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The Netherlands – Additional Information on the Balanced Labour Market Act 2020

New year, new legislative updates! Today, we’re coming to you from Europe and the beautiful Netherlands to fill you in on further updates that have been highlighted  in relation to The Balanced Labour Market Act (‘Wet Arbeidsmarkt in Balans’ or  ”WAB”).

Toward the end of last year, we saw the Dutch Parliament adopt this new employment legislation which came into effect on 1 January 2020. A communication in response to a judgement of the Supreme Court pertaining to this act has since been made available.

 

Supreme Court Judgement

On 8 November 2019, the Supreme Court decided that employers are obliged to terminate the employment of an individual after 104 weeks of illness if the employee is asking to do so. In the majority of instance, this was not the case. Why? – In order to avoid the payment of transition fee. The employment contract was then kept ‘dormant’. Now that employers will be compensated by the UWV (social security) for the payment of this transition fee as of 1 April 2020, with a retro-active term up to 1 July 2015, the Supreme Court has decided that employers must cooperate with a request for termination within the framework of “good employment practices”.

Because the calculation of the amount of the transitional allowance will change with effect from 2020, we would like to draw your attention to the following:

If an employee has been sick for more than 104 weeks and has been employed for more than 10 years, the employee is entitled to a lower transition fee as of 1 January 2020 if agreement is reached before1 January 2020. There is therefore a risk that employees who submit an application on 1 January 2020 will hold employers responsible for the damage suffered (lower transition compensation). As a result, there may not be full compensation and there may also be no compensation at all for damages. In order to exclude this risk, it is important to approach and inform the employees concerned before 1 January 2020. We realise that this is on a short notice, but due to the very recent judgement of the Supreme Court, these possible consequences are only now being discussed.

 

Transitional Compensation as of 2020

As of 1 January 2020, you will have to pay a transition fee, regardless of the duration if the employment contract:

  • has been terminated by the employer;
  • has been dissolved at the employer’s request;
  • has not been extended on the initiative of the employer.

A transition allowance is only not required if the termination takes place:

  • before the employee’s 18th birthday and they have worked less than 12 hours per week on an average base;
  • when the employee reaches the pension age or the termination takes place after reaching the pension age.

At all times, the amount of the transition allowance for each year of service is one third of the gross salary per month. In the event of no full year of service, this will be calculated on a pro rata basis.

 

To keep up to date with other legislative updates from across the globe and ensure compliance, why not take  a look at some of our recent blogs.

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