After the formation of the Coalition Agreement, we published the newsletter article ‘Dismissal Law Turned Topsy-Turvy; What Should You Know?’ Meanwhile, the social partners have reached a Social Agreement that differs essentially from the Coalition Agreement. The main points in the Social Agreement are the following.
Dismissal Law (reform intended as of 1 January 2016)
- There will be one procedure for dismissals depending on the reason for dismissal. The procedure via the UWV must be followed if there are economic reasons (reorganization) or long-term disability. The procedure via the court must be followed in the event of a labor conflict or reasons inherent in the person.
- It may be set out in a Collective Labour Agreement (CLA) that the aforesaid procedures are replaced by a (mandatory) evaluation by a sectoral committee established under the CLA. The principle of proportionality may then be deviated from in the CLA.
- If the employment contract is terminated by mutual consent, the employee will be given two weeks’ time to reflect.
- If the UWV denies the request for approval of a dismissal, the employer may request the court to rescind the employment contract (judging on the basis of the same criteria as the UWV). If this request is allowed, the employee may request the court to restore the employment contract.
- It is possible to lodge an appeal or to appeal to the Supreme Court against the court’s ruling.
- The notice periods remain unchanged. In both dismissal procedures, the time of the procedure will be ‘set off against’ the notice period, on the understanding that a term of one month always continues to apply.
- If an employee is dismissed who has a (temporary or permanent) employment contract of at least two years, he will be entitled either to a ‘transition fee’ of € 75,000 maximum (it is not clear whether this is a gross or a net amount), or one annual salary. The transition fee amounts to one-third of a monthly salary per year of service worked in the first ten years of service, and to half a monthly salary per year of service worked in the years after that. For people above 50 who have ten years of service, until 2020 the transition fee is set at one month per year of service above the age of 50 (while an exception is made for small and medium-sized businesses having less than 25 employees). It is possible to deviate from the rules on the transition fee in a CLA.
- In the event of serious culpability of the employer, the court may award additional compensation besides the transition fee. The entitlement to the transition fee may lapse if the employee is seriously culpable
Flexible Labor (reform intended as of 1 January 2015)
- The provisions on succession of fixed-term employment contracts will be adjusted. In the case of fixed-term employment contracts succeeding each other within a period of six months (now three), a permanent employment contract will arise either as the fourth contract or after two years (now three). It is possible to deviate from the provisions on succession of fixed-term employment contracts in a CLA, but not from the ‘six-month’ period, if the nature of the work requires to have temporary contracts, on the understanding that the number of contracts can be limited to a maximum of six within a period of four years.
- No probationary period can be agreed in temporary contracts of six months or less.
- No non-competition clause can be included in temporary contracts, except under special circumstances (substantiation requirement).
The Social Agreement contains other plans, e.g. related to unemployment benefits (which are to be reduced gradually to 24 months). It remains to be seen whether Parliament will agree to the Social Agreement. The opposition has indicated that it will only pronounce an opinion after the agreements have been elaborated in bills. We therefore expect that we will have to wait a while for more clarity.