7.2 Final conclusions

In the WOR, the legislator made a fundamental choice in relation to enterprises which are operated by a legal entity and decided to exert direct influence on the policy and course of events within the enterprise, instead of exerting an indirect influence by being involved in the composition of the entrepreneur’s corporate bodies. I fully support this choice, because, in my opinion, this is the better option for implementing employee participation. This direct employee participation, is expressed best in the consultations with the entrepreneur (Articles 23 and 24 of the WOR) and in the right to offer advice about, and consent to a number of decisions (Articles 25, 27 and 30 of the WOR).

A certain tension exists between, on the one hand, the employee participation law which is set down in the WOR and, on the other, the company law recorded in Book 2 of the Dutch Civil Code and the regulations controlling public takeover bids recorded in the Dutch Financial Supervision Act (Wet op het financieel toezicht). I have based my research on the assumption that this tension has arisen because the WOR fails to appreciate in its implementation of direct employee participation that the entrepreneur could be a legal entity. The results of my research confirm this assumption. I have asked myself whether, and if so, to what extent this means that, in a normative sense, the WOR is not properly equipped to do full justice to employee participation.

The above-mentioned assumption is made because the right of advice of the Works Council (Article 25 WOR) refers to decisions made by ‘the entrepreneur’. In the same way, Article 24, paragraph 1 of the WOR obliges the entrepreneur to make announcements and conclude agreements about any decisions which ‘he’ is considering. Articles 24 and 25 of the WOR, therefore, do not acknowledge that an entrepreneur could be part of a larger group of legal entities which frequently have an international character. I consider this to be an omission in the WOR, as one of the most characteristic features of legal entities, especially public and private limited companies, is that they lend themselves towards forming larger groups with other legal entities. Within groups such as these, decisions which relate to, or affect matters subject to the right of advice of the Works Council are prepared and taken without any input by the entrepreneur.

To ensure that the consultations with, and the right of advice of, the Works Council come fully into their own in such cases, the decision-making under company law in the entrepreneur cannot be the only factor determining employee participation. In case law on employee participation, methods for attribution and equation have been developed which enable decisions which have been prepared and taken without any input from the entrepreneur to be placed within the scope of Article 25 of the WOR. Although the Court has not yet pronounced on this subject, these methods, in my opinion, can also be applied to the consultations on the decisions which are in preparation of the sort referred to in Article 24, paragraph 1, second and third sentence. If a third party exerts direct influence on the course of events within the enterprise in a systematic way, i.e. the influence is being exerted effectively, then the third party is deemed, for the purposes of the WOR, to be partly operating the enterprise. In that event, the Works Council may involve this third party, in addition to the entrepreneur, as a co-entrepreneur in the appeal proceedings pursuant to Article 26 of the WOR. In my opinion, co-entrepreneurship is a qualified form of attribution. From the viewpoint of a WOR in which the entrepreneur has a central role, it is understandable for conditions to be determined for co-entrepreneurship, just as the Dutch Supreme court did; however, this also means that, under a particular set of circumstances, the legislation cannot adequately do full justice to participation. This is particularly the case if, without the decision of the third party being withdrawn, a matter which should have been subjected to the Works Council’s advice is implemented anyway. In that case, the Works Council has no other means of calling the third party to account than on the basis of Article162, Book 6 of the Dutch Civil Code.

There is a positive side to the fact that Article 25 of the WOR refers to decisions of ‘the entrepreneur’. To determine whether or not a decision has to be subjected to the right of advice of the Works Council, knowing which corporate body of the legal entity took the decision is not important. If the control structure of the entrepreneur changes (as seen, for instance, in the recent amendment of Article 239, paragraph 4, Book 2 of the Dutch Civil Code) all this means, at most, is that the stage in the process defining when the Works Council must be asked for advice in the corporate law decision-making process will also change. On the other hand, the weighing of interests, which is done by the various corporate bodies of the entrepreneur pursuant to company law, influences the weighing of interests which ‘the entrepreneur’ has to do pursuant to Article 26 paragraph 4 of the WOR. In this context it is striking, and also proof of a certain tension, that when company legislation is effected, there is seldom any discussion as to whether it could have consequences for – in this case – the exercise of employee participation in the company.

The regulation on the presence of certain officers during consultation meetings with the Works Council does acknowledge the possibility of the entrepreneur being part of a larger group. In its current form, however, the regulation is too rigid and, under certain circumstances, it can detract from the successful set-up of consultation meetings. There is, therefore, a role for the legislator in which respect I have made a number of proposals in paragraph 4.3.7.4. One of these proposals concerns a provision on the director(s) of the entrepreneur. The definition of director in Article 1, paragraph 1 and sub e of theWOR is unsatisfactory, as it does not ensure that the consultations, as referred to in Article 24, paragraph 1 and Article 25, paragraph 4 of the WOR, are always attended by at least one director of the entrepreneur. In my opinion, this is another example of the WOR failing to do full justice to employee participation. The addition to Article 24 of the WOR that I propose ensures that at least one director will be present.

That the WOR does not consider that the entrepreneur operating the enterprise could be a legal entity is an assumption which is also made because of the nature of the subjects which are addressed in consultation meetings with the entrepreneur, pursuant to Articles 23 and 24 of the WOR, and because of the nature of a number of decisions which must be subjected to the right of advice of the Works Council, pursuant to Article 25 of the WOR. Articles 23 and 24 of the WOR only refer to ‘the enterprise’ and ‘the general course of events of the enterprise’. However, legislative history does make it possible for subjects of concern to the entrepreneur to also be addressed during consultation meetings. In practice, what appears to be particularly lacking is an arrangement for matters to be discussed which concern the entire group and could be of interest to the enterprise. The law falls short in this respect and, consequently, it is advisable to amend it. In light of the fact that Article 24, paragraph 2 of the WOR prescribes that group directors be present in consultation meetings, paragraph 1 of this article is pre-eminently the provision to which additions such as this could be made.

The consultation meetings held about decisions currently being prepared with regard to which the entrepreneur or ’ his’ top holding, should disclosure be postponed, is obliged to guarantee confidentiality on the basis of the regulations controlling public takeover bids recorded in the Dutch Financial Supervision Act deserves special mention. The entrepreneur must handle the tension between both obligations carefully. Under certain circumstances, it will be justified for him, in the context of weighing interests, to choose to disregard the rights of the Works Council on the basis of Article 24, paragraph 1, second and third sentence of the WOR.

In Article 25 of the WOR, the exercise of employee participation is especially liable to suffer in the event of proposed decisions to transfer the control of the enterprise, or to make an important change to the organisation and distribution of the power within the enterprise. In both cases, these concern decisions which are related to ‘the enterprise’. It seems artificial to make a distinction between the enterprise and the entrepreneur regarding the application of the relevant provisions. It is inevitable, therefore, that the authority of the Works Council will, under certain circumstances, also extend to decisions concerning the person of the entrepreneur. Even so, according to prevailing opinion in this respect, there is still room for discussion. In my opinion, if the control of the entrepreneur is transferred, the decision of the shareholder(s) can be attributed to the entrepreneur for the purposes of Article 25 of the WOR, even if the entrepreneur was not involved in the transfer. Additionally, if a two-tier board structure is abolished or mitigated, the intention to abolish or mitigate must, in my opinion, also be subjected to the right of advice of the Works Council, as long as the entrepreneur’s intention in this respect is caused by the fact that he no longer meets the requirements forcing him to apply this regime either wholly or partly.

In conclusion, I return to the question as to whether the WOR is properly equipped to do full justice to employee participation. The Act has come of age in the, more than, 60 years since it came into effect. However, problematic issues still remain, the most important of which I have described above. I do consider the Act to be properly equipped in these events, provided that the Act is interpreted and applied in the manner that I have proposed above. However, if a Court adopts a viewpoint that is contrary to mine, the legislator will have work to do, as, in that event, it appears that the Act is not properly equipped to do full justice to employee participation. At any rate, the legislator has work to do in those cases in which the Act is inadequate for other reasons, apart from the interpretation or its application. This specifically concerns the consultation meetings with the Works Council. Parts of the Act should be amended, in which respect I refer to my proposals.