Work's Council to Discuss Remuneration of Managing Directors 

July, 2016 - Ellen de Kok

Recently, public and political commotion has arisen in cases where the remuneration of managing directors increased, while the employees received no or a marginal increase in salary. This public debate was the reason for the government to propose an expansion of powers of the work's council on this subject. The government's aim in this regard is to make companies aware of the public debate and it believes that shareholders should consider the interests of the employees more closely when deciding on the remuneration of the managing directors.

The minister of social affairs and employment has proposed an amendment to the Works Councils Act (Wet op de Ondernemingsraden). Pursuant to this amendment, the managing board of a company with 100 employees or more should at least annually discuss the remuneration of the managing directors with the work's council.

Currently, the work's council has the right to written information on the remuneration of the managing directors. As this does not necessarily lead to a discussion on this topic between the managing board of the company with the work's council, the minister believes that the work's council should have more rights in this regard.

The Council of State rendered advice on the proposed amendment and indicated that it finds the added value and effectiveness of the proposal unclear and advised against sending it to the House of Representatives until changes are made to improve these issues. However, the minister has sent the proposal to the House of Representatives anyway as he believes the amendment will lead to improvements.

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