Netherlands: Upcoming Changes Regarding Dutch Labour Law Announced by the Government

After an election that resulted in the first right-wing government that the Netherlands has seen in a while, many people were anxious to see what plans were going to be presented during our so-called “Prinsjesdag.” However, many people have criticized this year’s showcase, saying they have failed to elaborate most of their plans in concrete terms. The following plans are relevant to labour market developments.

Limitation of compensation regarding transition payment after 2 years of illness: 

Starting 1 July 2026, only companies with fewer than 25 employees will be compensated by the government for the payment of the statutory transition payment (statutory severance payment) to long-term sick employees (after 2 years of illness). Currently, every company, regardless of their size, is entitled to this compensation.

Change in employment tax

The government is planning to address the tightness of the labour market by changing the system of tax credits and adding a new tax bracket. This will result in more net remuneration when workers decide to work more under their current employment contract. This is important. In comparison to other EU countries, Dutch people work more part-time.

Mandatory confidential advisor, not obligatory yet

An obligation for companies to install a confidential advisor is in the works. This is to reduce the growing amount of transgressive behaviour cases that we are witnessing in the Netherlands. This rule will only be enforced on companies with 10 or more employees. It is still unclear when this obligation will be in force.

Adjustment of the leave system

There will be an investigation on how the Dutch leave system can be simplified in the short term, the government has announced. The social economic council is working on an advice on this subject, so there is no clear view of what these adjustments will entail.

Stricter rules for employees from abroad

The government has announced the intention of changing a few rules concerning employees from abroad. Labour migrants without housing will fall under the responsibility of the employer when creating nuisance or social costs. When labour migrants stay in the Netherlands for a long time, the employer must make available a Dutch-speaking course. Also, companies will have more possibilities to house labour migrants on their own property. It is unknown if, when, and how these changes will be implemented. However, the tax-advantage for expats will be decreased from 30% to 27% starting in 2027.

 

It has furthermore been confirmed that the new government is continuing the course of the old government regarding:

• The abolition of the roughly translated ‘zero-hours contract’ in which it was possible for an employer to set the standard hours for a worker to 0, which basically made it an on-call contract. With this change, the government has expressed its desire to make permanent contracts the standard when working in a structural manner.
• Increasing flexibility for small and medium businesses regarding their requirements in case of reintegration of a sick employee. The exact details have yet to be determined.
• Their approach in making a clear distinction between workers with an employment contract and independent contractors. Right now, these two types of contracts exist next to each other within the same type of work. This results in a disbalance on the labour market. Starting 1^st of January onward, the Tax and Customs Administration will enforce this.
• Right now, the noncompetition clause is often used to prevent employee turnover, which is not its intended purpose. Therefore, a couple of adjustments are coming.
• Changing the current pension system, which intentions have not been made public yet.