Budget Day 2026: the government revises its plans for social security and employment

On Budget Day 2026 (in Dutch: Prinsjesdag), the Dutch government presented its plans for 2027. The government has withdrawn the proposed reduction of the maximum daily wage and postponed the abolition of the compensation scheme for transition payments and the reduction of the maximum duration of unemployment benefits. In addition, it has identified three policy priorities aimed at increasing labour market participation, making the labour market more flexible and attractive, and simplifying the social security system.

 

Every year on the third Tuesday of September, the Dutch government presents the Budget Memorandum, setting out its financial plans and policy priorities for the coming year.

Firstly, the government has decided to withdraw the proposed reduction of the maximum daily wage. The maximum daily wage is used to determine the maximum amount of several employee insurance benefits, such as unemployment benefits, sickness benefits and maternity and parental leave benefits. By maintaining the current level of the maximum daily wage, individuals with an income around or above that threshold (indexed to EUR 6,617.44 gross per month as per 1 July 2026) will not face a reduction in the maximum amount of benefits to which they may be entitled.

In addition, the government has decided to postpone the abolition of the compensation scheme for transition payments in case of long‑term illness by one year. The scheme was originally due to end on 1 January 2027, but this has now been moved to 1 January 2028. Until then, employers may continue to apply for compensation for transition payments made following the dismissal of employees who have been incapacitated for work for a prolonged period, provided the applicable conditions are met.

The government has likewise postponed the proposed reform of the unemployment benefit system. The intended reduction of the maximum duration of unemployment benefits from 24 to 12 months will be delayed by one year and is now scheduled to take effect on 1 January 2029. The other measures announced in relation to unemployment benefits remain unchanged and are expected to enter into force from 2030. These measures include stricter eligibility requirements, a higher benefit during the first two months of unemployment and a reduction in the rate at which unemployment benefit entitlements accrue.

In addition to these specific measures, the government has identified three key policy priorities to focus on in 2027. First, the government aims to increase labour market participation by helping more people, including newcomers, enter and remain in paid employment, while investing in lifelong learning and job‑to‑job transitions. Second, the government seeks to create a more flexible and attractive labour market by balancing room for entrepreneurship with certainty for both employers and employees. Third, the government intends to simplify and modernise the social security system, including the sickness and incapacity for work framework, in order to improve its accessibility, effectiveness and sustainability.

 

Key Points for Human Resources

• Several significant social security reforms have been postponed or withdrawn.
• The compensation scheme for transition payments in case of long-term illness will remain in effect at least until 1 January 2028.
• We will continue to monitor developments in these areas and keep you informed of any legislative changes and further developments.