In 2021, a few things will change in the field of Dutch employment law. Below we have listed a number of important changes, that may apply for you.
Maximum transition allowance
The maximum amount of the transition payment, which is calculated on the basis of a monthly salary and the duration of the employment, is fixed at EUR 84,000 as of 1 January 2021. This represents an increase of EUR 1,000 compared to 2020. If an employee has a gross annual salary of more than EUR 84,000, the maximum transition payment is a gross annual salary.
Tax-free fixed travel allowance
When an employee travels to the workplace for 36 weeks or 128 days a year, employers have the option to pay the employee a fixed, untaxed commuting allowance up to a maximum of EUR 0.19 per kilometer. In May 2020, State Secretary Vijlbrief of Finance announced that employers may continue to pay the travel allowance tax-free in 2020 in the context of the corona crisis, even if employees (partly) work from home (provided the employer had awarded the travel allowance before 13 March 2020). This measure has been extended until 1 April 2021. If the measure lapses (and only actual travel days can still be reimbursed tax-free up to a maximum of EUR 0.19 per kilometer), employers will have to map the travel pattern of employees and check it against the 36-week or 128-day requirement to determine whether there is still a right to an untaxed fixed travel allowance.
Minimum wage up
As usual, the statutory minimum wage has increased as of 1 January 2021. The gross minimum wage for employees aged 21 and older is EUR 1,684.80 per month as of 1 January 2021 (July 2020: EUR 1,680).
Payroll pension scheme
As of 1 January, 2021 payroll employees are entitled to "an adequate pension scheme". With the entry into force of the Balanced Labor Market Act (WAB), this has been laid down in the Workforce allocation by Intermediaries Act (Waadi).
Compensation transition allowance for SMEs
In the event of business termination as a result of retirement or death of the employer, small employers (with fewer than 25 employees) can apply for compensation from the UWV as from 1 January 2021 for transition payments paid on or after 1 January 2021. A number of conditions apply to the compensation. For example, permission must have been obtained for at least one employee for the termination of an employment contract by the UWV or one employment contract must be terminated by the court due to company closure. Compensation for the retirement of the employer will only be provided if the employer has reached retirement age. The periods within which compensation can be applied for are stated in the published ‘Regeling compensatie transitievergoeding’.
The compensation option in the event of company closure due to illness of the employer has not yet come into effect. An agreement must first be reached on a number of points.
Pilot web module for self-employed and enforcement of the Tax Administration
A pilot for the web module is launched on 11 January 2021, providing self-employed with clarity and - where possible - certainty about the qualification of the employment relationship for payroll taxes. With this, everyone can go through a standard questionnaire anonymously, after which an indication of the employment relationship is given. Only after the evaluation of the pilot - from October 2021 at the earliest - will the Tax Administration fully enforce the DBA Act (Deregulation Assessment of Labor Relations Act). This means that until October 2021 the Tax Administration will only enforce in case of malicious intent or if clients do not follow instructions given within a reasonable period. For more information, please refer to our earlier Alert.
Offer fixed working hours on-call contracts
With effect from the WAB as of 1 January 2020, employers are obliged to offer employees who work on the basis of an on-call contract, a contract with fixed working hours, within one month each time the contract has lasted 12 months. This offer must at least include the average number of hours worked in the previous 12 months. Pursuant to the SZW Collective Act, as of 1 July 2021, i) an employee will be given a maximum of one month to accept the offer regarding the fixed working hours instead of at least one month and ii) if the employee accepts the offer, this will take effect no later than the first day after two months have passed, each time after the employment contract has lasted 12 months (later is not allowed).
Under certain conditions, employees who come from outside the Netherlands and work temporarily in the Netherlands can claim the 30% tax ruling. This means that they do not pay tax on a maximum of 30% of their wages. The cabinet has shortened the maximum term of the 30% tax ruling as of 1 January 2019 from 8 to 5 years. For employees who already used the ruling before 2019, this change will take effect from 1 January 2021. The tax authorities are looking at how long foreign employees used the scheme on 1 January 2021.
Continued payment of AOW pensioner during illness
On 1 January 2016, the Act on working after the state pension (AOW) age came into effect. The law regulates a lighter labor law regime for working state pensioners. As a transitional measure, an amendment has added to the law that, among other things, the period of continued payment of wages during sickness for AOW beneficiaries would provisionally be 13 weeks instead of 6 weeks. In a letter to Parliament dated 13 November 2020 about the evaluation of the aforementioned law, the Minister of Social Affairs and Employment proposed to cancel the transitional measure. The minister intends to have the period of 6 weeks start from 1 April 2021.
These are a few important changes in employment law that came into effect on 1 January 2021 or are (expected) to come into effect in 2021. If you have any questions or want to know more about a specific subject, please feel free to contact us.
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