The government has announced its intention to expand works councils’ right of consent with regard to pension schemes. If the law is changed, all intended decisions to adopt, amend or repeal a pension scheme – regardless of the pension provider – would require works council consent. Until this change is made, the exact rights of the works council remain unclear. If a company decides to request the consent of its works council while unsure if it has to, it is advisable to do this conditionally.

Current situation: gaps and lack of clarity

Companies require the consent of their works council on any intended decision to adopt, amend or repeal a collective pension scheme that is placed with a pension insurer. Pension schemes placed with pension providers that are not pension insurers do not fall within the scope of this law.

The intended decision to place a pension agreement with a premium pension institution (PPI) also requires the consent of the works council. According to the government, this provision implies that an intended decision to adopt, amend or repeal a PPI pension scheme also requires works council consent. This is questionable as, according to the Supreme Court, co-determination rights have to be strictly interpreted while the relevant act only refers to the intended decision to place a pension agreement with a PPI.

As of August 2013, companies also require the consent of the works council for any intended decision for adoption or repeal of a collective pension agreement that is executed by:
a. a company pension fund (ondernemingspensioenfonds)
b. a non-compulsory industry-wide pension fund (niet verplicht gesteld bedrijfstakpensioenfonds)
c. a compulsory industry-wide pension fund, albeit that consent is only required for that part of the pension agreement that is executed by the industry-wide pension fund on a non-compulsory basis.

It is unclear why this new act does not include “amendment”; it could be a mistake of the legislature. However, as co-determination rights must be strictly interpreted, it is likely that under current legislation only the adoption and the repeal of a pension scheme as mentioned above require the consent of the works council.

The fact is that under current law, the right of consent in pension matters is a patchwork that raises several questions as to the exact contents of works council rights. The government intends to change that.

Expected: expansion of right of consent in pension matters

On17 January 2014, the State Secretary of Social Affairs and Employment announced that she intends to expand the right of consent of works councils in pension matters and to improve current legislation. In relevant part, she intends to remove existing differences in the co-determination rights of works councils between pension schemes placed with a pension insurer, pension schemes placed at PPIs and those referred to in the most recent legislation. As a result, all intended decisions of companies to adopt, amend and repeal a pension scheme will require the consent of the works council, regardless of the nature of the pension provider (unless the parties to a collective labour agreement agreed on the pension scheme, or if participation in an industry-wide pension scheme is compulsory). Especially in comparison to the situation before August 2013, this will substantially increase the right of consent of works councils in pension matters.

The State Secretary expects to submit a bill in autumn 2014.

Until then?

Until the right of consent in pension matters is clarified, the situation remains somewhat uncertain. If a company requests works council consent on an intended decision with regard to a pension scheme, while uncertain if the works council has the right of consent, the company is advised to request consent conditionally, specifically, that the works council does indeed have this right. In doing this, the company still has the possibility to challenge the existence of this right