This article summarises three areas in which important employment law developments are anticipated in the Netherlands in 2019.
By: Marieke ten Broeke
Firm: Bronsgeest Deur
1. Amendments to employment law
Last year, the Minister of Social Affairs and Employment presented planned amendments to employment law in a bill named ‘Wet arbeidsmarkt in balans’ (the balanced labour market law, ‘WAB’). The main proposed changes are as follows:
Less restrictive dismissal law
At present, permission to dismiss an employee may only be granted if at least one of the statutorily limited dismissal grounds from the Dutch Civil Code is fully met. These grounds include underperformance or a seriously disrupted working relationship. Pursuant to the upcoming WAB, dismissal will also become possible if a particular case combines partial elements of different grounds. In these cases of dismissal for a combination of reasons, an employee will be entitled to claim additional compensation up to a maximum amount of half the statutory ‘transition payment’ (the statutory severance payment). This compensation is on top of the statutory transition payment and any potential reasonable compensation (which may be granted where there has been serious culpable behaviour by the employer).
Amendment to transition payment
Under the WAB, an employee’s right to a transition payment will start immediately when work starts (including during the probation period) rather than after 24 months of employment. The calculation of the transition payment will also be amended, taking length of service out of the calculation of the amount of the transition payment per year; instead, for each year of service, a third of the employee’s monthly salary will be accrued towards the transition. Furthermore, smaller employers closing their company for reasons of pension or illness will be compensated. For these companies, an arrangement will be put into place so that they will not owe a transition payment in certain circumstances.
Chain of employment contracts
The WAB also aims to relax the chain of employment rule. Under current legislation, employees need to be offered an indefinite contract after they have worked three consecutive fixed-term contracts over a two-year period. The WAB reinstates a three-year period. The WAB also introduces the possibility of shortening the maximum interval between fixed-term employment agreements from six months to three months beyond which the chain of employment contracts will be broken through the Collective Labour Agreement (CLA) when the nature of the activities requires it, such as for example for seasonal labour.
With respect to employment agreements for an indefinite period, the option may be created to include a probationary period of five months. At present there is a maximum probationary period of two months.
Employees working for an organisation on a ‘payrolling’ basis (the Dutch term for the practice of outsourcing staffing and associated administrative responsibilities) will become entitled to the same employment conditions as employees employed by that organisation (bar the pension scheme and entitlements). This has not in so many words been included in the present legislation but is generally in case law presumed to be the case.
The government wishes to dispense with obligatory permanent availability for employees with an on-call contract. It has been stipulated in the WAB that on-call employees need to be called on by the employer at least four days ahead of time. On-call employees also retain their entitlement to salary if the employer does not require them after all.
Unemployment benefit premiums
The ceiling for unemployment benefit premiums for employers currently depends on the branch in which the employer operates. The WAB proposes reducing employers’ premiums relating to unemployment for employees on indefinite contracts. An employer hiring a large number of temporary employees will therefore pay a higher amount towards unemployment benefit premiums. The government hopes that this will create an incentive for employers to more readily offer employees indefinite contracts.
The intended entry into force date is 1 January 2020. In 2019, the legislative proposal will develop and we expect to get more clarity on the final amendments that will take place.
2. Modernisation of working practices
Over the past few years, both employers and employees have been exploring modern forms of work. This remains a very topical issue in 2019.
In this respect, we expect the discussion regarding the legal status of self-employed workers, contractors, and other workers such as platform workers to continue. To what extent should they be qualified as an employee, with all that this legally implies? Should the government or the workers themselves design some kind of special social security safety net for these types of workers, and what should that look like?
Furthermore, we also expect that working from home will increase, not only because workplaces are overcrowded, but also because employees value a more flexible form of work. This also manifests itself in public focus on work-life balance and the right to be unreachable outside of working hours.
3. Diversity and inclusion
There is a lot of public and governmental attention on discrimination in the labour market. In June 2018, the Ministry of Social Affairs presented the Labour Market Discrimination Action Plan 2018-2021. With this action plan, the government aims to reduce labour market discrimination by raising awareness, improving control and enforcement, doing research and developing instruments, methods and practical guideline measures for employers. There is a specific focus on reducing discrimination in selection and recruitment, pregnancy-related discrimination and discrimination against employees with a migrant background.
Furthermore, the government envisages reducing the gender pay gap. Currently, a legislative proposal for an Equal Payment (Men and Women) Act is pending. We expect that this act (or a modified version of it) will come into force within the next few years. The proposal contains a provision pursuant to which larger companies (companies that are required to publish an annual report) will be obliged to report on differences in pay between men and women, covering all aspects of remuneration, in the annual report. Furthermore, companies will be obliged to inform the works council at least once a year about differences in pay between men and women in similar positions.