The Position of Dutch Works Councils in Multinational Corporations

Acknowledgements 13

Chapter I: Introduction 15
1 Background of the study 15
2 Relevance of the study 16
3 Research objective 17
4 Research approach 19
5 Structure of the study 21
6 Transparency disclosure 23

Chapter II: Methodology 25
1 Introduction 25
1.1 Conceptualisation and operationalisation 27
1.2 Empirical analysis 31
1.2.1 Quantitative analysis: online-questionnaire 33
1.2.1.1 Sampling 35
1.2.1.2 Pretesting 37
1.2.1.3 Representativeness of the questionnaire 37
1.2.1.4 Validity and reliability of the sample 42
1.2.1.5 Scope of the Dutch works councils included in the sample 43
1.2.1.6 Position of the individual respondents within their works council 44
1.2.2 Qualitative analysis 46
1.2.2.1 Structure of the interviews 48
1.2.2.2 Ethical considerations 49
1.2.2.3 Validity and reliability 49
1.2.2.4 Analysis of the qualitative results in ATLAS.ti 51

Chapter III: The Dutch legal framework 55
1 The Dutch legislative framework on employee participation 55
1.1 Introduction 55
1.1.1 Brief overview of the historical development of works councils in the Netherlands and Western Europe 56
1.1.2 Conceptualisation of employee participation 62
1.2 Forms of employee participation 64
1.3 The Dutch works council 67
1.4 Rights of the Dutch works council 70
1.4.1 Information rights of the Dutch works council 71
1.4.1.1 The Harrewijn Act of 2006 74
1.4.1.2 The entrepreneur within the meaning of the WCA 77
1.4.2 Consultation rights of the Dutch works council 77
1.4.2.1 Article 25(1)(a) WCA 79
1.4.2.2 Article 25(1)(b) WCA 81
1.4.2.3 Article 25(1)(c) and (d) WCA 82
1.4.2.4 Article 25(1)(e) WCA 84
1.4.2.5 Article 25(1)(h) and (i) WCA 85
1.4.2.6 Article 25(1)(j) WCA 86
1.4.3 Consultation right on the appointment or dismissal of the management 86
1.4.4 Right to appeal pursuant to article 26 WCA 88
1.4.5 The right to speak at the general meeting of shareholders 90
1.4.6 The (possible) right of inquiry 94
1.4.6.1 Conclusion 101
1.4.7 Other rights of the Dutch works council and its members 102
1.4.7.1 The right to set up committees 102
1.4.7.2 The right to consult internal and external experts 103
1.4.7.3 The right of access to facilities of the undertaking 103
1.4.7.4 The right of access to training 104
1.4.7.5 Protection from unfair treatment resulting from the works council membership 104
1.4.7.6 Additional rights through covenants 105
1.5 Duties of the Dutch works council 105
1.5.1 The composition of the works council, elections and terms of office 106
1.5.2 The mode of decision-making in the works council 107
1.5.3 Duties regarding meetings with the management 108
1.5.4 Confidentiality 109
1.5.5 Other duties 110
2 The added value of works councils in multinational corporations 110
2.1 Less labour fluctuation 111
2.2 Enhanced trust 112
2.3 Greater labour productivity and incremental product innovation 113
2.4 Direct and indirect costs of employee representation 114
2.5 Concluding remarks 116
3 Multinational corporations: conceptualisation and analysis of specific characteristics 117
3.1 The notion of multinational corporations 118
3.2 The structure regime 121
3.2.1 Full application of the structure regime 124
3.2.2 Exemption from the structure regime 128
3.2.3 Partial application of the structure regime 130
3.2.4 Voluntary application of the structure regime 136
3.2.5 Conclusion 138
4 The concepts of attribution of an (intended) decision and co-entrepreneurship 139
4.1 The separate legal entity principle 141
4.2 Attribution of an (intended) decision – definition and criteria 142
4.2.1 The notion of the wholly-owned subsidiary and overwhelming control 143
4.2.2 The (intended) decision has to be implemented in the subsidiary 144
4.2.3 The weighing of all interests at stake 145
4.2.4 The notion of sufficient leeway of the subsidiary and the effet utile of employee participation 147
4.2.5 The tangibility of an (intended) decision 147
4.2.6 Personal union of the management(s) 149
4.2.7 Attribution in the case of share transactions 150
4.2.8 Conclusion – the criteria necessary for an application of the technique of attribution of an (intended) decision 152
4.3 Co-entrepreneurship – definition and criteria 154
4.3.1 Direct interference of the third party 155
4.3.2 The Provincie Zuid-Holland case – systematically in a position to influence the decision-making to a sufficient extent 156
4.3.3 A high degree of dependency and dominant control of the third party 157
4.3.4 The Packard Bell cases – co-entrepreneurship possible in the case of a share transaction? 159
4.3.5 The VLM Nederland case – co-entrepreneurship in the case of a change of the articles of association? 164
4.3.6 The Novio case – confirmation of the earlier jurisprudence 165
4.3.7 Conclusion – the criteria for co-entrepreneurship 167

Chapter IV: Quantitative results 169
1 Introduction 169
2 General characteristics of Dutch works councils in MNCs 170
2.1 Legal form 170
2.2 The country of origin of the corporation and corporate culture 171
2.3 Employees of the multinationals in the Netherlands and abroad 173
3 Where does employee participation in the Netherlands in MNCs take place and with whom? 174
3.1 At which level within the MNCs does employee participation take place? 174
3.2 Consultation partner of the Dutch works council 176
4 The role of the works council within the corporate structure and the influence of the parent company 179
4.1 Application of the structure regime 180
4.2 The relationship between the Dutch works council and the supervisory board 188
5 Rights of the Dutch works council in MNCs and their use 196
5.1 Agenda setting of the Dutch works councils 196
5.2 Consultation meetings with the management 199
5.2.1 Frequency of consultation meetings 205
5.2.2 Presence of supervisory board members in consultation meetings 207
5.2.3 Time available for advices of the works council 208
5.2.4 Disputes whether prior consultation of the works council is necessary 210
5.2.5 Who takes the initiative for ad-hoc consultation meetings? 212
5.3 Additional rights under a covenant 214
5.4 Access to financial information 218
5.5 Access to information on the holding structure of the corporation 222
5.6 The use of experts by Dutch works councils 225
5.7 Access to training and personal development 228
5.7.1 Training and courses for Dutch works councils 229
5.7.2 Personal development of the members of Dutch works councils 231
6 Foreign contacts of Dutch works councils and involvement in transnational issues 236
7 The relationship with the European Works Council 238
8 Summary and conclusion – the status quo of Dutch works councils in MNCs anno 2014/2015 250
8.1 Responses are divided on the overall position of Dutch works councils in MNCs 250
8.2 Information rights of Dutch works councils in MNCs 251
8.3 Consultation rights of Dutch works councils in MNCs 252
8.4 The use of covenants 253
8.5 Other key rights of Dutch works councils 255
8.6 The relationship between the Dutch works councils and the EWC 256

Chapter V: Qualitative results 259
1 Introduction 259
2 Preliminary remarks 263
3 Mapping of examples of good practice applied in multinational corporations 265
3.1 Access to information 265
3.1.1 Access to (reoccurring) information on a continuous basis 266
3.1.2 Access to information on the (group) strategy 269
3.1.3 Informal access to information 272
3.1.4 The works council and employees as source of information 273
3.2 Consultation 275
3.2.1 Formal consultation and effective structuring of consultation meetings 276
3.2.2 Use of covenants to extend formal consultation rights and procedures 282
3.2.3 Informal consultation 286
3.2.4 Scenario development and own initiatives by the works council 289
3.2.5 Monitoring of decisions 291
3.2.6 Process-oriented employee participation schemes 293
3.3 Facilities 297
3.3.1 Elections 297
3.3.2 Training and development 299
3.3.3 Work exemptions of works council members and temporary (working group) members 300
3.3.4 A single point of contact between works council and management 304
3.4 Relationship with the supervisory board and corporate governance 307
3.4.1 (Alternative forms of) formal consultation meetings 308
3.4.2 Informal meetings between works council and supervisory board members 311
3.4.3 Exchange of information between the works council and supervisory board 312
3.4.4 Election of supervisory board members 313
3.5 Professionalism of the works council 316
3.5.1 Proactive stance of the works council 316
3.5.2 Agenda setting 318
3.5.3 Committees and working groups 319
3.5.4 Internal training and development 322
3.5.5 Works council elections 324
3.5.6 Annual employee representation day 326
3.6 Relationship with the European works council 327
3.6.1 Consultation and pre-consultation meetings 328
3.6.2 Country reports as feedback mechanism for the topmanagement 329
3.6.3 Incorporating the EWC position in the standpoint of the Dutch (central) works council 331
3.7 Soft skills necessary for effective employee participation 332
3.7.1 Openness and transparency at the core 332
3.7.2 Trust and ensuring confidentiality 334
3.7.3 Taking the works council seriously and valuing its input 335
3.7.4 Relationship management and constructivism of the management and works council 336
4 Concluding remarks: Towards process-oriented employee participation 337

Chapter VI: A bird’s eye view on Dutch works councils in MNCs 339
1 Introduction 339
2 Main differences between Dutch and foreign MNCs based on the quantitative analysis 340
2.1 Level of employee participation and the position of the consultation partner 340
2.2 Access to information in Dutch MNCs compared to foreign MNCs 342
2.3 Access to and use of consultation rights in Dutch MNCs compared to foreign MNCs 344
2.4 Presence of supervisory board members in consultation meetings 348
3 The position of Dutch works councils within the corporate governance structure of MNCs 351
3.1 General remarks 351
3.2 Application of the structure regime (revisited) 353
3.2.1 Non-compliance with the structure regime 353
3.2.2 The works councils’ recommendation right and presence of supervisory board members in consultation meetings 355
3.3 Composition of the supervisory board and possible undue influence 356
4 Process-oriented employee participation in MNCs 362
4.1 Elements of process-oriented employee participation applied in practice 363
4.2 Pre-consultation of works councils in the process-oriented participation model 364
4.3 Monitoring during and after the implementation phase 367
4.4 Final remarks 368

Chapter VII: Conclusion 371
1 Introduction 371
2 Summary of the main quantitative findings 372
2.1 Information and consultation of Dutch works councils 372
2.2 Presence of supervisory board members 373
2.3 Application of the structure regime 374
2.4 (Non)-use of the works councils’ recommendation rights 374
3 Summary of the main qualitative findings 376
3.1 Tailor-made approaches to employee participation 376
3.2 Monitoring of decisions 377
3.3 (Digital) information packages 377
3.4 Professionalised employee participation structures 378
4 Outlook and future challenges for the position of (Dutch) works councils in multinational corporations 378

Bibliography 381
Executive summary 403

Annex I: Good practices overview 405
Annex II: Questionnaire | Quantitative results 411
Annex III: SPSS outputs | Quantitative results 427
Annex IV: Overview of missing answers | Quantitative analysis 453
Annex V: Sector data CBS | Quantitative analysis 455
Annex VI: Interview protocol | Qualitative results 457
Annex VII: Code Book | Qualitative results 465