Informing the Works Council during the consultation process: Dutch employer cannot hide behind group management

Reorganisation initiated by the group

The Micro Focus case concerned the Dutch entity of an international software company with 24,500 employees – the OpenText group. In early July 2024, the Canadian parent company announced a global “Business Optimization Plan”, under which 1,200 positions were eliminated and 800 new positions were created. Twelve positions were eliminated within the Dutch entity.

The works council was only informed of this decision after termination discussions had already taken place with employees. The works council demanded a formal request for advice. The Dutch employer halted implementation and requested the works council’s advice. Over the following months, two consultation meetings took place, along with several written rounds of questions and answers. The main topics concerned the substantiation of the reorganisation and the dismissal conditions. In early October 2024, the works council issued a negative advice, after which the employer nevertheless adopted the reorganisation decision.

The works council requested the Enterprise Chamber to rule that Micro Focus could not reasonably have come to the reorganisation decision and to order its withdrawal and reversal.

Still material influence?

The Enterprise Chamber held that the decision was subject to the consultation requirement pursuant to Article 25 of the Dutch Works Councils Act (WOR). This was not disputed between the parties. Although the works council was involved too late, Micro Focus remedied this defect by pausing the termination discussions and subsequently conducting a consultation process. During that process, several consultation meetings took place and the employer adjusted the dismissal conditions at the request of the works council. As a result, the works council had material influence.

No obligation to have a social plan

The works council argued that Micro Focus should have had a social plan in place. The previous social plan had expired in the month before the reorganisation decision was taken. According to the works council, this was a deliberate strategy to avoid applying the social plan. Micro Focus did not wish to agree on a new social plan. The Enterprise Chamber held that it was not required to do so. An employer is not obliged to conclude a social plan.

Inadequate provision of information

Where things did go wrong was the provision of information. During the consultation process, the works council asked numerous questions about the background to the reorganisation, its consequences for the Dutch entity, and the reasons for the elimination of the selected positions. Micro Focus largely referred back to the group decision and did not go much further than stating that the reorganisation was necessary due to disappointing global results. Any further financial or business substantiation was lacking.

According to the Enterprise Chamber, Micro Focus itself should have explained the impact on the Dutch entity and why eliminating these specific positions was necessary. The fact that such information would allegedly not be available at local level is not a valid excuse. Even within an international group, the Dutch employer must independently assess its own interests and weigh them against the group interest — and make that assessment transparent to the works council.

Independent assessment, not mere execution

The Enterprise Chamber ruled that a Dutch employer cannot hide behind group management. A different view would, according to the Enterprise Chamber, undermine the statutory system of employee participation in an unacceptable manner. The group strategy is a relevant factor, but it is not decisive. The local employer must demonstrate that it has made an independent assessment based on its own circumstances, interests and figures. Because Micro Focus failed to do so, the Enterprise Chamber held that the decision was manifestly unreasonable. Micro Focus was required to withdraw the decision, reverse its consequences, and was prohibited from implementing the reorganisation.

Confirmation of earlier case law

The Micro Focus ruling fits within a clear line of case law: local entities within an international group remain responsible for compliance with the WOR and for weighing their own interests. The Enterprise Chamber previously ruled along the same lines in the cases of Watts Industries, Nalco, Assa Abloy and Sabic.

Anyone relying on a global decision must be able to explain why that decision is also reasonable and necessary at local level. An employer cannot suffice with “this was decided at headquarters”.

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