Consultation of the Works Council Applies to a Relaunch Following Liquidation

By Jeffrey Kenens, TeekensKarstens advocaten notarissen

Article 25 of the Dutch Works Councils Act states that an entrepreneur is required to consult the Works Council about intended decisions related to matters of finance, commerce and business organisation. This includes, for example, an intended decision to transfer the control of the business or to cease the business activities. Under Dutch law there has been a discussion about whether the receiver is obliged to request advice from the Works Council during the liquidation of the company’s business.

The Works Councils Act and parliamentary history of that Act are unclear on this point. In 2016, the Netherlands Enterprise Court at the Amsterdam Court of Appeal ruled that, in such cases, the Works Council does not have advisory rights, because such an advisory right would not easily be consistent with the nature of bankruptcy law. With its judgment of 2 June 2017, the Dutch Supreme Court corrected this opinion by deciding that in some situations there may be an advisory right for the Works Council.

The Supreme Court considers that, in principle, the advisory right does not refer to decisions on the sale of goods and decisions to dismiss employees in the event of bankruptcy, even if this results in the liquidation of the company’s business. However, if on the other hand, there is an intended relaunch of (parts of) the company and it is foreseeable that jobs can be maintained, the receiver needs to consult the Works Council beforehand.

Jeffrey L. Kenens

Jeffrey L. Kenens

TeekensKarstens advocaten notarissen, Leiden, The Netherlands
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Jeffrey Kenens is a Partner at TK and part of the international Corporate Employment Law team.

TeekensKarstens advocaten notarissen (TK) is a full service Dutch law firm with extensive experience in the field of international law. TK has established specific international teams to provide international clients with tailor-made services and information.

Published: Winter 2017 l Photo: -

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