The Supreme Court of the Netherlands’ interpretation of a “temporary employment contract” in its recent decisions C4C/StiPP, Sector classification and Leerorkest/Tentoo has a significant impact on Dutch employers’ ability to “second” employees from one affiliate to another.
The Decision’s Impact on Secondments
As a result of the Court’s broad interpretation, in principle, all secondments may be seen as temporary employment contracts, and the seconding Dutch employer may be seen as being engaged in the temporary employment agency business and seconded employees. Consequently, seconded employees may be subject to the Collective Labor Agreement and the Pension Fund for the temporary employment agency industry. A mandatory affiliation with the Pension Fund would mean that all seconded employees must be registered with the Fund.
The financial consequences of the registration could be quite substantial, especially when Dutch employers were not aware of this obligation and have covered seconded employees under their company pension plans, which now must be terminated. The financial impact is even greater if coverage by the mandatory Pension Fund must be applied retroactively (e.g. for the past 5 years or longer), and the Dutch employer must fund the past service liability.
In addition, the premium for employee risk insurance may be based on the sector premium for the temporary employment sector, which is usually higher than other sectors as the unemployment and disability risks are considered higher in the temporary employment sector.
The Dutch legislature must step in and provide greater clarity. Until then, these recent decisions by the Supreme Court may have a considerable impact on Dutch employers that second employees. Such employers do not consider themselves engaged in the temporary employment agency business and certainly do not expect to qualify as temporary employment agencies in the strict sense of the word.
For More Information
More information regarding the Dutch decisions can be found at:
- Astrid van Ommeren and Pauline Bakker, ‘Allocatiefunctie niet langer vereist voor uitzendovereenkomst: gevolgen voor de cao, pensioenregeling en sectorindeling’, Pensioen & Praktijk 2017, afl. 1.
- Remke Scheepstra, ‘Wat zijn de gevolgen van het Care4Care/StiPP arrest voor intra-concern uitzending’, Magna Charta magazine First Ladies of Law, published 16 February 2017.