Approved Bill on Balanced Labour Market Act
Several changes to varying employment laws
June 5, 2019 – The Dutch Senate has approved the bill on the Balanced Labour Market Act [Wet arbeidsmarkt in balans (WAB)]. This will introduce several changes to varying employment laws. The new legislation is meant as a first step in achieving more balance between employees with an employment contract for an indefinite period of time and employees with a more flexible employment contract, e.g. a contract for a definite period of time or a zero-hour contract.
- Fixed term contracts: The maximum term for extending fixed-term employment contracts will be 3 years (instead of 2 currently). The number of fixed term contracts within the 3 years term is still 3 employment contracts. In addition, the bill will introduce the ability to reduce the allowed interval between 2 employment agreements to a minimum of 6 months. In case of collective labour agreements (CLAs) the allowed interval between employment agreements is 3 months.
- Zero hour and min-max employment contract: The employer must notify the employee (without fixed working hours zero-hours and ‘min-max’ contracts) of the times at which the work is to be performed at least 4 days in advance. A term of less than four days may be agreed in the collective labour agreement (CLA). If the call is withdrawn within four days of commencement of the work, the employee will be entitled to payment of wages for the period for which he was called. Employer will be obliged to offer employee a fixed number of working hours after 12 months have passed. The offer must take into account the average working hours over the last 12 months.
- Payroll Employees: Payroll constructions are still be possible, however Payroll employees will no longer fall under the temporary employment regime. As a result, payroll companies will no longer be able to use a temporary employment clause and more extensive chain provision for payroll employees. In addition, payroll employees are entitled to the same employment conditions as employees who are employed by the employer.
- Introducing the i-dismissal ground: This ground means that there must be a combination of circumstances consisting of two or more grounds for dismissal to such an extent that the employer cannot reasonably be required to continue the employment contract. To use this ground it will mean that this leads to a higher maximised severance payment in addition to the transitional severance for the employee. Such compensation cannot exceed fifty per cent of the transitional severance to which the employee is entitled in the event of termination of the employment contract.
- Notice period voluntary termination employment zero hours contract: Employees with zero-hours contracts will be able to terminate their employment contracts subject to a notice period of 4 days (or such shorter term as agreed in the CLA), without any liability to pay a compensation to the employer. At the moment, these employees have a 1 month notice period.
- New formula for calculating the severance payment [transitievergoeding]: The severance payment will be calculated from the first day of employment, rather than only after 2 years currently. There will be no more increase of the transition payment on the moment the employment contract has continued for 10 years.
- Compensation for small-sized companies: Companies could be entitled to compensation for employers who have made transition payments in the situations where it concerns a small-sized employer who dismisses employees in view of discontinuation of his business to retire or due his sickness.
- Unemployment benefit [WW]: Employers are going to pay a low unemployment insurance premium for employees with a permanent contract and will pay a high unemployment insurance premium for employees with a flexible contract.
The act will enter into force on 1 January 2020.