international employment law firm alliance L&E Global

The Netherlands: New Balanced Labour Market Act: the 9 major changes to Dutch employment laws

Recently the Balanced Labour Market Act has been approved by the Dutch Senate. The Act introduces several important changes to Dutch employment laws. The Act is intended to enter into force as per 1 January 2020. Below we will discuss the 9 most important changes.

Cocktail dismissal

At the moment there are 8 reasonable grounds for dismissal in the law and the employer must fully satisfy 1 of the 8 grounds for dismissal. An additional ground is to be added: a dismissal will also become possible if all the circumstances such as dysfunction and disrupted employment relationship are added together. When this cumulative ground is applied to the dismissal by the court, it may award an extra half a redundancy payment (on top of the redundancy payment and apart from any fair compensation).

Right to redundancy payment from day one onwards

From the first day onwards employees will be entitled to a transition payment (instead of after at least 2 years of employment). So this also applies to dismissal during the probationary period. This is a proportionate amount. Thereby the new “formula” of the transition payment will boil down to 1/3rd of the monthly salary for each worked year.

Reduced redundancy payment build-up on long employment

The build-up of the redundancy payment will be reduced on long employments. This is because the increase after the 10th year of service will be cancelled.

Compensation scheme for small employers on termination of business operations due to illness/retirement

In certain situations for small employers, in order to avoid payment of a transition payment resulting in a disproportionately heavy burden for employers, small employers are given the option to request compensation for the redundancy payment, which has been paid on dismissal as a result of termination of business operations due to retirement or illness.

Extension of the chain rule (legal rule where a maximum of successive temporary employment contracts are converted into one for an indefinite period of time)

The succession of temporary contracts will revert again to a maximum period of 3 years. Currently it is possible to enter into 3 consecutive contracts within 2 years and this will (again) become 3 contracts within 3 years. But the interval of 6 months continues to apply before a temporary contract is converted into a permanent contract. In addition, it becomes possible to shorten the interval between a series of temporary contracts for each collective labour agreement from 6 to 3 months, if this relates to recurring work that can be carried out for a maximum of 9 months in every year. In addition, there will be an exception to the chain rule for supply teachers in primary education who stand in due to illness.

Payroll benefits cancelled

Employees working on a payroll basis will have the same employment conditions as employees employed by the client (with the exception of pension to which its own scheme applies). Therefore the special rules applicable to temporary agency workers will no longer apply to payroll employees. The definition of the temping agency agreement will not be changed.

More rights for standby workers

Measures will be taken to avoid obligatory permanent availability of standby workers. For instance, an employee must be called by the employer at least 4 days in advance. Standby workers will also retain their right to a wage if the work is cancelled during this period. The period of 4 days can be reduced to 1 day in a collective labour agreement.

Obligatory offer of “fixed volume” for standby workers

If the volume of work has not been unambiguously stipulated, the employer must each time, within one month – if the standby contract has lasted for 12 months – make an offer for a work volume, which is at least equal to the average volume of work per month in that previous period of 12 months.

Cheaper unemployment contributions in relation to permanent contracts

The unemployment contribution will become cheaper for employers if they employ an employee on the basis of a permanent contract instead of a temporary contract. The sector classification is therefore no longer relevant.