Who bears the costs and expenses of the works council?
The main rule of the Dutch Works Councils Act (WCA) is that costs that are reasonably necessary (redelijkerwijs noodzakelijk) for the performance of the tasks of the WC, should be borne by the entrepreneur. The same goes for costs that are incurred by the WC committees.
These costs include travel and subsistence costs, training costs, costs for specialist literature, costs for the secretariat, costs for experts and costs for court proceedings. The costs for experts and the costs for court proceedings should only be borne by the entrepreneur in case that the WC has informed the entrepreneur about these costs beforehand. This is to protect the entrepreneur from excessive costs. It is questionable however in how far this protection really works as the WC is not required to get the entrepreneur’s approval. A mere notification beforehand is sufficient.
The entrepreneur and the WC can agree that the WC gets an annual budget. The WC is free in how it wishes to spend this budget. In case that the budget appears to be insufficient, the entrepreneur is only required to bear the additional costs in case that he approves to do so. In case that parties fail to come to an agreement on the budget, all costs that are reasonably necessary for the performance of the tasks of the WC, should be borne by the entrepreneur.
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'Reasonably necessary costs'
All costs that the WC incurs should be reasonably necessary for the performance of the tasks of the WC. What does that mean?
it is not surprising that quite often entrepreneurs and WCs tend to think differently about what should be considered as reasonable costs. In such cases the Rules of arbitration (algemene geschillenregeling) of the WCA comes into force. The WC or the entrepreneur can ask the Subdistrict court to decide on the reasonableness of the costs. Case law shows that at least the following items are taken into consideration in the assessment of the reasonableness of the costs:
- the importance of the issue in which the WC has hired the expert;
- the level of the costs that the WC incurs; and
- the financial strength of the entrepreneur.
Although it may, at least in the eyes of the entrepreneur, seem as if the WC has carte blanche with regard to the costs that it incurs, case law shows that the WC should act carefully in that respect. This is also shown by the recent investigation with the Dutch National Police.
The entrepreneur who has objections against the WC’s costs, should immediately bring this under the WC’s attention and should clearly motivate his objections. Should the entrepreneur omit to do so, the results are for his own risk… and account.
