KEY DEVELOPMENTS FOR 2017
Proposed change to the statutory redundancy payment in cases of business related dismissals
Under the new dismissal rules, an employee who has been employed for at least 24 months and whose employment contract is terminated or not extended at the employer’s initiative is in principle entitled to a statutory severance payment called the ‘transition fee’. Parties to a collective labour agreement may agree on a similar arrangement as long as the value of total compensation to which the employee is entitled is at least at the same level as the statutory transition fee to which the employee would have been entitled. A recent proposal (if legislated) would permit employers to agree via collective agreements for transition fees which are lower than the statutory transition fee for dismissals for business related reasons. These new rules are scheduled to enter into force on 1 January 2018.
Proposed change to statutory transition fee in case of long term illness
Since 1 July 2015 employers have been required to pay employees who are ill a statutory transition fee in case of dismissal within the period of two years from the period of illness. Following protests from employers, the Dutch Minister of Social Affairs has proposed that employers are repaid this statutory transition fee (which is paid to its employees who are ill for two years or more) out of a government fund. The nationwide social security contributions for employers are intended to be increased to fund this proposal. These new rules are scheduled to take effect on 1 January 2018.
KEY DEVELOPMENTS FOR 2016
Changes in the assessment of payroll tax liability for independent contractors
With effect from 1 May 2017 a new and stricter regime means that payroll taxes do not need to be withheld by the client who has engaged a contractor if (i) the contract between the contractor and the client is based on a template contract published by the Dutch Tax Authority; or (ii) the contract drafted by the contractor and the client was ‘preapproved’ by the Dutch Tax Authority, provided that (in both situations) the contractor and the client act directly in accordance with the contract terms. In any other case, payroll taxes will be due. If the client fails to withhold and pay these payroll taxes, this may result in a tax claim. This may be increased with interest and a penalty of up to 100% of the payroll taxes which have not been withheld and paid.
New fines for businesses acting in breach of the Dutch Data Protection Act
On 1 January 2016, two important changes were made to Dutch data protection law. Under the revised law, Data processors are required to notify the Dutch Data Protection Authority (“DDPA”) (and on some occasions the data subjects concerned) in the case of a personal data security breach. As of the same date, administrative fines can be imposed in case of a breach of the Dutch Data Protection Act. These fines can be up to EUR 810,000 or 10 percent of the annual turnover in case of a legal entity. Employers can be data processors so they should make sure that they meet the Dutch employee data protection rules, particularly if data are stored in, transferred to, or accessible from locations abroad or if they are shared with third parties.
Considering the new risk of fines, employers should ensure that their internal privacy policies are in line with the guidelines provided by the DDPA.
From 1 July 2016, employers employing 50 employees or more were required to have a whistleblowing scheme in place. An independent governmental body called the House for Whistleblowers can investigate wrongdoings at the request of whistleblowers, advise whistleblowers on their position and possible actions and provide protection against detrimental measures of their employers. It is expected that there will be more whistleblowing claims by employees.
With thanks to Els de Wind and Cara Pronk of Van Doorne N.V. for their invaluable collaboration on this update.