Dutch government and social partners announce changes to employment and pensions laws

Further to our alert of 5 November 2012, we can report that an agreement was reached earlier this month between the Dutch government and the Dutch social partners (trade unions and employers’ associations) on several major changes to employment and pensions laws. This agreement (called the “Social Agenda”) includes amongst other things:

  • Dismissal laws are set to change on 1 January 2016.
  • Dismissals based on economic grounds (i.e. redundancy reasons) and on two year continued illness can only be dealt with by the semi-governmental agency UWV. Other dismissals (i.e. performance related) can only be dealt with by courts. Alternatively, collective labour agreements can provide for a sector committee to handle dismissals in the sector.
  • In case of a negative decision by the UWV the employer can appeal to the court in an effort to still be able to dismiss the employee. In case of a positive decision by the UWV the employee can appeal to the court in an effort to restore the employment agreement. Court appeal against UWV-rulings will always be possible. Appeal against court rulings will also become possible.
  • A mandatory two week reflection period will be introduced during which employees can revoke their consent to a termination of their employment agreement by mutual consent.
  • Time spent by the employer on the UWV or court procedures can be deducted from the notice period, provided that the remaining notice period will be at least one month.
  • Under certain conditions, deviating from the so-called ‘principle of reflection’ (used for redundancy selection) will become possible in collective labour agreements.
  • A distinction will be introduced between a mandatory transitional allowance and a possible severance payment on top of the transitional allowance.
  • Transitional allowance: in case of employment exceeding two years, the employer will be obliged to pay a transitional allowance with a maximum of € 75,000, or one year’s salary should it exceed this amount. The transitional allowance will be calculated as follows: 1/3 monthly salary for each year of service during the first ten years, and 1/2 monthly salary for each year of employment after ten years. A transitional scheme will apply to employees over 50 years of age until 2020, which will however not apply to companies which employ less than 25 employees. No transitional allowance will need to be paid to employees under 18 years of age.
  • A hardship clause will be introduced in respect of the transitional allowance. Such an allowance will not need to be paid if the employee can be seriously blamed for the dismissal, and it can be reduced or set at zero by the court if payment would impact the continuity of the employer or lead to more dismissals by the employer.
  • The court can increase the transitional allowance by awarding an additional severance payment to the employee in case the employer can be seriously blamed for the dismissal. Costs for outplacement, education, etc. made in respect of the dismissal can be deducted from the allowance.
  • Deviating from the above on the transitional allowance will be possible by entering into collective labour agreements and social plans which cover different but comparable arrangements.
  • Other future changes:
  • Publicly financed unemployment benefits will gradually be reduced to 24 months, starting 1 January 2016. An additional 14 months unemployment benefits period can be agreed upon in collective labour agreements.
  • The position of flexible staff will be improved as from 1 January 2015. A fixed term employment agreement will become indefinite after four agreements within a period of two years, provided these four agreements are less than six months apart (unless the employee is under 18 years of age). The possibility of deviating from this provision by collective labour agreement will be restricted.
  • Agreeing a probationary period in fixed term employment agreements of < 6 months will no longer be possible. Agreeing a non-compete clause will no longer be possible in a fixed term employment agreements at all, unless exceptional circumstances apply.
  • Measures are taken to reduce inappropriate use of i.a. temp workers and payroll constructions.
  • It will be considered whether the rules on transfer of undertaking need to be amended for tenders.
  • As from 2015 pensionable salary will be capped at € 100,000, meaning that pension cannot be accrued tax friendly if it exceeds this cap. The maximum pension accrual percentage will be reduced by 0.4%. The social partners are given until 1 June 2013 to consider alternative measures.

The Social Agenda as briefly set out above appears to be receiving full support from the members of the employers’ and employees organisations, as well as backing by the Dutch parliament. If everything proceeds as planned, the Social Agenda will be turned into legislation in the next few years. Although the contents of the proposed changes are still likely to change during this process, it has in any case become more likely that important changes will actually take place. We will keep you abreast of relevant developments as they unfold.

For more information please contact Martijn van Broeckhuijsen on (+31) 20 799 6364.