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What do the plans of the new Dutch cabinet mean for employers?

Publication date: 13 November 2017
The Rutte III cabinet has a lot of plans. What will change with respect to dismissal, transition compensation, self-employed persons, etcetera? Read more about the most important plans in the fields of labour law, social security and pension law.

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The Rutte III cabinet has a lot of plans. In the following we will outline the most important ones with respect to employment law, social security and pension law. This will enable you to anticipate these plans where possible and necessary. Please note, at the time of writing, these are still plans and therefore not yet applicable law. Of course, through our blog we will keep you informed of the date the plans will enter into force.

Combination of different reasons for dismissal will be possible

Upon the introduction of the Work & Security Act the reasons for dismissal were limited and each reason by itself has to provide sufficient substantiation for dismissal. A combination of “incomplete” reasons, as for instance, malfunctioning, misconduct, insufficient trust, is no longer possible. The new cabinet will again allow for the combination or accumulation of reasons for dismissal. However, in these events the court will be given the option to award the employee one and a half times the transition compensation.

Transition compensation

All employees

The transition compensation will apply to all employees, thus also to employees who have worked for less than a two year period. As the amount of the transition payment is calculated as 1/6 a month’s salary per half year of service, it is still unclear whether employees who are in service for less than a half-year period will also be entitled to transition compensation.

Length of service has no impact

Also, from the tenth year of service the basis of calculating the amount of transition compensation is 1/6 of a month’s salary per half year of service and not more than 1/4 of a month’s salary per half-year of service. The transitional arrangement where older employees are entitled to a higher compensation till 1 January 2020 will remain effective however.

Training costs

In the future, the costs for vocational re-training of employees to a different position within the company may be deducted from the transition compensation. Training costs to remain in the same function may still not be deducted from the transition compensation.

Compensation for transition compensation

The plans to compensate employers for the costs of the transition compensation in the event of dismissal after two years of illness or due to economic circumstances will be carried through. In addition, more employers will be allowed to invoke the bridging for small and medium enterprises, which is in force till 1 January 2020

Temporary contracts

Successive fixed-term contracts with intervals of less than six months will bring about an indefinite contract only after a period of three years (currently after a period of two years). More industries will be allowed to make use of the exemption to the regulation regarding successive fixed-term contracts that applies to seasonal employment. IThe chain will then be interrupted after three months instead of after six months.

Trial period

A longer trial period may be agreed upon for long-time contracts. A maximum period of three months applies to temporary contracts of more than two years, and a maximum period of five months applies to indefinite contracts. The current regulation will continue to apply to shorter contracts.

Payrolling

The cabinet intends to limit payrolling to the “relieving” of the employer. This means that payrolling will no longer fall under the regulation for agency workers and that payrollers will be entitled to the same employment conditions as other employees of the hirer.

Zero-hour contracts

The cabinet wants to prevent employees with a zero-hour contract from having to be available around the clock and not being able to accept another job. Having a different job will therefore become a valid reason for the employee to refuse a call. In the event of cancellation by the employer, the employee will be entitled to a salary.

Illness and re-integration

Continued payment of wages small employers

Henceforth, small employers only have to continue to pay wages of ill employees for a period of one year. In addition, the Employee Insurance Agency will take over a number of re-integration obligations during the second year of sickness. The salary of the ill employee will be paid from a special contribution for small employers during the second year of sickness.

Premiums and re-integration

Sick employees will have consequences for the Partially Disabled Persons Regulations for five years instead of for ten years. Also, measures will be taken to provide more clearness on the extension of the period in which the employer is obliged to pay an employee’s salary, second-track re-integration, and requesting an interim opinion on the re-integration efforts.

Self-employed persons without employees (zzp’ers)

The Assessment of Employment Deregulations Act will be revoked. Avoiding pseudo-self employment will remain a key focus. Therefore, it will be assumed that self-employed persons without employees who earn less than 125% of the statutory minimum wages and work for a period longer than three months for the same client have an employment contract and not a contract for services.

For self-employed persons without employees who earn more than 125% of the statutory minimum wage there will be a “principal statement” that will provide security in advance regarding the question whether or not wage tax and social-security contribution have to be paid. The client has to apply for this statement to the tax authorities. For this purpose, a specific module will be developed.

Leave

Post-natal leave

As of 1 January 2019, partners of the mother will be entitled to five days of leave after delivery; this leave has to be taken during the first two months after childbirth. The employer has to continue to pay the entire wages during this leave. Besides, as of 1 July 2020 there will be five weeks of additional post-natal leave that may be taken during the first year after childbirth. During this additional leave the employer does not have to continue to pay wages. Instead, the employee will receive compensation from the Employee Insurance Agency amounting to 70% of the salary up to a maximum of 70% of the maximum daily salary.

Adoption leave

The adoption leave will be extended from 4 to 6 weeks. This extension also applies to foster parent leave.

Training

To stimulate “lifelong learning”, the cabinet intends to replace the tax deduction of training costs by an individual loan for the purpose of education for every Dutch citizen. In addition, more money will be invested in the training of older employees so that they will be able to remain active for a longer period.

Pension

The cabinet intends to reform the pension system thoroughly. What this will mean in actual practice is yet unclear.

More information

Do you have questions regarding the plans of the new Dutch cabinet on employment law or other issues or do you have any other questions regarding labour law or dismissal, please contact us:

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