Labour Market in Balance Act approved: 6 significant changes

Publication date: 12 June 2019
As of 1 January 2020, there will be major changes in employment law. There will be the option to combine various grounds for dismissal, the calculation for the transition compensation will change and there will be new rules for on-call workers. Also, employers will be allowed to conclude temporary contracts for a longer period and there will be a change to the unemployment insurance contributions.

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On 28 May 2019, the Dutch Senate approved the bill on the Labour Market in Balance Act. This Act will be effective as of 1 January 2020. What are the six main changes?

1. Cumulation ground

Various incomplete grounds for dismissal can be combined. This is referred to as cumulation ground or “i-ground”. At present, the employer still has to comply fully with one of the eight legal grounds for dismissal. In the event of dismissal on the basis of the cumulation ground, the employee can receive a maximum of 1.5 times the transition compensation.

2. Transition compensation

The transition compensation will change:

  • Employees will be entitled to transition compensation from the first working day instead of after two years, also during the probationary period.
  • The accrual of the transition compensation for everyone, irrespective of the duration of the employment, is one third of the monthly salary per year of service. This means employees no longer receive a higher transition compensation for the eleventh years of service and subsequent years of service.
  • Incomplete years of service are settled pro rata. The transition compensation will no longer be rounded off to half years of service.
  • Small employers are compensated for the transition compensation if they have to terminate their business due to retirement or illness.

3. Extension of provisions on succession of fixed-term employment contracts

The provisions on succession of fixed-term employment contracts (chain rule) will be extended. Employers can conclude three fixed-term employment contracts in three years instead of two years, without an employee being entitled to a permanent contract. In the case of seasonal work, it is possible to shorten the interval between a chain of temporary contracts from six to three months by means of a collective agreement. There is an exception to the provisions on succession of fixed-term employment contracts for teachers in primary education who substitute because of illness.

4. On-call workers

As of 1 January 2020, on-call workers must be called up at least four days in advance by the employer. If a call for work is cancelled less than four days in advance, the on-call worker will still be entitled to pay. In a collective agreement it can be agreed upon to shorten the period of four days to one day.

In addition, after 12 months, an on-call worker must be offered a contract for the average number of hours he has worked in those 12 months. If this contract is not offered, the on-call worker is still entitled to wages for this number of hours.

5. High and low unemployment insurance contributions

Instead of the sector-dependent level of unemployment insurance contributions there will be unemployment insurance contributions at a low level for employees with a permanent position and unemployment insurance contributions at a higher level for employees with a fixed-term contract. The high level does not apply to flex contracts with young people under 21 years of age who work a maximum of 12 hours per week.

6. Labour conditions of payrollers

Payrollers will be entitled to at least the same primary and secondary conditions of employment as the employees who are employed by the client. With effect from 1 January 2020, a pension scheme for payrollers must also be set up by the payroll company if they work for a client with a pension scheme for employees in the same or equivalent positions.

More information

Do you want to know what the consequences are of the Labour Market in Balance Act for your company? Or do you have any other questions concerning employment law? Please contact us:

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