COALITION AGREEMENT: PROPOSALS AMENDMENT EMPLOYMENT LAW
(reading time: 10-15 minutes)
The coalition agreement aims to modernize the labour market, a new balance has to be found: work for an indefinite term has to be less permanent and flex work has to be less flexible. We point out that the coalition agreement includes only a general outline of the new government’s proposals; these proposals have yet to be crystallized before they will be submitted as legislative proposals. Naturally, we will keep you posted of any further clarification of these proposals.
1. Illness and incapacity for work
Continued payment of wages during illness
Shorter period for small employer: the coalition wishes to shorten the obligation to continue payment of wages for small employers (up to 25 employees) from 2 years to 1 year, in order to encourage that SME’s hire more personnel for an indefinite term. The Employee Insurance Agency (in Dutch: “Uitvoeringsinstituut Werknemersverzekeringen”, UWV) will be responsible for continued payment of wages, and re-integration obligations, during the second year of illness. The employment agreement will continue to exist during that time. Small employers will collectively pay the costs for the second year of illness in the form of a uniform, break-even, premium.
Interim judgement UWV: in case of insufficient re-integration efforts the employer is obliged to continue pay wages. The employer will have the possibility to request an interim UWV judgement with respect to the intended re-integration efforts, to decrease this risk of extension of the period during which the employer is obliged to continue to pay wages.
2. Termination employment made easier
Introduction multiple dismissal grounds
On the one hand, employers may – simultaneously – bring forward a combination of dismissal grounds, currently each dismissal ground must in itself justify termination and as a result more termination requests are denied.
For completeness’ sake, the statutory grounds for termination of an employment agreement are as follows:
- a redundancy as a result of the termination of the company’s activities or as a necessary result of an economic reorganization (a-ground);
- sickness or disability of the employee lasting for more than two years, if there is no expectation of recovery within the next 26 weeks, and within that period, the work cannot be adjusted;
- frequent absence due to sickness (c-ground);
- inadequate performance (d-ground);
- culpable conduct or negligence on the part of the employee (e-ground);
- refusal to perform work due to a serious conscientious objection (f-ground);
- damaged working relationship (g-ground); and
- other reasons (only rarely), such that the employer cannot be required to continue the employment contract (h-ground).
On the other hand, to compensate the employee for this, the court can award an extra allowance (a maximum of 50% of the transitional compensation) to the employee on top of the statutory mandatory transitional compensation.
3. Adjustment transitional compensation
Amendment (accrual) transitional compensation:
- no waiting period: employee will immediately be entitled to a transitional compensation from the start of the employment instead of this being the case after 24 months of employment only. The transitional payment accrues per ½ year of service (rounded off);
- lower accrual after 10 or more years of service: accrual for each year of services is 1/3 (instead of 1/2) monthly salary;
- compensation training costs: training aimed at employability at the employer will be reduces from the transitional compensation subject to the condition that this is aimed at another position than the own position.
4. Chain scheme (rules on succession fixed terms)
- longer maximum duration: the maximum duration of succession of consecutive fixed terms, which was shortened to 2 years under the Dutch Work and Security Act, will be extended 3 years;
- CBA deviation of interval: the interval to break the chain of consecutive fixed terms, which was extended from 3 to 6 months under the Dutch Work and Security Act, will in principle be maintained. It will still be possible to shorten this period to 3 months by CBA, which is currently possible in case of seasonal work. If the employer and employee representatives cannot agree to an arrangement in this respect on a sectoral level, the Minister of Social Affairs and Employment can take a decision.
5. Probationary period
It is anticipated that in case of an indefinite term contract as a first contract, a maximum probationary period of 5 months (now 2 months) can be agreed upon. In case of a definite term of more than 2 years, a maximum probationary period of 3 months is possible. The maximum probationary period will remain the same in other matters. Currently, a probationary period is not permitted in temporary employment contracts entered into for six months or less.
6. Payroll and zero-hours contracts
Legislative proposal payroll worker
Payroll has to be an instrument to “unburden” the employer and not to compete with respect to employment terms. The coalition intends to adopt a legislative proposal to make the position of payroll workers, in the context of employment terms, similar to that of the employees of the hirer.
Adjusted zero-hours contracts scheme
The coalition will also draft new rules for so-called zero-hours contracts, the employee will no longer be obliged to respond to a call for work and will be entitled to a compensation in case of cancelled call.
7. Independent contractors
The Assessment of Employment Relationships (Deregulation) Act will be replaced by a new act which will offer the independent contract and client certainty with respect to the question whether or not they have an employment relationship.
Categories independent contractor:
Contractors will be divided in 3 categories:
- Employee (minimum hourly wage): a worker will be qualified as an employee, if the contractor works for a low hourly fee (likely between € 15 and € 18) (i) for at least 3 months or(ii) performs work that can be considered as part of the regular business activities;
- Opt out: a worker can be qualified as an independent contractor and can request an exemption (“opt out”) for wage tax and social security premiums, if the contractor works for a high hourly fee (more than € 75) (i) for less than a year or (ii) performs irregular business activities;
- Client statement with an indemnification: a client can request a statement (in Dutch: “opdrachtgeversverklaring”) in advance, with an indemnification for wage taxes and social security premiums, via a website/web module for an independent contractor who works for a high hourly fee.
The law will be revised in order to clarify the definition of a “relationship of authority” (in Dutch: “gezagsverhouding”), the examination will emphasize material (instead of formal) circumstances. Additionally, the coalition will, together with employee and employer representatives, assess if and how a new contractual base for cooperation, the “entrepreneur agreement” (in Dutch: “ondernemersovereenkomst”), will be included in the law.
The Dutch Tax Authorities will exercise restraint in its enforcement policy during the first year after introduction of the new legislation.
8. Paternity leave
Paternity leave in case of child birth:
The paternity leave will be extended to support the development of the relationship between a partner and his or her child, and to improve the chances of women in the labour market by decreasing the differences in leave terms.
- Extension paternity leave in 2019: the paternity leave of 2 days, paid by the employer, will be extended to 5 days, effective 1 January 2019.
- Additional paternity leave in 2020: effective 1 July 2020, partners will be entitled to, an additional paternity leave of 5 weeks in the first 6 months after the birth, a benefit amounting to 70% of the (maximum) daily wage. This shall be paid by the employer but can be reclaimed from the UWV.
9. 30% tax ruling
Shortening duration 30% tax ruling
The maximum duration of the 30% ruling for foreign workers, 30% of the wages are tax free under this facility, will be shortened from 8 to 5 years.