Several changes in Dutch employment law will be effectuated as per 1 January 2020.
The Act Labourmarket in Balance (WAB) that will come into effect as per that date aims to make it more attractive for employers to offer contracts for an indefinite period.
The most relevant changes are:
• new combined ground for termination
• changes in transition compensation
• extension chain rule for contracts for a definite period
• unemployment benefit premium indefinite period – flex
• new rules stand-by contracts
• new rules payrolling
new combined ground for termination
Since July 2015 we have an exhaustive enumeration of grounds for termination. For termination it is necessary that all requirements for one of such grounds are met. The “box” must be filled completely.
As per 1 January 2020 there will be a new cumulative ground (the i ground): a combination of circumstances mentioned in two or more of the other grounds. So e.g. two boxes each half full, or three boxes each filled for one third, can also lead to termination.
The grounds for termination that can be combined are the c, d, e, g and h grounds:
• frequent illness with unacceptable consequences for the business
• culpable acts or omissions
• a disturbed employment relationship
• other circumstances
The combined ground cannot be used to combine with the a, b and f grounds: business economic reasons, long-term illness or conscientious objection. If the court terminates on the basis of the new combined ground it can award, apart from the transition compensation, an additional compensation up to a maximum of 50% of the transition compensation.
changes in transition compensation
The 50+ arrangement, with which years of service above 50 years of age and a minimum of 10 years of service lead to one monthly salary per year of service, will expire per 1 January 2020. This was a temporary arrangement.
In addition, with the WAB an arrangement that is applicable to all employees will expire. This is the arrangement that all years of service above 10 lead to a ½ monthly salary.
In the new system that is applicable as per 1 January 2020 each year of service will lead to 1/3rd of a monthly salary. The requirement that an employee will have to be employed for at least two years in order to have an entitlement to a transition compensation, will be discontinued: the transition compensation will accrue as of day 1 and will be calculated prorated without rounding down.
The old system will remain applicable to employment agreements for which notice has been given before 1 January 2020 or for which a termination permit of dissolution has been requested before 1 January 2020.
extension chain rule for contracts for a definite period
The chain rule for contracts for a definite period (a maximum of 3 contracts / total duration 2 years) will be extended to a maximum of 3 contracts / total duration 3 years.
This change has immediate effect on 1 January 2020. However, if the chain has been exceeded before that date and the employment agreement consequently changed to an employment contract for an indefinite period, it will remain a contract for an indefinite period.
unemployment benefit premium indefinite period – flex
In order to stimulate employers to offer contracts for an indefinite period there will be a higher premium for unemployment benefit insurance for contracts for a definite period and for stand-by contracts. The lower premium will be applicable to contracts for an indefinite period which are not stand-by contracts.
Instead of the lower premium the higher premium will be applicable with retro-active effect in two cases:
• if the employment contract ends ultimately 2 months after it started;
• if in a calendar year 30% more hours (or more) have been paid out than stipulated in the employment agreement.
new rules stand-by contracts
The employer must call upon the employee for work at least 4 days in advance. If this term is not observed, the employee is not obligated to work.
If the employer changes or cancels the call for work within 4 days before the start of work, the employee is nevertheless entitled to salary. The notification of such change or cancellation should be done in writing or electronically.
If the employment agreement has lasted for 12 months, the employer is obligated to -within a month- offer the employee a fixed number of working hours equal to the average number of working hours in the previous 12 months. If the employer fails to do so, the employee is nevertheless entitled to salary for the average number of working hours.
A stand-by contract is defined as an agreement in which the number of working hours has not been laid down as a number per period of time:
• not exceeding one month, or
• not exceeding a year if the salary is spread equally over that period.
new rules payrolling
Currently some employment conditions for workers that work on the basis of payrolling should be equal to employment conditions that apply to employees in the company to which the worker is payrolled. With the WAB this is further extended to all employment conditions. If the company to which the worker is being payrolled does not have employees of its own, the employment conditions that apply in the sector will apply.
In addition the more flexible chain rules that apply to temping agencies can no longer be applied which means that the regular chain rule for contracts for a definite period will apply.