Newsletter Vestius april 2018

The government has drawn up a bill, the Dutch Balanced Employment Market Act (“WAB”) which amends various employment law and social law issues. The WAB bill is available online until 7 May 2018 for consultation from ‘society’. Interested parties can give their input on the bill online. Following that, the bill has to be approved by both Houses of the States General. This means that it is possible that changes will be made, but it is expected that the main legislative changes of the bill will enter into force as of 2020.

Put briefly, the most important amendments are the following:

Cumulation ground: it will be possible to ask the court to dissolve an employment contract based on a combination of incomplete dismissal grounds, such as partially underperformance and partially a damaged working relationship, if the employer cannot reasonably be expected to continue the employment contract. The employee can, however, be eligible for a higher severance pay (up to a maximum of half the transition payment). This extra severance pay is independent of the transition payment or the fair payment that the court may award in the event of serious culpable acts or omissions imputable to the employer.
Probationary period: a probationary period of five months (rather than two) is allowed in an employment contract for an indefinite period of time. The employer may not, however, hold the employee to a non-compete clause if the employment agreement is terminated during the probationary period (barring exceptions).
Unemployment insurance premium differentiation: if an employee is offered an employment contract for an indefinite period of time rather than a fixed-term contract, the employer will pay a lower unemployment insurance premium. The nature of the contract will also be visible to employees on the salary slip.
The maximum period during which consecutive fixed-term contracts can be concluded: is extended from 2 to 3 years. The maximum number of three successive fixed-term employment contracts remains the same.
Transition payment:
the transition payment is payable from day one (also during the probationary period);
the extra accumulation after 10 years of service is cancelled;
the options to deduct costs of retraining are extended.
On-call workers: no longer have to be permanently available and must therefore be called on at least four days in advance (this may be reduced to one day in a collective bargaining agreement.
Payrolling: payroll workers will be entitled to the same terms of employment as employees in service of the employer (except for pension rights). The phased scheme in the CLA for temporary workers no longer applies.

In general the bill mitigates some of the loud complaints from the field, with the government trying to encourage employers to offer contracts for an indefinite period. Added to that, the bill resembles a set of loose reparations rather than a balanced approach to the employment market, even though the coalition agreement on which the bill is based suggested the latter.

The introduction of the cumulation ground for dismissal is an important development for the practice because the rigid dismissal rules are a major point of criticism of current employment law. It remains to be seen, however, how quickly courts will honour an appeal to the cumulation ground, also in view of the relatively limited payment that an employee receives in the form of extra severance pay. We feel that an employer who ‘has not done his homework’ will still leave the court empty-handed. The cumulation ground seems to have been written for cases in which one of the grounds for dismissal is nearly met but denying the request for dismissal would, in the court’s opinion, lead to an unreasonable result.

It is surprising that the WAB bill does not address limitation of the period of continued payment of wages in the event of sickness to one year for small-sized employers, even though this was part of the last coalition agreement. It would have been obvious to incorporate that legislative amendment in the WAB. It is unclear whether that change has now been dropped.

The WAB bill is bad news for companies that use payrolling; payrolling remains an option but it will become significantly more expensive for employers.

It is too early to take specific steps in preparation of the new legislation as it is not yet clear what the exact provisions of the new Act will be. We will of course keep you informed.