# Industrial manufacturing: decisions taken at group level
A decision on production capacity, plant relocation or the transfer of manufacturing activities is frequently taken by a foreign parent but carried out through a Dutch subsidiary. Under the applicable Dutch rules, that subsidiary's works council typically holds an advisory right before the decision is implemented, regardless of where it was decided. This changes the timeline and the documents you need before implementation starts.
Why this arises in industrial manufacturing
Industrial manufacturing groups usually run a production site in the Netherlands with its own workforce, its own ondernemingsraad (works council), and long-term supply and tooling agreements tied to a specific line. Group decisions on capacity, closure or relocation are almost always made at the level of the international group, not by the local board. This creates a gap between where the decision is made and where the legal consequences for employees, permits and financing attach. That gap is what proper corporate law and governance in the Netherlands work is asked to close before implementation, not after.
This advisory right is a feature of Dutch law, not a discretionary courtesy extended by the group.
How the mechanism works in short
The foreign parent's board decides on capacity, closure or relocation and records that decision at group level. The Dutch subsidiary board must then take its own implementing decision, because the works council's rights attach to the entity that employs the staff, not to the board that decided.
Before that implementing decision is final, the subsidiary asks the works council for advice on the motivation, the consequences for staff, and the measures proposed to soften those consequences. The council can ask for more time or an external opinion.
If the board proceeds against negative advice without observing the standstill period, the council can bring the matter to the Enterprise Chamber, the Dutch court that hears these disputes and can suspend or reverse the implementing decision after the fact.
Only once advice has been given, or the standstill period has run, can the Dutch entity execute the parent's decision: sign the relevant contracts, dispose of machinery, notify a landlord, or move a permit. This sequence runs alongside the group's own internal approvals, not instead of them.
What is specific to industrial manufacturing
Three sector traits change how this plays out, and assuming any of them for a services or life-sciences group would be wrong.
Machinery and production lines are frequently financed against a security interest, created by private deed and registered with the tax authority for priority. Relocating or disposing of pledged equipment as part of a group decision generally needs the secured creditor's consent, or at least notice, independent of the works council step.
Certain machine tools and process technology fall under export-control classification for dual-use goods. A cross-border transfer of that equipment within the group needs a licence from the customs and export authority, on a timeline that does not track the works council's standstill period at all.
Production capacity sits on a site permit, omgevingsvergunning (site permit), issued to that location. A relocation decision does not carry the permit with it: the new site needs its own permit before the line can restart, and the old site's obligations continue until it is formally closed.
One situation arises only here: a group decision to move a production line abroad can require the works council's advice, the secured creditor's consent, and an export licence, on three timelines set independently and rarely aligned.
What to check before implementation
- Whether the Dutch entity has an installed works council and whether the decision affects the workforce, the site or the production line it employs.
- Whether the machinery involved is pledged, leased with a purchase option, or otherwise encumbered.
- Whether any machinery or technology involved carries a dual-use export classification.
- Whether the site permit is tied to activities that would not transfer with a relocation.
- What internal governance approval the foreign parent itself requires, and whether it already assumes the Dutch steps are complete.
Registers and regulators that touch a group decision
| Pattern | Where it is recorded or supervised | What it changes for the timing |
|---|---|---|
| Works council advisory right | Works Councils Act procedure; appeal sits with the Enterprise Chamber | implementation waits for advice or the standstill period |
| Pledge over machinery or equipment | private deed, registered with the tax authority for priority | creditor consent or notice may be needed before disposal or relocation |
| Dual-use or export-controlled machinery | export licensing by the customs authority | cross-border transfer needs a licence on its own timeline |
| Site or production permit | issued by the competent local authority | tied to the site, not transferable by an internal decision alone |
| The Dutch entity itself | Trade Register at the Chamber of Commerce (KVK) | confirms who holds authority to sign the implementing decision |
What this does not cover
- The substance of any redundancy or social plan that follows a relocation decision.
- The permit application procedure itself, or the criteria a competent authority applies to grant or refuse one.
- The export licence application procedure for dual-use goods.
- Tax consequences of an intra-group transfer of machinery or a production line.
- Sectors other than industrial manufacturing: the same fork looks different again in, for instance, life sciences.
Questions
Does a decision taken by a foreign parent trigger the Dutch works council's advisory right?
Yes, if it will be implemented through the Dutch entity that employs the affected staff. The right attaches to the entity carrying it out, not to the board that decided.
What happens if the works council disagrees with a group decision already implemented?
The council can bring the matter to the Enterprise Chamber, which can order the decision reversed or its effects suspended for a period, even after implementation has started.
Does a machinery pledge block a group decision to relocate production?
It does not block the group decision itself, but it can block disposal or physical relocation of the pledged equipment until the secured creditor consents or is properly notified.
Author
Eva Kuipers, governance and the Enterprise Chamber. Eva works on group decisions, works council procedures and disputes that reach the Enterprise Chamber.
Closing
Where a group decision needs to be tested against the actual position of the Dutch entity before it is implemented, a structure report sets out who holds authority to sign, what is pledged, and what is filed at the Trade Register. The same fork, held for a different sector, is set out for group decisions in life sciences and, on the restructuring side, for a restructuring plan in payments and fintech. Where financing rather than the group decision itself is the open question, see the position before a guarantee is given. Where the concern is a director's own exposure rather than the group's, see the documents and proof required for late filing of accounts. This material sits under the corporate practice pages.
Last legal review: 2026-09-25