On May 17 2014 authoritative Dutch market research company TNS NIPO and Statistics Netherlands (CBS) published the results of a study of the national labour market in a report entitled Dynamics of the Dutch Labour Market: Focus on flexibility.
The research reveals that one out of every four employees currently has a flexible working relationship. Such workers include:
- employees on fixed-term employment contracts (with or without fixed hours);
- employees on permanent employment contracts without fixed hours;
- temporary agency workers;
- on-call workers; and
- self-employed workers without employees.
It is estimated that by 2020, one out of every three employees - that is, 30% of the working population - will be a flexible worker. In 2007 only one out of every five employees had a flexible working relationship. Since 2007 the number of permanent employees has declined in all industries, except for the transport industry. The hospitality industry has the greatest number of flexible workers: almost 60% of all hospitality workers have a flexible working relationship.
The research further indicates that employees with a flexible working relationship become unemployed and change jobs more frequently. While flexible workers in general have less job security, there are also significant differences in job security between the various forms of flexible worker. The position of employees on fixed-term contracts seems to be (relatively) stronger than that of on-call workers. In addition to reduced job security, flexible workers often have heavier workloads and less autonomy, which may result in illness. They are also offered fewer opportunities for development. It is also generally not possible for flexible workers to obtain a mortgage and they do not build up a pension.
TNS NIPO and the CBS concluded that the increase in labour market flexibility is unrelated to the country's economic recovery, but is a consequence of the pressure on employers to further specialise their organisations and focus on core activities. In the current economic climate it is more difficult for companies to predict when peaks and troughs in workload will arise. This results in more work of an 'on demand' nature.
The research of TNS NIPO and the CBS would suggest that employers still prefer to enter into temporary and flexible working relationships rather than permanent employment relationships. The trade unions and the minister of social affairs and employment are not happy with this ongoing trend. Earlier this year (for further details please see "Easing rules on Dutch dismissal law"), the minister introduced a proposal which aimed to force employers to enter into permanent employment contracts sooner by introducing the following legislative changes, among others:
- It will no longer be possible to include a probationary period of less than six months' duration in fixed-term employment contracts. In principle, it will also no longer be possible to include a non-compete clause in a fixed-term employment contract, irrespective of its duration, unless the employer can demonstrate that a sufficiently important business or service interest justifies its inclusion. These changes are scheduled to enter into force on July 1 2014.
- If more than three fixed-term employment contracts are concluded between the same parties at intervals not exceeding six months, or if the total duration of consecutive employment contracts – at intervals not exceeding six months – is two years or more, the last employment contract will qualify as a permanent employment contract. These changes are scheduled to enter into force on July 1 2015.
- Where an employment contract has lasted for at least two years or is permanent, the employer must pay a transition budget to the employee if the employee's termination is involuntary or if a temporary contract will not be extended. These changes are scheduled to enter into force on July 1 2015.
While the proposal is intended to address the current dichotomy in the labour market, it is doubtful whether the changes will achieve the government's aim of ensuring that flexible workers are offered a permanent employment contract after two years. As the research conducted by TNS NIPO and the CBS confirms that employers have not yet been deterred from moving towards a flexible workforce, despite the introduction of the proposal, it seems logical to assume that this trend will continue in the future. In fact, the proposal might even prove detrimental for flexible workers, as employers may opt to terminate employment relationships after two years in order to avoid the need for a permanent contract.
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.