Reorganization: advisory right Works Council in case of a major proposed decision
On December 22, 2023, the Enterprise Chamber of the Amsterdam Appellate Court ruled, in no uncertain terms, that Spotify Nederland ought to have sought the Works Council’s advice during a reorganization in which 11% of its employees were laid off.
Important decision or not?
Spotify is undergoing a worldwide reorganization, affecting 19 out of the 120 jobs in the Netherlands. The Works Council had asked for a request for advice several times within a short space of time, but it did not get one. According to Spotify, there was in fact no significant change because the organization itself was not changing. Moreover, the figure of 19 was – just – below the limit of the Collective Redundancy (Notification) Act (Wet melding collectief ontslag; WMCO). The UWV dismissal applications had already been filed at the beginning of December and the settlement agreements sent out.
The Works Council disagreed with this and applied to the Enterprise Chamber, requesting that Spotify be prohibited from going on with the reorganization and that it reverse all implementing acts already taken. According to the Works Council, there was indeed a significant organizational change pursuant to Section 25 of the Works Councils Act; for instance, teams were being disbanded or reorganized.
The Enterprise Chamber punishes the failure to provide clarity
The Enterprise Chamber pressed ahead. The hearing took place just three days after the application was filed and the judgment was issued the following day. According to the Enterprise Chamber, the decision had serious consequences for the affected employees. Spotify had failed to provide clarity to the Works Council and to the Enterprise Chamber about the impact of the reorganization on the organizational setup, and that was at its own risk.
In a nutshell, the reorganization decision could not reasonably have been taken and must be revoked. This means that the effects of that decision also have to be reversed and Spotify is prohibited from going on with the reorganization. As a result, the distributed settlement agreements can go back in the drawer, UWV will stop processing the dismissal applications that were submitted, and the Works Council may yet receive a request for advice.
Whilst not a sensational ruling from a legal point of view, it does show that shortcuts taken by a business owner can have far-reaching and painful consequences.