Works Council Costs: What Does Article 22 of the Dutch Works Councils Act Say?

Which costs fall under Article 22 WCA?

The costs incurred by a works council can vary considerably. First and foremost, they include the facilities necessary to carry out works council activities. Examples include meeting rooms, secretarial support, communication tools, professional literature, and costs related to communication with employees.

In addition, the works council is entitled to training. In practice, works council members regularly attend courses on topics such as consultation and consent rights, reorganisations, employment conditions, and financial matters. Since effective employee participation requires knowledge and expertise, these training costs are, in principle, borne by the employer.

The works council may also require external expertise, particularly in complex consultation or consent procedures. The WCA therefore provides the possibility of engaging experts such as lawyers, financial advisers, or organisational consultants. The costs of such experts are likewise borne by the employer, provided that the employer is informed of the expected costs in advance.

The same applies to legal proceedings. When a dispute arises between the employer and the works council regarding the application of the WCA, legal assistance and litigation costs may be necessary. These costs may also fall under Article 22 WOR, provided that they are communicated to the employer in a timely manner. 

When are costs not borne by the employer? 

Although Article 22 WCA allows for broad reimbursement of works council costs, the arrangement does have limits. Costs that are unrelated to the statutory duties of the works council generally fall outside the employer's reimbursement obligation. The same applies to costs arising from experts or legal proceedings of which the employer was not informed in advance, or that are considered unreasonable.

Discussions may also arise regarding the reasonableness of certain expenditures. The legal standard remains that costs must be reasonably necessary for the performance of the works council's duties. This assessment will always depend on the circumstances of the case. Relevant factors may include the nature and complexity of the matter, the timeframe within which the works council must formulate a position, and the knowledge and experience already available within the works council. Article 22 WCA is therefore not a blank cheque for the works council to incur costs at its own discretion. Consultation and transparency remain important. 

The importance of adequate resources and clear agreements 

Article 22 WCA serves both the interests of the works council and those of the employer. For the works council, it is essential that sufficient resources are available to enable it to carry out its statutory duties effectively. The subjects on which works councils provide advice or consent are becoming increasingly complex, including reorganisations, sustainability initiatives, AI-applications, and pension-related issues. It is therefore unrealistic to expect works council members to possess all the required expertise themselves. Training and the ability to engage external experts enable the works council to participate as a well-informed and equal discussion partner in the decision-making processes within the organisation.

At the same time, employers have a legitimate interest in understanding the costs associated with employee participation. Works councils can therefore reasonably be expected to announce expenditures in advance, explain why they are necessary, and use available resources responsibly. Transparency and effective communication help prevent disputes and contribute to a constructive working relationship between employer and works council. 

The works council budget in practice 

Organisations may choose to work with an annual works council budget. Such a budget can offer practical advantages for both the employer and the works council. It provides clarity in advance regarding available resources and avoids the need for consultation on every minor expenditure. However, a budget also presents certain challenges. Where specific costs are included within the budget, exceeding that budget may lead to discussions.

It is therefore advisable to clearly record in advance which costs are and are not covered by the budget and how unexpected expenses, such as a major consultation process or legal proceedings, will be handled. It is also important to recognise that not every works council benefits from a very strict budget. Because it is not always possible to predict which requests for advice or consent will arise during the year, insufficient financial flexibility may hinder the effective exercise of employee participation rights. 

Practical points of attention

1. Make timely arrangements regarding training, external experts, and other works council expenses.
2. Record budgetary and facilities agreements in writing.
3. Inform the employer in advance about the costs of external experts and legal proceedings.
4. Substantiate major expenditures and clearly explain why they are necessary.
5. Periodically evaluate whether the agreements made still meet the needs of both the works council and the organisation.

Conclusion 

Article 22 WOR provides an important safeguard for effective employee participation. A works council must have access to the resources necessary to perform its statutory duties properly. These resources include facilities, training, expert assistance and, where appropriate, legal proceedings. At the same time, employers have a legitimate interest in transparency, reasonable costs and clear budget arrangements.

In practice, most disputes can be avoided when the works council and the employer engage in timely discussions about anticipated costs and the way in which these costs will be funded.

Effective employee participation entails costs, but it should primarily be viewed as an investment in careful decision-making, support within the organisation, and constructive cooperation between employer and employees. Ultimately, both the works council and the employer benefit from this approach.

Do you have questions about works council expenses or arrangements concerning the allocation of costs between the works council and the employer? Our Employment Law specialists will be pleased to assist you. Feel free to contact us or subscribe to our newsletter.