23-10-2017

Employment law and the agreement of the new coalition government – what is about to change?

After several months of negotiations, the prospective Dutch coalition for a new government has published its coalition agreement (“regeerakkoord”). This agreement will be the basis for the coming government term and includes the intended policy.

The coalition agreement also includes a number of major changes to Dutch employment law that will impact businesses, which will be briefly elaborated below. Please note that the exact scope and impact of the changes is not completely clear yet and that the proposed legislation needs to go through parliament.

Obligation to continue to pay salary during illness

The obligation to continue to pay salary during illness shall be reduced from two to one year for small employers (max. 25 employees).

Extension of consecutive fixed-term contracts

Consecutive fixed-term contracts can be offered for a maximum of three years before the contract changes to an indefinite period of time. Currently this maximum period is two years.

Extension probation period

In case of an employment agreement for indefinite term (provided that this is the first contract of the employment) a probation period of maximum five months may be included. In case of an employment agreement for definite term of more than two years a probation period of three months may be included.

Introduction of cumulation of dismissal grounds

Currently, each ground for dismissal - which grounds are limitatively prescribed by law - must in and of itself justify a termination of the employment agreement. Following from the coalition agreement, the Dutch courts shall be permitted to terminate an employment agreement based on a combination of the statutory dismissal grounds, e.g. underperformance, culpable conduct and disturbed relationship. Furthermore, to compensate employees for this, the court may award an additional severance payment to the employee, up to a maximum of 50 percent of the statutory transition payment.

Transition payment revised

Employees will be entitled to the statutory transition payment as of the start of their employment instead of after two years.

Independent contractors

The Deregulating Assessment Working Relationship Act (Wet DBA) which was introduced in 2016, shall be replaced. Parties were required to work on the basis of model contracts published by the Dutch tax authorities. Instead under the new regime contractor should use a ‘principal statement’, which parties can obtain by filling out a web-based form. The new regime should give (more) certainty on an independent contractors position and should avoid pseudo self-employment (schijnzelfstandigheid).

Payrolling

Payroll companies are generally used by companies to act as formal employer and to take over the risk of several employment obligations such as continue payment of salary during illness and the severance payment. Within the new regime (i) the more flexible legal regime for temporary workers (uitzendkrachten) will no longer apply and (ii) employees that work through a payroll company should be offered the same primary and secondary terms of employment as regular employees of the company where they work. These measures are introduced in order to avoid competition on terms of employment.

Zero-hours-contracts

The new coalition government wants to avoid that zero-hours contracts that asks for permanent availability of the employee is (mis)used in case the nature of the employment doesn’t require this. Therefore, employees will no longer be required to respond to a call for work within a specified period and where an employee was called for work, but the call was later cancelled, that employee becomes eligible for financial compensation.