NETHERLANDS – Jetta Klijnsma, state secretary for the Dutch Ministry of Social Affairs, said she would move to prevent companies from setting up pension funds without first consulting their worker councils.

Her promise came during a parliamentary debate on governance legislation and followed criticism from the Christian Democrats (CDA) and the Socialist Party (SP) of Shell Netherlands for establishing a defined contribution scheme for new staff while current workers enjoy more generous defined benefit arrangements.

According to unions and the workers council (OR), the employer "fully ignored" their proposals for alternatives.

Pieter Omtzigt, MP for the CDA, described the developments at Shell as "very undesirable" and tabled an amendment to grant the OR a right of approval on contracts for pensions provision, as well as on the launch of new pension funds.

He said the current absence of this right was down to a "legal loophole", and while he acknowledged that it would be very difficult to apply the proposed legal changes retroactively, he called on Shell's executive board to "retrace its steps".

Paul Ulenbelt, MP for the SP, accused Shell of "sidelining" its employees.

"Shell is creating a precedent that could undermine the Dutch pensions system," he said.

State secretary Klijnsma, however, argued that the conflict was about labour conditions rather governance.

She said granting an OR a right of approval on pension provision would "unnecessarily stretch" the council's role.

"The OR already has a right of approval on establishing pension arrangements," she said.

"Extending this competence will cause unnecessary costs for both companies and ORs."

In the opinion of Hans van Meerten, of law firm Clifford Chance, it would be easy to involve an OR in decision-making on pension provision, simply by stating the right of approval in the pensions contract.

"Since the social partners conclude the pensions arrangements, it would also have been possible to establish the conditions for a proper scheme at Shell," he said, stressing that the content of a pension plan was more important than the provision.

In a statement, Shell said it had "voluntarily conducted serious, lengthy and extended consultations" with the OR, and that it decided to establish a new scheme because a settlement could not be agreed.

It said the OR subsequently declined to be involved in the establishment of the new pension fund, including the composition of its board.