UvA-DARE (Digital Academic Repository) Het sociaal plan van der Hulst, J. Link to publication

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1 UvA-DARE (Digital Academic Repository) Het sociaal plan van der Hulst, J. Link to publication Citation for published version (APA): van der Hulst, J. (1999). Het sociaal plan Deventer: Kluwer General rights It is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s) and/or copyright holder(s), other than for strictly personal, individual use, unless the work is under an open content license (like Creative Commons). Disclaimer/Complaints regulations If you believe that digital publication of certain material infringes any of your rights or (privacy) interests, please let the Library know, stating your reasons. In case of a legitimate complaint, the Library will make the material inaccessible and/or remove it from the website. Please Ask the Library: or a letter to: Library of the University of Amsterdam, Secretariat, Singel 425, 1012 WP Amsterdam, The Netherlands. You will be contacted as soon as possible. UvA-DARE is a service provided by the library of the University of Amsterdam ( Download date: 21 Nov 2017

2 In the Netherlands it is general practice that when an employer takes an economic or organisational decision that could have significant consequences for employees (for example, downsizing, mergers or efficiency operations), a so-called social plan is established. Social plans include measures to reduce the consequences for staff, such as redeployment and compensation schemes in the case of dismissal. Sometimes social plans are referred to as redundancy programmes. However, in this summary the term 'social plan' is used, because in this study the concept of social plan is broader than a redundancy programme. A social plan may for example also, or even solely, include procedural rules relating to how personnel changes should be carried out during a reorganisation. Particularly within large companies and groups, sometimes a 'generic' social plan exists. Such social plans, sometimes forming part of a collective labour agreement (collectieve arbeidsovereenkomst - CAO), are valid for a fixed period of time and apply to all organisational changes within the company or group. Social plans are often established in consultation between the employer and one or more trade associations. However, in some cases, a works council may act as the employer's consultative partner, or the employer may unilaterally establish a social plan. It is striking that, although frequent in legal practice, social plans are not governed by explicit statutory regulations. The lack of statutory regulations is one of the reasons giving rise to questions concerning the establishment, legal character and legal effects of social plans. Establishing social plans Employers intending to take an economic or organisational decision with potential consequences for their employees are obligated to comply with various regulations that require them to inform and consult with employee representatives. If an employer plans to terminate the employment of twenty or more employees within a period of three months, the Notification of Redundancy Act (Wet Melding Collectief Ontslag - WMCO) requires said employer to present this for consultation in due time to the trade associations concerned. For mergers concerning companies of a certain size and if the merger parties are expected to reach agreement, the Merger Code established by the Social and Economic Council (SER) requires employers to immediately notify the trade associations of this fact. The trade associations must then have the opportunity to present 353

3 their opinions before agreement is reached on the intended merger. Art. 25 of the Works Councils Act (WOR) requires employers to ask the works council for advice on proposed important decisions in an economic or organisational sphere. Art. 25, Section 3 of the WOR stipulates that employers, when submitting their request for advice, must provide information on the expected consequences of the decision for the employees and the measures the company intends to take in this regard. Case law shows that, based on the above section of the article, a works council may in some cases be entitled to request the employer to set up a social plan in connection with the consequences of the proposed decision. In addition to requirements set out in the WMCO, the Merger Code and the WOR, many employers must also comply with more extensive information and consultation requirements set out in the applicable CAO when taking economic and organisational decisions. Although in the context of proposed reorganisations and mergers, the above regulations stimulate consultation with trade associations and works councils, they do not require employers to agree on a social plan with the trade associations, unless specified in a CAO. An explanation for the fact that employers usually do negotiate on a large scale with trade associations on social plans, without employees having to exercise their right to strike, is that an agreement with the trade associations on a social plan can promote a successful reorganisation. Such an agreement could have a positive influence on the WOR advice procedure and may also help to limit employee uncertainty arising in response to the employer's proposals. Should these proposals lead to involuntary dismissals, an agreement with the trade associations will place the employer in a favourable position during dismissal procedures. In consultations relating to a proposed reorganisation, the authorities of the works council and trade associations may overlap. Whether or not this leads to problems depends primarily on the relationship between these two employee-sided bodies. If they maintain close contact, the works council can be intensively involved in negotiations about the social plan. If an employer's proposed decision does not lead to consultation with the trade associations, sometimes the works council acts as negotiating partner in the interest of establishing a social plan. Legal character and consequences of social plans A social plan drawn up in agreement between the employer and trade associations may have the legal character of a CAO as intended in the Collective Agreement Act (WCAO). This is the case if the formal conditions stipulated in the WCAO are satisfied and the parties have not 354

4 rejected the option of extending that legal character to the agreement. The normative clauses of a social plan with the legal character of a CAO automatically and obligatorily form part of the individual employment contracts of employees who are members of trade associations that are party to the social plan in question. A social plan of this character only binds other employees if and insofar as they have approved the application thereof. A social plan agreed with trade associations that does not have the legal character of a CAO can be regarded as a membership contract. The normative clauses of a social plan of this character are binding for employees who are members of trade associations that are party to the social plan in question. However, the difference with being bound by a CAO is that, if an employer and an employee conclude an agreement that contradicts the membership contract, the former agreement is legally valid. Another difference with a CAO is that an employee is no longer bound by a membership contract once his or her membership with the trade association that is party to the contract ends. Just as for CAOs, membership contracts are in principle only binding for other employees if and insofar as they have approved the application thereof. The fact that employees who are not members of a trade association that is party to a social plan can oppose the application of provisions unfavourable to them, is of particular importance if the intention of the social plan is to tighten the employee's employment conditions. Under exceptional circumstances, employers can respond to an employee's opposition to tightening employment conditions in accordance with the social plan, on the basis of unforeseen circumstances or the obligation of the employee to show good 'employeeship'. An employee's refusal to approve the application of provisions in the social plan could also serve as a legitimate reason for the employer to terminate the employee's employment contract. Regulations relating to compensation for involuntary dismissal generally form an important component of social plans. The extent to which an employee is bound by such regulations appears to be at odds with the discretionary authority of the court to assess the employee's dismissal compensation in apparently unreasonable dismissal (art. 7:681 BW 1 ) and dissolution procedures (art. 7:685 BW). Art. 7:681 and 7:685 BW are both mandatory, and cannot be deviated from in an agreement. Nonetheless, it may be concluded on the basis of a 1995 ruling of the 1. BW is the Dutch acronym for the Netherlands Civil Code. 355

5 Supreme Court of the Netherlands that these articles do not detract from the fact that an employer and an employee can be bound by an individual or collective redundancy scheme. However, in such a case, the court does retain the authority (taking into account all the conditions of the situation, including the applicable redundancy scheme) to independently pass judgement on fair dismissal compensation. However, the court can be bound by an applicable redundancy scheme between the employer and the employee, if this has the character of a settlement agreement to end a dispute or uncertainty. A social plan will generally not have the character of such an agreement. Published jurisprudence has revealed that when assessing the dismissal compensation due to an employee based on the procedures in art. 7:681 and 7:685 BW, the court generally tends to concur with the social plan approved by the trade associations, unless exceptional circumstances are at play that justify deviation from the social plan concerned. Moreover, jurisprudence has shown that the court has regularly evaluated (albeit to a marginal extent) the fairness of compensation based on the social plan. Effective 1 June 1998, a special dissolution procedure provision was included in the Recommendations of the Association of Subdistrict Courts with regard to the dissolution compensation to be awarded to an employee if a social plan applies. In accordance with this provision and in cases of dissolution due to reorganisation, the subdistrict court should award employees compensation based on the social plan agreed in writing with the representative trade associations, unless this would result in an 'obviously unfair outcome' for the employee concerned. If a social plan is established in an agreement with the works council or a social plan is drawn up unilaterally by the employer, individual employees are only bound by this if and insofar as they have approved the application thereof. Under certain circumstances, it could be possible that if an employee refuses to approve the application of a social plan that was not agreed with the trade associations, the employer can appeal on the basis of unforeseen circumstances or good 'employeeship' or that this refusal provides the employer with a legitimate reason to terminate the employment contract with the employee. However, such circumstances would have to be particularly extreme. With respect to apparently unreasonable dismissal and dissolution procedures in cases where the employer draws up a social plan entirely unilaterally, the court judges separately from the social plan what the fair dismissal compensation should be under the circumstances. The same point of departure is used for dissolution procedures in the Recommendations of the Association of Subdistrict Courts. Jurisprudence is divided 356

6 on the significance that must be awarded to a social plan established with the approval of a works council. According to the Recommendations of the Association of Subdistrict Courts, such a social plan should in principle be awarded the same status as a unilaterally established social plan. The redeployment scheme stipulated in a social plan often not only determines the efforts expected of an employer to redeploy an employee facing redundancy, but, for example, also how employees are in the first instance selected or excluded from redeployment in the new organisation. The question of whether an employer correctly complied with the personnel redeployment scheme in the social plan will mainly be reviewed by the court if the court is required to pass judgement on the dismissal of an employee in an apparently unreasonable dismissal or dissolution procedure. Right to social security and social plans Social security legislation has a significant influence on the content of the redundancy schemes in social plans. In schemes that award those involved recourse to benefits in addition to their social security benefits, provisions may be included in accordance with provisions in social security legislation concerning the imposition of penalties and exclusion of unemployed workers from benefits. However, especially provisions regarding the deduction of dismissal compensation from social security benefits have a considerable influence on the content of redundancy schemes in social plans. Redundancy schemes are usually set up to prevent the deduction (in whole or in part) of dismissal compensation from the legal benefits of the employees involved. Social plans in practice Chapter 6 discusses 66 social plans agreed with trade associations in the hospital, bank and insurance sectors and the metal and electronic industries. The assumption held at the start of the study, that the characteristics of the different sectors would have a significant impact on the social plans, proved to be correct. Social plans in the hospital sector emphasise the procedural aspects of the reinstatement of personnel in the organisation and the consequences of redeployment for employment conditions. In principle, involuntary dismissal usually only takes place if redeployment is unsuccessful due to the fact the employee refuses to accept the new position offered. Provisions for compensation in the case of dismissal are rare in social plans in this sector (the CAO includes a redundancy payment scheme). 357

7 The social plans studied in the bank and insurance sectors apply to all reorganisations that take place concerning the company during a fixed period of time. In general, these social plans are based on the assumption that employees will not be involuntarily dismissed if they cooperate satisfactorily with redeployment efforts. Social plans in this sector focus primarily on the internal or external redeployment of a particular employee whose position has been terminated. Provisions also exist relating to procedural rules that must be followed by the employer if an actual reorganisation takes place. The provisions relating to compensation in the case of dismissal primarily concern supplementing the lower salary received by an employee from a new employer as well as premiums granted if an employee leaves voluntarily. Social plans in the metal and electronic industries do not exclude the possibility of involuntary dismissal. These social plans include extensive financial schemes in the case of dismissal. Nearly all the social plans in this sector include schemes to supplement unemployment benefits or lower salary levels at a new employer, and financial schemes if an employee leaves prematurely of his or her own accord. If at all, internal and external redeployment schemes differ widely, from extensive to extremely limited. Additionally, more attention is focused in this sector on external rather than internal redeployment. Reorganisation in the public sector Civil servants occupy a special place in Dutch labour law. Characteristic differences in their legal status as opposed to that of private sector employees include their unilateral legal relationship with respect to the government employer, the unilateral recording of their employment conditions in generally binding provisions, the legal protection they receive from the administrative courts and their recourse to social security benefits. The public sector is divided into eight subsectors, each with its own regulations on civil servants 'legal status and employment conditions, which are established at sector and/or local level (in whole or in part). In the context of this study, particular attention was paid to sector-related legislation pertaining to central government and the municipal authorities. In both the central government and municipal subsectors, the government employer is required to consult with trade associations in the case of major reorganisation decisions. The WOR has applied to government organisations since Consequently, the government employer must request advice from the works council concerning decisions of the type intended in art. 25 of the WOR. 358

8 For the procedures to be observed in the event of reorganisations, the uniform regulation stipulated in Chapter VII of the General Public Service Regulations (ARAR) applies to central government. This concerns a generally applicable regulation that applies directly to all reorganisations in the government sector. Since this legislation took effect, it is no longer necessary to establish in separate social plans which provisions apply to a proposed reorganisation. In Chapter VII of the ARAR, provisions are stipulated relating to the appointment of candidates for redeployment and the efforts involved in the redeployment of these candidates. The chapter also includes financial legislation to simplify redeployment and measures to promote staff departures. In the municipal subsector, the number of provisions relevant to reorganisations is far more limited in general legal status legislation. However, a number of provisions relating to such topics as dismissal resulting from reorganisation are included in the collective employment conditions scheme/detailed agreement (collectieve arbeidsvoorwaardenregeling/uitwerkingsovereenkomst - C AR/U WO). In municipalities, special provisions related to legal status in cases of reorganisation are generally found in specifically formulated generic regulations. These provisions include the broad lines of the municipality's reorganisation policy. In cases of actual reorganisation, consultation with trade associations can lead to the establishment of specific regulations applicable to the reorganisation concerned. Civil servants generally enjoy better legal protection than employees in the private sector. Important elements in this context include the fact that civil servants' legal protection is assigned to the administrative courts, which take an active role during the procedure. Civil servants only run a limited risk of being ordered to pay the legal costs of the opposing party. Civil servants have numerous opportunities to lodge an appeal to the administrative courts against decisions made in the context of a reorganisation or redeployment procedure. They can base such appeals on the fact that the required consultation about the reorganisation with the trade associations and/or the works council did not take place as it should have. In such cases, the courts proceed to evaluate (albeit to a marginal extent) the legitimacy of the reorganisation decision. The court will conduct a more stringent evaluation of the government employer's handling of the situation if the civil servant bases his or her appeal of the decision on the premise that the employer did not correctly comply with the required procedures for redeployment and dismissal. If the courts deem the appeal lodged by a civil servant grounded, this will lead to the complete or partial nullification of the decision. The court can 359

9 also uphold the legal consequences stemming from the decision in whole or in part. If the appeal is deemed grounded, the court can award the civil servant compensation for material and non-material damages. The different government sectors have their own redundancy payment schemes and benefit regulations. In some respects, these regulations provide the parties involved with more favourable options than the social security legislation applicable to the private sector. However, in comparing the status of a dismissed employee in the public sector to that of an employee in the private sector, the appeals that private sector employees often lodge for dismissal compensation to be paid by their former employer must also be taken into account. Do the problem areas identified require legislation? Certain problem areas emerge in social plans due in part to the lack of legislation aimed specifically at this legal concept. However, these problems hardly require intervention from the legislature. In terms of establishing a social plan, it has been observed that there is no clear need to extend the legal obligations to inform and consult with trade associations. However, arguments have been put forward for the works council's advisory powers to be extended to a social plan, if the social plan concerned relates to a proposed decision requiring consultation taken by the employer without agreement having been reached with the trade associations. Furthermore, it was considered that the problems in practice resulting from the overlap between employer consultations with trade associations and the works council could not be solved by legal measures. The problems relating to the legal effects of social plans arise from the valid points of departure relating to the degree to which employees are bound by employment conditions schemes. Social plans are not such a unique legal concept, that they require specific legal regulations, in which these general points of departure are deviated from. The differences that may arise between social guidance measures in social plans must be accepted as an unavoidable consequence of the autonomous establishment thereof. Furthermore, in this context a certain minimum standard applies in the sense that an employee's recourse to provisions based on the social plan must be able to withstand assessment by the court in cases of an apparently unreasonable dismissal or dissolution procedure. 360