At the beginning of 2020, the Netherlands will enact new Dutch labour law reforms. The Parliament approved the reforms, which will become effective per January 1st, 2020. The goals is to diminish the gap between employees with permanent and flexible employment agreements. With these reforms, the government hopes to make it more attractive for employers to offer a permanent contract. The Balanced Labour Market Act (in Dutch: Wet arbeidsmarkt in balans, “WAB”) will impact any employer with employees in the Netherlands. In this article we explore some of the most important points of the Dutch labour law reforms.
Main takeaways Dutch labour law reforms.
Here are six important reforms that will take force on January 1, 2020. Employers have to take these reforms into account when drawing up or revising contracts. Additionally, they concern payments, dismissals and insurances.
- New Combination ground for dismissal
Currently, the Dutch Civil Law provides 8 statutory reasonable grounds for employee dismissal. Under the Balance Labour Market Act, employers will be able to combine different grounds for dismissal. By doing so, employers can cite several smaller reasons that add up to grounds for dismissal.
- Transition payment
Under the current law, only employees of two or more years are entitled to a transition allowance for a dismissal. When the changes occur, they will be enacted in two ways:
1. Employees will qualify for transition payment from the start of their employment contract, including trial periods.
2. Employers will calculate transition allowance over the actual period of the employment contract.
- The “on-call contract”
At the moment, employees with a zero-hour or min-max contract have to be available to work at all times. In contrast, the WAB requires employers to notify their on-call employees 4 days in advance. Moreover, if the employer cancels the assignment within that period, the employee is entitled to compensation for the cancelled hours. Finally, if an on-call contract lasts up to 12 months, the employer must offer the employee guaranteed average working hours.
- Payroll employees
Third party payroll employees will be entitled to the same terms of employment as employees of the client. However, this will not be applicable to temporary workers and secondment employees.
Fixed term contract duration returns to three years
In 2020, the maximum term for successive fixed-term employment agreements will revert from 2 years back to 3. The chain of successive fixed-term employment agreements can be broken if there is an interval of 6 months between the employment agreements.
- Changes to unemployment insurance contribution
Finally, unemployment insurance will be based on the type of employment contract instead of sector.
- Low contribution for permanent contracts
- High contribution for flexible or fixed-term contracts
Learn about the immediate effects the Dutch labour law reforms will have on employers and employees, by following this link. If you have any further questions, feel free to connect with our COO, Edward Nijland via email at email@example.com.