Global employment briefing: Netherlands, January 2018

• Netherlands

• Employment law

31-01-2018

New Government proposes changes to Dutch employment law

In November 2017, after months of negotiations, a new government has started its four year term and published the new “coalition agreement 2017-2021”. In the coalition agreement, the government has outlined their plans for employment law changes during this term and thereafter. As all these intended changes of law still need to go through the legislative process, it is not clear yet to what extent and when employment law will eventually change as a result of the coalition agreement. Below we have briefly summarized the most relevant points of the coalition agreement.

Introduction of a cumulative ground for dismissal

At the moment, the law contains an exhaustive list of statutory grounds for dismissal. Any ground for dismissal must be sufficiently substantiated. Partial substantiation of several dismissal grounds does not add up to a sufficiently substantiated ground for dismissal. This means that pursuant to current law, the employment of an employee who, for example, is consistently underperforming – although not dramatically – and who’s attitude at work consistently irritates colleagues, although again not dramatically, in principle cannot be terminated by the court.

The new government has now considered that it should be possible for employers to terminate employment based on a combination of partially substantiated grounds for dismissal. In such event, the court may award an employee additional compensation up to half the statutory severance payment (see formula below). This additional severance shall be paid on top of the statutory severance payment.

Extending the entitlement to a statutory severance payment

The statutory severance payment amounts to 1/3 of gross monthly salary for every year of service for the first 10 years of service and 1/2 of gross monthly salary for every year of service for each year above the first 10 years of service. The gross monthly salary also includes holiday allowance and any other remuneration in monies, such as a fixed overtime allowance, a 13th month and the average bonus over the last 3 years, calculated on a monthly average. The statutory severance payment is capped at EUR 79,000 gross or one gross annual salary if the gross annual salary exceeds EUR 79,000 gross.

The current requirement that an employee must be employed for at least two years in order to be entitled to the statutory severance payment will lapse. This means that employees will be entitled to the statutory severance payment as from the start of their employment. Further, the formula for the statutory severance payment will be amended in such a way that employees will no longer receive a higher severance after 10 years of employment.

Extension of maximum amount of fixed term employment contracts

The period after which successive fixed-term contracts automatically convert into an indefinite term contract will be extended from two years to three. This would be in accordance with the law which lapsed on 1 July 2015.

Extension of probation period

The maximum probationary period to be included in a first indefinite term contract will be extended from 2 months to 5 months. For definite term contracts of 2 years or longer, the maximum probationary period will be 3 months instead of 2.

The maximum probationary periods for other contracts do not change. For definite term contracts for less than 2 years, the maximum probationary period will amount to 1 month. A definite term employment contract of six months or less may not be subject to probationary period.

Paying salary during sickness – small employers

The period during which small employers (up to 25 employees) are required to pay salary to sick employees will be reduced from two years to one. The responsibility for paying salary to employees during the second year of sick leave will be transferred to the Labour Office (‘UWV’).

New partner leave upon birth of child

Under the current rules on partner leave, partners are entitled to two days of leave on full pay after the birth of a child, to be taken within four weeks. As of 1 January 2019, this will be extended to five days. In addition, entitlement to supplementary partner leave of five weeks will be introduced. This leave will have to be taken in the first six months after the birth of the child. During this period of leave, employees will receive an allowance from the Labour Office (‘UWV’) of 70% of the (maximum) daily wage.

Zero hour contract rights

Under certain circumstances, employees who work under a zero hours contract will not be required to respond to a call for work immediately or within a certain timeframe. They will also be entitled to compensation if a shift is cancelled.

Self-employed workers

The Assessment of Employment Status (Deregulation) Act (‘Wet Deregulering Beoordeling Arbeidsrelaties’) will be replaced by new legislation. It must assure genuine self-employed workers and their clients that there is no formal employment relationship and, on the other hand, prevent pseudo self-employment.

Self-employed workers who (i) work for a low hourly fee (EUR 15 – EUR 18 per hour) and (ii) work on the basis of a contract for at least 3 months or whose work consists out of regular business activities, will always have an employment agreement with their client/employer.

Self-employed workers who (i) work for a fee of EUR 75 per hour or more and (ii) work on the basis of a contract for less than 1 year, or whose work does not consist of regular business activities, can choose to ‘opt out’. This means that the relationship between the self-employed worker and the client will not be seen as an employment agreement as a result whereof no wage taxes and social security premiums have to be paid.

Self-employed workers to which the above does not apply, can request for a client statement (‘opdrachtgeversverklaring’) from the Tax Authorities in advance by filling out a web-based form. The client statement will provide organizations that engage self-employed workers the assurance that they will not be liable for wage tax and social security contributions.