Expenses Incurred by the Works Council; What Are the Rules?

Last Monday, the news came out that the members of the Central Works Council (Centrale Ondernemingsraad, “COR”) of the police had resigned. The reason for this was an investigation into the spending of the COR’s budget. Allegedly, large parts of the Works Council’s budget had been spent illegally and ineffectively. For example, image coaches would be hired, exclusive locations for meetings would be used, and champagne would be drunk at breakfast. This matter gives rise to the question what the rules are for compensation of expenses incurred by a works council (Ondernemingsraad, “OR”). Which expenses are eligible for compensation? And how are employers protected against excessive expenses made by the OR?

Compensation of OR Expenses

Section 22 of the Dutch Works Councils Act (Wet op de Ondernemingsraden, “WOR”) offers a scheme for expenses to be incurred by the OR and its committees. Pursuant to this section, all expenses incurred by the OR that are reasonably necessary for the fulfilment of its duties are payable by the employer. Examples are general expenses, like a meeting room, telephone costs, travel costs, consumptions, etc. In addition, three specific categories of expenses are also eligible for compensation:

• Expenses of consulting an expert: in principle, the OR has the option – if it considers this necessary for a proper fulfilment of its duties – to consult an expert. The costs of consulting experts are only payable by the employer if it has been informed of these costs in advance. If no specification of these costs could be obtained in advance, the employer in any case has the right to receive an estimate of the costs, supported by reasons.
• Litigation expenses: the expenses of conducting legal proceedings by the OR are also payable by the employer. Here too, the condition applies that the employer must have been informed of these expenses – or a reasonable estimate thereof – in advance.
• Training and education: the OR is entitled to annual training at the expense of the employer. The Social Economic Council (“SER”) sets target amounts each year for costs involving education and training. For example, for the year 2017 the SER has set a target amount of 995 Euro per part of a day for a customized course for the whole OR.

If the OR and the employer do not agree on the costs to be made by the OR, or the amount of these costs, they may present their dispute to the Subdistrict Court in advance.

OR Budget

The employer and the OR can make arrangements with each other about an annual budget to be awarded to the OR, which the OR can largely spend at its discretion. However, they are not obliged to do the above. If the OR has received a budget of its own, and needs to make costs that exceed this budget, it may request the employer for an additional budget or to take these additional costs for its account. The employer is free to refuse this.

Please note:

• Both the OR and the employer should tread carefully. The employer only has to pay the expenses that are reasonably necessary for the fulfilment of the duties of the OR and its committees. Therefore, the OR would do wise to consult the employer in advance if any costs need to be made. This is even mandatory as far as it concerns the costs of consulting experts and the costs of litigation.
• Even if the OR has a budget of its own, it is wise to spend this budget only on matters that are necessary for the fulfilment of the OR´s duties. I think it goes without saying that these duties do not include enjoying a champagne breakfast.