On June 10 2014 the Senate adopted the Wet Werk en Zekerheid bill, which introduces several legislative changes, including to Dutch dismissal law (for further details please see "Easing rules on Dutch dismissal law"). The main changes introduced and their effective dates are outlined below.
- the chain of fixed-term contracts covers two years or more without a rest period of up to six months between contracts; or
- the chain of fixed-term contracts consists of more than three fixed-term contracts without a rest period of up to six months between contracts.
From January 1 2015, in principle, it will no longer be possible to agree on a non-compete clause in fixed-term contracts, unless the employer has substantiated in writing that it has a significant business or service interest that justifies such a clause.
From January 1 2015, a notification obligation will apply in respect of employment contracts for at least six months' duration. The employer will be obliged to notify the employee in writing at least one month before the fixed-term contract terminates as to whether the contract will be extended and, if so, on what terms and conditions. If the employer does not comply with this obligation, it will be obliged to pay the employee's salary equal to the number of days for which it delays in notification (up to a maximum of one month's salary).
The changes to Dutch dismissal law will take effect from July 1 2015. Under the new legislation, the Employee Insurance Agency procedure will be compulsory where an employment contract will be terminated due to:
- economic reasons; or
- incapacity to work due to illness for more than two years.
The employer will be obliged to follow the court procedure where an employment contract will be terminated due to performance-related or other personal reasons. The new legislation allows parties to appeal the relevant decision to the competent (higher) court and seek reinstatement.
From July 1 2015, the employer will further be obliged to pay the employee a transition payment where the employment has been employed for two years or more and termination of the employment contract is 'involuntary', or where a fixed-term contract will not be extended. This transition payment will be calculated as one-sixth of the employee's monthly salary for each six-month period of the first 10 years of employment, and one-quarter of the employee's monthly salary for each six-month period thereafter. The transition payment is capped at €75,000 gross or an amount equal to the employee's maximum annual salary where this is higher than €75,000.
If an employee agrees to terminate the employment contract by mutual consent, a mandatory two-week cooling-off period applies, during which the employee can dissolve the settlement agreement without any need for court proceedings and without having to give reasons.
For further information on this topic please contact Danielle Pinedo at Baker & McKenzie, Amsterdam NV by telephone (+31 20 551 7555), fax (+31 20 626 7949) or email (firstname.lastname@example.org). The Baker & McKenzie website can be accessed at www.bakermckenzie.com.