Netherlands: Elections May Impact New Employment And Dismissal Laws

Although the dust has barely settled on the new employment and dismissal laws contained in the Work and Security Act introduced in 2015 and 2016, more changes are on the horizon. Much depends on the outcome of the Dutch elections this coming March, as it seems unlikely that the current coalition will continue. The VVD, D66 and CDA have already proposed significant reforms of the Work and Security Act in their election programmes.

On a smaller scale, a legislative proposal has been submitted to parliament to amend the Works Councils Act and extend the right of works councils at large companies to receive information about remuneration.

Work and Security Act (Wwz)

2017 may be a 'make or break' year for the new employment and dismissal laws. While the Minister of Social Affairs continues to stress the positive effects of the legislation that he implemented during his term of office, criticism is increasing as elections approach. According to VVD, D66 and CDA, the employment sector, including the Wwz, needs thorough reform.

VVD wants to reintroduce the possibility of extending temporary contracts more than twice, as was the case before the Work and Security Act. They also want to abolish the universal applicability of collective labour agreements, which would allow employers and employees to make their own arrangements for their employment contracts, making termination simpler and cheaper. Both VVD and CDA want to introduce temporary contracts with a longer duration than the current two year period. CDA also wants to ease the burden on employers by shortening the statutory two-year period of employee sick pay.

The D66 party envisages a system with shorter and cheaper dismissal procedures, facilitating only one type of contract: the permanent contract. The build-up of the transition payment should start immediately, not after two years of employment. However, they want to abolish the higher transition payment after ten years of service and oblige employees to use the transition payment to actually seek new employment. They also want to abandon the 'age proportionality' principle which applies in collective reorganisations; instead of a selection based on years of service per age group, employers should be allowed to select on the basis of performance.

The left-wing parties also have some suggestions: Groen Links and SP want to make permanent contracts more attractive to employers by increasing the employers' unemployment insurance contributions on temporary contracts. The PvdA party also wants the build-up of the transition payment to start from day one, while the SP Party intends to double the transition payment from one-third to two-thirds of the monthly salary per year of service.

Regarding self-employed persons, right-wing and left-wing parties stand on opposite sides of the discussion. Right-wing parties want to maintain the 'flexible shell' formed by self-employed persons and let them choose whether or not they want to pay for their own pension and disability insurance. Left-wing parties want to reduce what they call excessive labour market flexibility, which - in their opinion - has resulted in unfair competition. They want to introduce compulsory minimum insurance and pension for self-employed persons.

All in all, while we do not expect the employment law landscape to change as drastically as it has done over the past two years, reforms seem unavoidable. Which reforms will prevail will depend on the composition of the government after the elections.

Works Councils Act (Wor)

The Works Councils Act may be amended in 2017. This would extend the works council's right to information on salaries and remuneration policies at large companies (meaning those with more than 100 employees). The legislative proposal specifies that at least once a year, the remuneration policy and the development of remuneration proportions within the company will be discussed in the consultation meeting with the works council. This right to information extends to the content and amount of employee benefits for each group of employees, including the management board and - if applicable - the supervisory board. Although this does not constitute a major change (the works council currently has the right to be informed in writing on these subjects), the government wants to use this proposal to stress the importance of transparency in remuneration, in view of the social debate on high incomes.

It is currently unclear when the amendment will enter into force. We will keep you informed on these and any other relevant developments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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