The Netherlands – The Balanced Labour Market Act (‘Wet Arbeidsmarkt in Balans’) 2020

On 28 May 2019, the Dutch Parliament adopted new employment legislation: The Balanced Labour Market Act (‘Wet Arbeidsmarkt in Balans’ or  ”WAB”)

What Are The Highlights?

• Effective from 1 January 2020, organisations will need to start tracking contract data per employee.
  • This information is needed to be able to calculate the correct premium percentage for the employer costs.

• Social security costs will be restructured.
  • The sector code will disappear but the premium for unemployment benefit will get two rates.
  • One for fixed term or flexible contracts and one for indefinite contracts.
  • The difference between the two rates will be 5%.

• Rules for the ‘transitie vergoeding’ will change.
  • This is the mandatory severance pay.
  • Currently organisations need to pay this when a contract is not extended or is terminate when the employee has been working for two years or more.
  • In the new legislation, the employer will need to pay this for all involuntary exits (so the ‘has been working for two years’ condition has been removed).

• The maximum period of having somebody on a fixed term contract will be increased to three years
  •  Organisations will be allowed to provide up to three fixed term contracts in three years.
  • A fourth contract or a contract that passed the three years period will automatically be an indefinite contract.

Note: The new law only takes effect from 1 January 2020.

Therefore, if an employee has been in your employment for two or more years on account of a contract renewal in 2019, the old law applies, and this employee will be entitled to a permanent contract.

There will be a minimum rate for freelancers.

Information that will be required from you before 1st January 2020:

1. Does the employee have a temporary or a permanent contract?

• • If temporary, what is the end date of the contract? This information is also needed for every additional temporary contract

2. In what circumstances does the law state that a temporary contract applies?

• • Contracts that require employees to work stand-by shifts either in attendance at the workplace or in readiness to attend if called up (in healthcare services) or to be on-call outside their working hours, in each case without any financial reward or extra time off to compensate for this.

In summary:

The following contracts are classified as temporary contracts:

1. Zero-hours contracts;
2. Minimum/maximum hours contracts;
3. Contracts that only mention a minimum or average number of hours;
4. When the hours to be worked are not stipulated as a number of hours during a time period of a week, month or year, or when the hours to be worked in a year are stipulated but the salary is not evenly spread over 12 months.

If you have any questions or would like to speak in more detail on these changes,  please get in touch with a member of the Immedis team below.