In a bid to simplify the provisions, the Dutch Government is proposing to extend the requirement to obtain consent as regards pensions.
The need for consent
Article 27 WCA, which came into force on 7 August 2013, provides that work council consent is required in respect of the adoption, amendment or withdrawal of “regulations”. “Regulations” in this context includes any regulations, measures or services which apply across a workforce or to a group of employees. Accordingly, the requirement for consent attaches to any proposal by an employer to introduce or change pension provision for its workers but only to the extent that such change relates to general pension regulations operated by pension insurer or a premium pension institution (PPI). The right to consent does not apply to pension schemes operated by a pension fund (both company pension funds and industry-wide pension funds).
Specifically, works council consent is required with respect to an employer’s decision regarding the adoption or withdrawal of:
- a pension agreement (i.e. the agreement between the employer and the employee) operated by a company pension fund;
- a pension agreement operated by an optional industry-wide pension fund; and
- a pension agreement operated by a mandatory industry-wide pension fund (as regards any non-mandatory element).
If the works council does not consent to the employer’s proposals, the employer can request the Cantonal Judge for permission to proceed in any event. Such permission will only be granted if the works council’s decision to withhold its consent is unreasonable, or if the employer’s decision is based upon compelling organisational, business or social reasons. However, if an employer were to implement a decision without either the works council’s consent or permission from the Cantonal Judge, that decision would be deemed void and the works council could, within a one month period, challenge it in writing and block it.
Government plans to simplify consent provisions
The current limitations on the requirement to obtain works council consent to change pension provision, is widely regarded as a loop-hole. The Government therefore considers that the WCA should be extended to apply to pension schemes operated by a pension fund, not merely those operated through an insurance scheme.
The Government has proposed amendments to the WCA which will simplify, but also broaden considerably, its application. It has requested its advisory body, the Social and Economic Council, to report back on its proposals before 1 June 2014. Submission of a legislative proposal is then scheduled for autumn 2014.
The simplified approach being proposed is that the works council’s right to consent regarding the adoption, amendment or the withdrawal of a regulation on a pension scheme (including pension agreements) will apply irrespective of the way the relevant pension scheme is operated. Therefore, it will apply to pension schemes operated by a pension insurer, a PPI, a company pension fund and an industry-wide pension fund. The intention is that, if approved, such amendment to the WCA will make it easier to assess when works council consent is needed and whether it has been sought. For many employers, however, the proposed change is unwelcome and is perceived as adding further bureaucracy and procedural complexity to an already complex matter.