Change to ‘primary’ employment conditions not subject to consent works council
A discussion of the judgment of the Subdistrict Court of
Rotterdam, 28 July 2009 (JAR 2009/210)
Works Council's right to consent
Pursuant to Section 27 of the Works Councils Act (Wet op de
Ondernemingsraden, "WOR"), the employer needs the
consent of the Works Council for any intended decision regarding
the policy issues mentioned in that Section. In the year 2000 the
Supreme Court held that it had not been the legislator's
intention to provide the Works Council with any right to consent
about 'primary' employment conditions (e.g. conditions that
concern the employees' salary, holidays, working hours). It is
however not always clear whether the intended policy change relates
to such a primary employment condition.
The
Facts
In the case at hand, the employer decided to implement the
following policy changes for two groups of managers:
- cancelling the Reduction of Working Hours ("ADV")
days and age-dependent holidays, and increasing the gross
salary as a compensation;
- introducing a recruitment freeze for an unlimited period of
time for two job groups;
- freezing the salaries of two job groups;
- adjusting the bonus targets and the moment that they are
paid out (from once to twice per year).
The Central Works Council (centrale ondernemingsraad,
"COR") took the position that these decisions were
subject to its consent pursuant to Section 27 of the WOR, and
turned to the Subdistrict Court.
The Judgment of the Subdistrict Court
The Subdistrict Court considered that the decisions were not
subject to consent of the COR, as these decisions regarded changes
to primary employment conditions. The Subdistrict Court explained
this as follows.
The decision to cancel the ADV scheme and the age-dependent days
and to increase the gross salary does not qualify as an amendment
of any policy regarding hours of work and rest time or regarding
leave (Section 27 (1) (b) of the WOR). This Section is to be
understood as covering a scheme that relates to the way in which or
the period within holidays can be taken. The decision neither
qualifies as a change to a remuneration system that is subject to
consent (Section 27 (1) (c) of the WOR), now that the change at
hand amounts to no more than an increase of the gross salary in
order to compensate for the loss of ADV days and age-dependent
days.
According to the Subdistrict Court, introducing a recruitment
freeze does not qualify as a scheme in the field of recruitment
policy (Section 27 (1) (e) of the WOR. An example of a scheme that
is covered by this Section is a scheme for the treatment of job
applicants or the hiring of temporary or permanent employees. The
decision whether or not to hire new staff in fact precedes such
schemes, and is therefore not subject to consent.
Furthermore, in the opinion of the Subdistrict Court, the
decision to freeze salaries is not covered by Section 27 of the
WOR. This decision does not qualify as a change to the remuneration
system (Section 27 (1) (c) of the WOR. A remuneration system is a
system in which remunerations are calculated and allocated to
specific positions. Such a system concerns the order of precedence
of pay grades and salary scales, for example. The case at hand
however concerned the level of salaries, which constitutes a
primary employment condition.
Finally, the Subdistrict Court held that the changes to the
variable remuneration system the company decided to make in fact
come down to an adjustment of the bonus targets. This adjustment
only relates to the way in which the bonuses are calculated within
'the internal order of precedence', whilst the internal
order of precedence between the various job groups is not altered.
The adjustment of the bonus criteria therefore does not qualify as
a change to the remuneration system within the meaning of Section
27 of the WOR. The same is true for the change in the moment the
bonus is paid.
Tips:
- Although the WOR does not mention this, the right to
consent of the Works Council does not concern primary
employment conditions.
- It is not always clear whether an intended company policy
change relates to a primary employment condition. It is helpful
to bear in mind that the right to consent only relates to
social policy within the company in a broad sense.
- Therefore schemes relating to the level of salary or the
number of holidays, such as a freezing of salaries or a
cancellation of ADV days, concern primary employment conditions
that are not subject to consent.
- Examples of schemes in the field of recruitment policy
subject to the Works Council's consent are rules with
regard to employee application procedures, hiring certain
categories of employees, and the type of employment (for
example permanent or fixed-term employment). The decision not
to hire any employees does not qualify as such a scheme.
- Remuneration systems within the meaning of the WOR are
systems used to calculate remunerations and to allocate them to
certain jobs. These systems relate to the order of precedence
between remunerations. The adjustment of the way in which a
bonus is calculated within this order of precedence is
therefore not subject to consent.