Legal impact of new Dutch government

Published 18 October 2017 by BWK Partners

On 10 October 2017, the newly formed government of the Netherlands presented the so-called Coalition Agreement 2017. Following the Dutch elections, the Coalition Agreement is an arrangement between the coalition parties on new plans, reforms and budgets. A Coalition Agreement only entails proposals on headlines that bind the new government. The actual legislative proposals will be drafted and submitted in the coming period of government. The Dutch Senate and the House of Representatives still have to decide on the contents of the Coalition Agreement. Nonetheless, the Coalition Agreement already is a determining guideline for the legislative proposals that we can expect.

BWK Partners attorneys has highlighted the relevant issues for Dutch labour law purposes:

Termination and severance payments in the Netherlands

  • It will become easier for employers to terminate labour contracts. The new rules will allow an employer to combine different grounds for dismissal, e.g. a combination of culpable behaviour, inadequate performance and a non-functional working relationship. Currently, dismissal can only be on one of these grounds which results in a more rigorous test for the employer.
  • The court will be entitled to grant an ‘extra’ severance payment. This payment is in addition to the so-called transition allowance.
  • Upon termination, an employee will be entitled to a transition allowance as of the beginning of the employment contract. Currently, an employee is only entitled to a transition allowance after two years of employment.
  • The transition allowance will amount to 1/3rd monthly salary for each year of employment, also if the employment is 10 years or longer.
  • It will become easier to decrease the transition allowance with education expenses in light of the termination.
  • Two existing legislative proposals will be pushed through, these concern:
    • (i) compensation for employers for the payment of a transition allowance in case of dismissal due to long-term disability;
    • (ii) the exclusion of a transition allowance for termination due to economic reasons if a facility laid down in a collective bargaining agreement applies.

Limiting the use of employment agreements for a definite period

  • Successive employment agreements for a definite period of which the total term is longer than 36 months (currently: 24 months) will be automatically converted into an indefinite employment agreement.
  • An employment agreement for a definite period that is renewed within six-month periods after it has ended, is considered to be a successive employment agreement, while for certain business sectors the interval period of 6 months may be shortened.

Probationary period

  • The maximum probationary period for an indefinite employment agreement will be five months. Currently, this is two months.
  • The maximum probationary period for a definite employment agreement of more than 2 years will be three months. Currently, this is two months.
  • Still a probationary period will be allowed for a definite employment agreement of less than 2 years, however, a probation period in a definite employment agreement for 6 months or less is prohibited.

Salary payment during illness

An employee is currently entitled to wages during a maximum period of 104 weeks of illness. The corresponding obligation to pay wages will become 52 weeks for small employers (up to 25 employees). The Employee Insurance Agency will take over the payment obligation in the second year of illness. In return, small employers should pay the Employee Insurance Agency a cost-covering premium for the second year.

Self-employed

  • The Assessment of Employment Relationships Act will –finally- be replaced.
  • Self-employed workers will need to make more than 125% of the minimum wage (the so-called ‘low rate’). For this, a ‘contractor statement’ will be introduced that can be obtained online. Through this statement, the contractor (or assignor) will be indemnified for wage tax and employee insurance contributions.

These are (only) the highlights of the Coalition Agreement 2017 that are relevant for Dutch labour law purposes. Please contact Nicky de Groot of BWK Partners Attorneys at n.degroot@bwkpartners.com or +31 (0)20 2400710 if you have any questions.