view of the wording of the Arrangement, it is capable
of being repeated.
According to the employer there was no question of an arrangement
within the meaning of Section 27 of the WOR, but of an
employment-law arrangement about an additional indemnification for
18 individual employees (out of the total of 14,600 employees).
Therefore it was not a decision of a general nature that may be
applied again, nor a change to an existing system or an existing
policy in the field of secondary elements of remuneration.
Furthermore, the employer stated that there was also no question of
a sufficiently defined group of persons who work for the
enterprise, as envisaged in Section 27 of the WOR.
Judgment of the Subdistrict Court
The Subdistrict Court ruled that there is no question of a
remuneration arrangement within the meaning of Section 27(1) under
c of the WOR or of a decision concerning the adoption of a
dismissal policy within the meaning of Section 27(1) under e of the
WOR. The Subdistrict Court has taken into account that the relevant
key officers worked at various departments and at various levels
within the enterprise. Within those departments, officers were also
working who had not been offered the Arrangement. Therefore it was
not possible to speak of a more or less defined group of persons
for whom an arrangement had been created. The Subdistrict Court
concluded that there was no arrangement that related to a group of
persons who work for the enterprise within the meaning of Section
27 of the WOR. Thus, according to the Subdistrict Court the
Arrangement falls beyond the scope of Section 27 of the WOR.
Tips
- In the case of an arrangement relating to a relatively
small group of employees who do not form a more or less defined
group, the Arrangement will not be considered to be a decision
within the meaning of Section 27 of the WOR. According to the
Subdistrict Court, the fact that the 18 employees worked at
various departments and at various levels within the enterprise
played an important (and therefore decisive) role in this
case.
- The Works Council may, however, bring forward its arguments
and suggestions with regard to such an arrangement pursuant to
Section 23 of the WOR.