The coalition agreement for 2017 to 2021 of the political parties forming a coalition – the VVD, CDA, D66 and ChristenUnie – has just been presented, including the requisite plans for the labour market.
The cabinet says that the economy is going well, but also acknowledges that in recent years the responsibilities for the employment relationship have been placed too much with the employers. We have also seen this in practice: the dismissal of personnel forms a considerable legal challenge since the introduction of the Work and Security Act. The lengthy obligation to continue to pay wages in case of illness, the stringent rules surrounding flexible working and the unclear situation concerning self-employed workers without staff – remember the Employment Relationships (Deregulation) Act? – often lead to uncertainty. All of this inhibits the hiring of personnel, whereas clients are also hesitant to engage self-employed persons.
It’s good news that the future cabinet has taken on this labour market challenge. The coalition agreement that has now been presented offers solutions for a number of the problems outlined above, so making it more attractive to be an employer. It also offers the necessary tools to allow the ‘workers’ themselves – employees and the self-employed – to take more of a share in the economic recovery by substantially lightening the burdens on work.
A selection of the proposals:
Right to terminate employment
- Introduction of cumulative grounds for dismissal in the right to terminate employment. At present, the grounds for dismissal must be ‘complete’ to enable an employee to be dismissed: the courts will only allow termination of employment on grounds of non-performance if things are not going well, the employee knows that things are not going well, and he or she is granted time, a programme, coaching and training to achieve improvement. Termination of employment only follows when these conditions are met. But if an employee repeatedly arrives at work late and moreover has a poor working relationship with his or her manager then that’s a pity, but it cannot supplement the grounds for dismissal due to non-performance. That is t change: if there are problems concerning multiple grounds for dismissal, then it will be possible to have the courts consider whether dismissal is justified. Higher compensation can then be awarded to the employee: half of the transition compensation on top of the existing transition compensation;
- The transition compensation itself will also be amended: firstly, employees are entitled to transition compensation from the start instead of after two years; secondly, the transition compensation will amount to a third of a monthly salary for every year of employment, also after ten years. That is now a half of a monthly salary after ten years, so the transition compensation will be lower. The transitional scheme (until 2020) for those aged over 50 will be retained (one month per year of service after 10 years of employment for years of service above 50 years old);
- A number of ‘sharp edges’ of the obligation to pay transition compensation will be smoothed off for small and medium-sized businesses. These include the transition compensation in the event of dismissal due to incapacity for work.
- The period after which consecutive temporary employment contracts are converted into a permanent employment contract for an indefinite period by operation of law will go back to three years (this was two years since the introduction of the Work and Security Act);
- After a six-month interim period the counter is reset to zero for consecutive employment contracts. That is also the case now, but it is envisaged that social partners can stipulate per sector that this period will be shorter, for example for seasonal work;
- The ‘chain rule’ will no longer apply to temporary employment contracts in primary education;
- Longer probationary period: a maximum probationary period of five months can be specified in a permanent employment contract, and for employment contracts with a term of longer than two years the (maximum) probationary period will be three months.
- Payrolling as such remains possible, but it will be arranged differently to prevent it being used to compete on employment conditions. It is stated in the coalition agreement that ‘the more flexible employment law regime of the agency work employment contract will be declared inapplicable’ to payrolling. In this way the plans are interrelated with the proposals for the continued payment of wages in the event of illness, the right to terminate employment and the amendment of the Employment Relationships (Deregulation) Act. It is therefore still unclear exactly what the plans in this respect will amount to.
Easing of obligations to continue to pay wages
- For small employers (up to 25 employees) the obligation to continue to pay wages goes from two years to one. The responsibility for this continued payment then passes to the Employee Insurance Agency (UWV) but the two-year protection against dismissal remains in place;
- The period for which premium differentiation applies in the Resumption of Work for Partially Disabled Persons scheme (WGA) is also reduced, from ten to five years.
- The Employment Relationships (Deregulation) Act will be replaced. On the one hand the new Act must bring about more certainty for both client and contractor that there is no question of an employment relationship, but on the other hand it must prevent fictitious self-employment. To this end it will be specified that self-employed workers without staff with low fees in combination with a longer term of the contract, or in combination with carrying out regular business activities, always work on the basis of an employment contract. A low fee is defined as up to 125% of the minimum wage or the lowest pay scales in collective labour agreements;
- At the top end, on the other hand, an opt-out will be introduced: there will no longer be an obligation to deduct wage tax and employee insurance if there is a high fee in combination with a shorter term of the commission, or non-regular business activities. A high fee is considered to be when the fee is higher than €75 per hour. A shorter term is shorter than a year;
- A ‘client’s declaration’ will be introduced for freelancers, which will give clarity and certainty to the client on the hiring in of the freelancer;
- The tax administration will be given – in this area – a coaching role, and the current “enforcement moratorium’ will be phased out.
Partner’s parental leave
- From 1 January 2019 partners will get five days of paid leave, to be taken up within four weeks;
- In addition, from 1 July 2020 partners will get extra supplementary parental leave of five weeks, to be taken up within six months of the birth. To this end the employer will receive a payment from the Employee Insurance Agency of 70% of the daily wage.
In short, the new cabinet is ambitious when it comes to the labour market. Of course we will have to wait and see how these plans will be translated into concrete legislation, but it seems that serious work is being done regarding the problems that currently dominate the labour market. The cabinet also has plans for renewal of the pension system. We will inform you of these separately.