On 11 April 2013 the Dutch government and the social partners came to an agreement on the social agenda for the employment market in response to the current economic crisis.
No change until 2016
It was decided that reforms to the WW (the Dutch 'Unemployment Insurance Act') and the law governing dismissal will not be implemented before 2016.
Currently, the maximum length unemployment benefit (WW) is 38 months. From 2016 this will gradually decrease by 1 month each quarter to a maximum period of 24 months.
Change to unemployment benefit
In addition, unemployed workers will have to accept jobs they consider to be beneath their level of education and work experience. This is currently only required after receipt of 6 months’ unemployment insurance.
Changes to dismissal laws and fixed term contracts
Most importantly, the law governing dismissal will be regulated in one law. The two dismissal options (via the UWV - Employee Insurance Agency - and the subdistrict court) will remain availabl eto the employer only. The employee can terminate the employment agreement simply by giving notice to the employer.
A procedure can be initiated with the UWV for dismissal for commercial reasons and dismissal due to lengthy incapacity. The subdistrict court should be used by the employer for dismissals relating to the individual employee’s conduct or capability or in the case of the breakdown of a working relationship. In cases of employment lasting two years or longer, the employer will pay a transitional remuneration consisting of 1/3 of the monthly wage for each year of service and, as at the 10th year of service, half a month’s wage, up to a maximum of €75,000 or a year’s salary if that is higher. A transitional arrangement will be created for employees over the age of 50.
From 1 January 2015 measures will come into effect to strengthen the position of flexible workers. With regard to temporary contracts, the current requirement of 3x3x3 will be changed to 3x2x6 (meaning 3 contracts in 2 years with an interval of 6 months) so that flexible workers can become eligible for a permanent contract more quickly.
It will no longer be possible to include a non-competition clause in a temporary contract except in cases of (currently undefined) special circumstances. In addition, probationary period for contracts lasting 6 months or less will not be permitted.
The proposed reforms reflect the so-called "flexsecurity" approach of the Dutch government with regards to employment law.
On the one hand, the amount of severance payments will be seriously limited, on the other hand, flexworkers will be better protected since they will have a permanent contract more quickly.
We consider that the main impact of the new rules will be the limitations on the amount of the severance payment. Currently, the employee can apply for a severance payment which isapproximately 1 month’s salary per year of service, with no maximum. That will change drastically, which will make it much cheaper for employers to dismiss employees.
For further information or to discuss any of the issues raised, please contact Edith Franssen on +31(0)2057854525 or +31(0)623004342 at Loyens & Loeff, Amsterdam.
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.
Circular 230 disclosure
To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.