Subdistrict Court of Utrecht, 3 January 2012 (LJN: BU9919)
Nowadays, in the event of a reorganization an employer usually drafts a social plan, whether or not in consultation or agreement with the trade unions and/or the works council. A social plan is – in brief – a regulation containing the reassignment, relocation and forced redundancy conditions, and the collective redundancy conditions and criteria made in connection therewith.
When an employer applies to the Subdistrict Court with the request to rescind the employment agreement of an employee for reorganizational reasons and a social plan has been agreed, the question is to what extent the Subdistrict Court should follow the social plan with respect to the determination of the amount of compensation. The explanation to the Recommendations of the Circle of Subdistrict Court Judges ('the Recommendations') stipulates that when answering this question the nature of the social plan must be examined.
In principle, if the social plan has been drafted unilaterally by the employer, whether or not in consultation with the trade unions and/or works council, no value will have to be attached to it. According to the explanation to the Recommendations, in the case that the employer has only concluded a social plan with the works council and the trade unions involved were no party thereto, there is insufficient ground to deviate from the Subdistrict Courts Formula (A x B x C) mentioned in the Recommendations when awarding a severance pay. After all, the question is to what extent the works council can sufficiently distance itself from the employer in order to render an objective judgment about the necessity of the reorganization and the creation of redundancy schemes.
If a social plan has been agreed by the employer in writing with sufficient (representative) trade unions and, if required, also with the works council, Recommendation 3.7 of the Recommendations stipulates that, in principle, the compensation for each employee to be made redundant must be determined on the basis of the social plan, even if the outcome deviates from the compensation calculated according to the neutral Subdistrict Courts Formula (C = 1). This does not apply if it appears that the full application of the social plan will lead to a manifestly unfair outcome for the employee involved. According to the explanation to this Recommendation, the starting point appears to be that a trade union is in any case representative if it represents more than 20% of the personnel. However, also a social plan that has been agreed with a trade union that has a minimum representation among the employees, may be of sufficient weight, as the Subdstrict Court ruled in the following case.
In this case the job of the employee became redundant as a result of a reorganization. The employer offered the employee a severance pay based on the social plan. The employee did not accept this compensation, after which the employer applied to the Subdistrict Court with the request to rescind the employment agreement of the employee concerned. In these proceedings the employee took the position, inter alia, that the social plan did not apply to him, because it had not been concluded with a representative trade union. The social plan had only been concluded with FNV Bondgenoten and according to the works council this trade union only represented 5 to 10% of the employees within the organization of the employer.
Judgment of the Subdistrict Court
According to the Subdistrict Court, it is not necessary to examine whether FNV Bondgenoten indeed represents a sufficiently large representativeness, expressed in percentages, in order to decide whether an employee is bound by a social plan. The Subdistrict Court thinks that it has been made plausible that FNV Bondgenoten has indeed negotiated with the employer, so that the social plan has in any case been established with sufficient legitimacy. The Subdistrict Court does not deem representativeness important because a social plan can be regarded as a regulation to moderate the consequences of collective redundancies, as meant in the Collective Redundancy Notification Act (Wet Melding Collectief Ontslag ('WMCO')) and the social plan has been agreed with a trade union that meets the formal criteria of the WMCO. To conclude, the Subdistrict Court also considers that it has been made plausible that the other unions than FNV Bondgenoten did not want to join the negotiations about the social plan. The Subdistrict Court rescinded the employment agreement and determined compensation, taking into account, inter alia, the social plan agreed between the employer and FNV Bondgenoten.
Although with the above-mentioned judgment the Subdistrict Court of Utrecht has ignored the Recommendation on the representativeness of trade unions when concluding a social plan, for the time being the rule continues to apply that a social plan has more support if it has been agreed with representative trade unions – and possibly also with the works council (see also Subdistrict Court of Haarlem, 9 October 2006, JAR 2007/39). It is therefore advisable to take into consideration when drafting a social plan whether it is a good idea to involve the representative trade unions, all the more if the employer considers offering compensation that is lower than the neutral Subdistrict Courts Formula.
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