The Netherlands: Framework letter from the Minister of Social Affairs and Employment, Labor Market 2023

On 5 July 2022, the Minister of Social Affairs and Employment published the Labour Market Framework Letter. This letter outlines, among other things, an approach to modernize the labour market and announces a legislative review in 2023. The goal is to encourage long-term employment relationships. Read briefly in this blog the measures proposed by the Minister (which are currently before the House of Representatives for approval):

• Abolishing zero-hours and min-max contracts
  The government believes that on-call contracts (such as zero-hour contracts and min-max contracts) provide limited certainty, namely income uncertainty and schedule uncertainty. The government therefore chooses to abolish on-call contracts in their current form. This means that zero-hour contracts and min-max contracts are no longer allowed in their current form. These contracts will be replaced by a basic contract. There will be an exception for students.
• Limiting temporary employment agency contracts in terms of phase and duration
  Temporary employment periods should be limited to three years (phase A: 52 weeks and phase B: 104 weeks), whereby deviations per collective labour agreement will no longer be possible. In addition, the government will consider what steps it should take to prevent temporary workers from being permanently posted to a hirer. Furthermore, the government is working toward a certification system for posting on the labour market.
• Provisions on succession of fixed-term employment contracts
  The government believes it is very important to prevent revolving door arrangements for temporary work and thus to increase the prospect of a permanent contract for employees. Permanent temporary employment with the same employer should no longer be possible. For this reason, the government intends to abolish the disruption of the provisions on succession of fixed-term employment contracts. Instead, an administrative expiration period will be developed.
• Partial unemployment benefit
  Employers will have the option of letting employees temporarily work less. The partial unemployment benefit can be used for the hours that the employee works less. This benefit will ensure that employers who temporarily have less work will not have to bear the full wage costs themselves, and therefore will not have to fire employees. At the same time, this will ensure that employees can keep their jobs.
• Reintegration
  In order to improve continued payment of wages during illness, reintegration during the second year of illness will be entirely focused on returning to work with another employer.
• Self-employed worker without employees
  1. There will be a disability insurance for the self-employed. A large number of self-employed people are currently not or not fully protected against disability. Mandatory disability insurance provides protection for all self-employed workers against the risk of income loss in case of disability.
  2. The term ‘’authority’’ (working in the service of another) will be further clarified. This term is in fact the main criterion about which there can be uncertainty regarding the assessment of employment relationships. Clarifying this will reduce the grey area between employees and the self-employed.
  3. Efforts will be made to improve the supervision and enforcement of bogus self-employment.

Does a contemporary empowerment policy release the employer from the legal obligation to offer the employee a process of improvement (PIP)?
Last summer, the Amsterdam District Court ruled on this issue: the empowerment policy that Red Bull pursues does not affect Red Bull’s obligation as an employer to offer a process of improvement (PIP). Read in this blog what exactly this empowerment policy entails and how the subdistrict court reached its verdict.

What was at play here?
Red Bull is not satisfied with the performance of a Customer Service Specialist (hereinafter: ‘employee‘) and asks the court to dissolve the employment contract: the employee is allegedly not performing well despite supervision, coaching and weekly interviews. In doing so, Red Bull – in its own words – gave the employee sufficient opportunity to improve her performance. However, the employee argues that there is no evidence of his malfunctioning. The employee was not informed of this, nor was the employee offered any opportunity to improve.

Assessment and decision
The emails, interview reports and assessment reports submitted did not show that Red Bull had made it clear that the employee was not functioning properly. According to the subdistrict court, it is on Red Bull to inform the employee in writing in a timely manner about the malfunctioning and to warn that it could lead to dismissal. Red Bull acknowledges that this was not done, but refers to its empowerment policy. This policy means that no ‘file’ will be built up with warnings and reprimands, but that employees will only be encouraged (i.e. without pointing out shortcomings). A classic improvement process (also called ‘PIP’) would, according to Red Bull, have a paralyzing effect. The subdistrict court acknowledged that this might be the case, but that did not mean that Red Bull should not have made it clear to the employee that there was a PIP that could result in dismissal because of malfunctioning. The judge therefore rejected Red Bull’s request for dissolution.

Tips & Tricks
The Amsterdam court makes clear that this emerging corporate culture – characterized primarily by a focus on praising, encouraging, expressing approval and giving confidence to the employee and omitting warnings and negative evaluations – does not relieve the employer of its obligation to duly inform the employee in writing about malfunctioning and about the consequences if the performance does not improve (namely, dismissal).