Changing employment conditions: with and without an unilateral change clause

The arrangements between employees and employer regarding employment are contained in the employment contract or a collective arrangement. These agreements must be complied with, but developments may occur during employment that require certain terms of employment to be changed. For example, because of legislative developments, business changes, or if a company wants to improve in terms of sustainability and the environment. These developments may mean that, for instance, an employee’s salary, workplace, vacation days or travel allowance must be changed.

The terms of employment can generally only be changed if the employee agrees.  Nevertheless, the law also provides ways to change terms and conditions of employment without the employee’s consent. In this article, we provide information on the ways that the employer can do so.

Changing employment conditions based on an unliteral change clause

Many employment contracts include an unilateral change clause. Such a clause gives the employer the authority to change an employee’s terms of employment without the employee’s consent. However, the fact that such a clause is included in the contract does not mean that the employer may simply change the employees’ terms and conditions of employment. It follows from the law that the employer can only invoke this article if the employer can prove that it has such weighty interests that the interest of the employee must give way. 

If the employer wants to invoke the unilateral modification clause, it is also important to weigh the interests of the employer and the employee against each other. For example, if an employer is in great financial difficulties, making the interest very important, the employer is more likely to be able to unilaterally modify an employment condition. On the other hand, the employee’s interests must also be taken into account.  If the employer wants to change more fundamental conditions of employment (e.g. salary), it becomes more difficult for the employer to do so.

Changing employment conditions without having an unliteral change clause

In principle, if an employer wants to change an employee’s individual terms and conditions of employment, but there is no unilateral modification clause in the employment contract, the employer will have to obtain the employee’s consent. Does the employee not give permission? Then the employer can invoke the employee’s legal obligation to behave as a good employee. This principle implies that an employee should behave reasonably in his contractual relationship with the employer.

When unilaterally changing employment conditions based on the principle of good employee behavior, the following conditions must be met:

  • The employer makes a reasonable proposal to the employee;
  • The proposal is related to changed circumstances at work;
  • The employee can reasonably be required to agree to the proposal.

If these conditions are met, in principle, an employer can unilaterally change an individual employee’s conditions of employment.

Conclusion

Are your terms of employment being changed and you have not agreed? Then first check your employment contracts to see if they include a unilateral modification clause. If so, discuss what your interests are and the interests of your employer are. Is there no unilateral modification clause included? Then see if the above conditions are met. The fact that, in principle, you as an employee must respond positively to a reasonable proposal does not mean that, you cannot stand up for your interests and accept everything.

More information

If you have any questions about the legality of changing your employment conditions or need advice about your personal situation. Please feel free to contact us.

Division of assets and debts in case of a Dutch community of property upon divorce

If you do not have Dutch nationality and/or were married abroad, but you did start living in the Netherlands shortly after the marriage and you did not agree on a prenuptial agreement, chances are that by default you are married in a Dutch community of property.

This blog explains what the Dutch community of property means for your assets and debts (you may or may not have known about) in case of divorce.

Full or limited community of property

If you were married before 1 January 2018, you may have been married in full community of property under Dutch law. This means that all assets and debts, both obtained or incurred before the marriage and during the marriage, are joint (excluding inheritances and gifts obtained under exclusion clauses). All assets and debts are divided equally in case of divorce.

If you were married after 1 January 2018, you may have been married under Dutch law in limited community of property. In that case, premarital debts and assets are private. In case of divorce, (only) the debts and assets accrued during the marriage are divided equally (excluding inheritances and gifts obtained during the marriage).

Ascription of assets

In practice, the question is regularly asked whether assets acquired by one of the spouses and in the name of this one spouse also falls within the community of property. The answer to this is yes. The ascription of an asset is not relevant for the Dutch community of property. Even if assets/debt are only in the name of one of the spouses, these assets/debt fall within the community of property and must be divided equally in case of divorce.

Debts

As mentioned above, (former) spouses should bear a debt that falls into the community by halves. This is also the case if the debt was incurred by the other spouse and is only in his/her name. Only in exceptional cases this obligation to pay for the debt 50%-50% can be deviated from. The basic principle is that you are jointly responsible for repaying the debt.

A more specific practical example is if one of the spouses has a sole proprietorship (eenmanszaak) that falls into the community of property and from which one or both spouses perform(s) labour. Legally, a sole proprietorship does not have separate assets. Assets and debts of the business fall into the community and are the responsibility of both spouses.

It regularly happens that a debt arises in the sole proprietorship, for example to the tax authorities because no or too little (income) tax was paid. Especially if only one of the spouses worked from this sole proprietorship, discussions may arise in the context of the divorce about which spouse should pay off the debt. Here too, the starting point is that both (ex)spouses pay off half of the debt after the divorce, as it falls into the community of property. Moreover, if the debt arose because of underpayment of tax, both spouses often lived on the higher income as a family.

Conclusion

In short, if one spouse works from a sole proprietorship that does fall into the Dutch community of property, the above is something to consider. If you want to avoid dividing assets and debts of the sole proprietorship by halves upon divorce, you can contact a notary in your area to get more information on this.

More information

Do you have questions after reading this article or about divorce in general? Please feel free to contact us. 

Guide for a Performance Improvement Plan (PIP)

Are you facing a PIP from your employer? Keep reading to find out what this means for you and what factors you should keep in mind.

What is a Performance Improvement Plan (PIP)?

Does your employer believe that you are not performing well at work and do you receive a poor performance review? Then your employer may wish to implement a Performance Improvement Plan (PIP). This process is designed to support you in enhancing your performance with the guidance of your employer. Typically lasting between 3 to 6 months, the duration of the PIP varies based on the your role. Central to the PIP is the creation of an improvement plan, a formal document that pinpoints specific ongoing performance issues, sets a timeline for improvement, and delineates the objectives that must be met. This plan incorporates measurable criteria for improvement, known as Key Performance Indicators (KPIs), which you are expected to achieve. Moreover, it outlines the repercussions of failing to meet the outlined goals, which could include demotion, transfer, or termination of your employment contract.

Why is it important?

If your employer wishes to terminate your employment contract, your employer must have a valid ground for this request. One of the reasonable grounds is underperformance. Without following a Performance Improvement Plan, your employer is not allowed to dismiss you for underperformance. If your employer believes that you are not meeting expectations, your employer is required to provide you a Performance Improvement Plan. This gives you the opportunity to enhance your performance. Is this requirement not met? Then this will result in the court rejecting the request of your employer for termination of your employment contract based on underperformance.

What to consider?

Both you and your employer are responsible when it comes to following a Performance Improvement Plan. Your employer formulates an objective action plan with realistic and equitable goals, while you actively engage in efforts to enhance performance. Typically, the PIP is developed by your supervisor and then forwarded to the HR department. Effective communication with both management and HR is crucial throughout this process. As mentioned earlier, the duration of a PIP is predetermined. It is important to periodically discuss the progress. Should you have any feedback on the plan, such as feeling inadequate time for improvement or lacking clear and measurable objectives, it is advisable to document your concerns in writing. Important is that both you and your employer must adhere to the plan and the agreements that are made. Any modifications or adjustments to the plan should only occur with mutual consent. You are encouraged to seek guidance, training, and coaching as needed.

If you agree with the content of the plan, you may sign it. In the event of disagreement regarding the PIP, it is recommended to address this with your employer. If resolution remains elusive, mediation can be helpful.

More information

Your employer cannot force you to participate in an improvement process. However, it is generally advisable to cooperate. For additional information or guidance on how to follow an improvement plan, feel free to contact us.

The change in legislation regarding the non-compete clause

Most permanent employment contracts in the Netherlands include a non-compete clause. This clause determines that you are not allowed to work for a competing company for a certain period of time within a certain region.  

The wording of a non-compete clause is often very broad. This means there is a high chance that a non-compete clause will be a problem when you want to apply for a job with a new employer, especially if you work in a small and specialized industry.

Changes

Now, a proposed bill has been introduced that will change the legislation of these non-competition clauses. On March 1, 2024, the Council of Ministers approved this bill. It is expected that the law will come into force in early 2025. The bill was introduced because, according to the legislator, research shows that the clause is often included as a standard clause in employment contracts by employers without considering the interests of the employee. According to the legislator, the non-competition clause is often used for the wrong reasons. This causes employees to be restricted from changing jobs and continue to work within their expertise and specialty.

In this article we compare the legislation of the current law and the proposed law. And we also provide an explanation of how to take legal action against a non-compete clause.

The current law

The legislation that is now in place sets forth two requirements for a non-competition clause in a permanent employment contract to be valid: it must be in writing and the employee must be over the age of 18. If these two conditions have been met, the clause is legally valid.

The proposed law

The proposed law imposes additional requirements for a non-competition clause to be valid. First, a non-competition clause can only have a temporal scope of one year. A non-compete agreement entered into for an extended period of time is null and void, as is a non-compete agreement that contains no duration. Second, the non-competition clause must include a geographical scope. This means that the clause must specify whether the clause applies only within a certain radius of the company or, for example, throughout Europe. Third, the non-competition clause must contain a written justification of the substantial business or service interest that justifies the restriction. Without this justification, the non-competition clause is not valid. This already applies to fixed-term employment contracts, but will then also apply to employment contracts entered into for an indefinite period.

In addition to the above requirements, the employer must pay the employee a compensation when he invokes the non-competition clause. A similar arrangement is already in place in a number of other European countries.  The compensation is at least half of the employee’s monthly salary for each month that the non-competition clause is in effect, or a higher amount if agreed upon. The compensation must be paid no later than the last day of the contract of employment.

Invoking the non-competition clause must, in principle, take place one month before the end of the employment contract. In case of situations where the employer could not yet know one month before the end of the employment contract that the employment contract would end, the clause must be invoked within two weeks of the notice. This is the case, for example, in the event of summary dismissal or termination by the employee.

When the proposed law has come into force in 2025, the current rules will continue to apply to non-competition agreements concluded before the effective date of the news law. This means that non-competition clauses with a scope for more than 1 year and/or without a geographical scope, will not have to be amended. The employer can still invoke these clauses. After the law takes effect, however, the employer must always pay a compensation to the employee if the non-competition clause is invoked. This also applies to non-competition clauses that have been agreed upon before the law takes effect. 

Legal action

Under both current law and the proposed law, it is possible to ask the court to suspend the non-compete clause. The court can then dismiss the non-compete and set it aside completely or partially. In the case of partial termination, for example, the term for which the non-competition agreement was agreed upon can be shortened.

In court, the judge will assess whether the employee would be unfairly disadvantaged by the non-competition clause in relation to your employer’s interest to be protected. The retention of employees may not in itself be part of your employers’ interest to be protected. The non-compete clause is designed to protect the employer’s business assets from impairments. The mere fact that an employee goes to a competitor does not automatically mean that business assets are also affected.

When determining whether the non-compete clauses should be (partly) waived, the judge weighs the interests of the employee and the employer. The judge will look at all the circumstances of the situation, for example:

  • The degree of attachment to the industry;
  • The possibility of a position improvement;
  • Personal circumstances (family / living conditions / affiliation to region);
  • The investments that the employer has made in the employee;
  • The question of who initiated the termination;
  • Whether the new position involves a lot of competition-sensitive knowledge.

More information

If the new law goes into effect, it will have a significant impact on the use of non-competition clauses. If you have questions about your current non-competition clause or the new legislation, don’t hesitate to contact us.

The works council: a body representing employees’ rights

Your individual rights as an expat employee are safeguarded by the Dutch, fairly protective, labor law legislation. However, many rules that apply to your employment contract can be determined through discussions between your employer and the works council. This body consists of a number of employees elected through internal elections within a company. The works council has extensive rights in the field of employment conditions arrangements. We would like to explain the importance of the works council for your rights.

Establising a works council in your company

A works council (in Dutch: “ondernemingsraad”) is a form of employee representation within a company. A works council is different from a union, which is involved in creating collective labor agreements for an entire industry. The works council represents the interests of the employees, having a legal right to be involved in major decisions that affect them. If your company has more than 50 employees, a works council must be established. If there is currently no works council, you and your colleagues can take the initiative to establish one. This has many benefits for employees, and often for the company as well, as decision-making by the works council can lead to more support for decisions within the company.

The formal rights of the works council

Under the law (the Works Councils Act), the works council has extensive rights regarding proposed decisions by the company. A brief overview:

• Right to information: the works council can request information from the company regarding legal structure, business plans, data, annual reports, etc.;

• Right to initiate: the works council can propose agenda items for the management and ask questions that must be answered regarding all affairs relating to the companies business;

• Right to advice: If the organization would propose a decision regarding reorganizations, collective dismissals, relocation of the company, mergers or acquisitions, major investments: for all such decisions of the company, the works council has the legal right to give advice in advance;

 • Right of consent: this statutory right of the works council applies to any significant changes in collectieve employment arrangements that the board of directors wishes to implement. This includes collective company arrangements on e.g. pensions, profit sharing, working conditions, working hours, and benefits.

When considering whether to agree to decisions proposed by the board of directors, the works council carefully considers the interests of the employees.

Your involvement in the works council

A Works Council is a body elected by all employees through a secret ballot. If you are chosen by your colleagues as a member of the works council, you will have additional legal protection. The employer may not disadvantage you through sanctions such as suspension, warnings, or dismissal because of your role as a member of the works council. Additionally, the employer must provide time and money to the works council and its members for meetings of the works council, training as a member of the works council, and for engaging external advisors such as lawyers.

If the works council feels that the board of directors is not cooperating, they can initiate legal proceedings at the cantonal court.

Training and advice

The works council has a significant influence on decision-making regarding financial and economic decisions and employment-related decisions within the company. It gives employees a say in these matters. For many expats and companies starting in the Netherlands, the Works Councils Act may be unfamiliar. In addition to providing advice to works councils and their members, we also offer training on the rights of the works council.

More information

Do you have questions regarding this article? Feel free to contact me.

Carefully Consider Before Deciding to Divorce

Applying for a divorce is a significant step, and in the Netherlands, only a judge can pronounce it. But before you take this step, it’s important to consider a few essential questions.

Only a judge can pronounce a divorce

In the Netherlands, asking for a divorce is straightforward, only a judge can pronounce a divorce, and all you need to declare is that the marriage is irretrievably broken. No need for examples or explanations. Despite seeming “easy” (apart from the other complex divorce-related issues such as parental authority, alimony, and property settlement ), it’s a good idea to ponder some questions before you decide to part ways.


How to make the decision

The biggest question is: do you still have love for your partner? If “yes” is your answer and you believe your marriage can be salvaged, think about getting counseling or therapy. Have a heart-to-heart. Dig into the reasons behind the potential split. Is the marriage beyond repair? If so, fixing it might be out of reach. Are you deciding based on feelings or facts? Decisions made in the heat of the moment may not last, but too much logic can make a relationship feel trapped and cold. Is that the outcome you’re aiming for?

Advice

Planning and getting professional advice can be crucial in your decision-making process. Your social circle matters too. Who can you count on for support post-divorce? Chat with a few trusted friends or relatives who can offer solid advice. And don’t overlook your job. You might find support through work, like flexible hours for family emergencies.

Lawyer or mediator

Once you’ve mulled over everything and if divorce still seems like the only or best option, be sure to engage a seasoned family lawyer sooner rather than later. Opt for a lawyer who’s part of the Dutch vFAS, the association of lawyer-mediators. vFAS-affiliated lawyer-mediators are experts in divorce and relationship breakdowns. They aim to settle divorces amicably, ideally working things out with your partner’s lawyer.

More information

Thinking about splitting up? Don’t hesitate to contact me or one of our other specialized family lawyers/mediators.

What you need to know in case of a restructuring

Tesla, Rabobank, Deloitte and FrieslandCampina: a few companies that recently went through restructurings with lay-offs, or are intending to do so. Since 2022, the number of companies that went through a restructuring in the Netherlands has been on the rise again.

A few things you need to know in case your employer is going through a restructuring.

The employer needs to seek advice from the Works Council

In the early stages of the restructuring, often before the other employees are informed, the employer has to seek the advice of the works council on the intended restructuring. The works council must be informed about, among other things, the reasons behind the intended restructuring and the consequences the decision will have for the employees. If the restructuring aims to make only a limited change, or only one or a few employees in a sizeable company are impacted, no advice may need to be sought. Not every company has a works council. Companies with fewer than 50 employees are not required to have one.

Who determines which employees are laid-off? The so-called ‘principle of reflection’

Next, the employer must determine which employees to propose for dismissal. The employer will have to consider this on a job-by-job basis. After all, the employer decides which position will be eliminated, but if more employees hold the same position, the employer may not choose which employee to keep and which not. He needs to take into account for this the ‘principle of reflection’ (in Dutch: ‘afspiegelingsbeginsel’). The employees are divided up in age categories, in which in each age category the employee who was last employed in principle is put forward for dismissal first, until the required job cut is achieved.

The employer is obligated to seek for redeployment options within the company

Once the employees to be offered for dismissal have been identified, the employer must first identify whether re-employment in the company in another suitable position is possible. While salary is not a measure of assessment of whether a position is suitable, it is generally considered that a position with a salary lower than 30% of the former salary need not be accepted. Please know that you are not always free to refuse a suitable redeployment offer without consequence. For more information I kindly refer to our other article about redeployment obligation of the employer.

How does the UWV-procedure for termination as a result of a restructuring work?

Without your permission, your employer can only terminate your indefinite term employment agreement as a result of the restructuring with prior permission of the UWV, the Dutch institute on Employee Insurance. This UWV procedure is a written administrative procedure, in which the employer must convince UWV of the necessity of the restructuring and be able to explain that it has complied with the above rules concerning i.e. the principle of reflection and redeployment. The procedure takes usually between one and three months, depending on how quickly UWV has all the necessary information to reach a decision and if you are filing a defense or not.

Compensation in case of termination

If UWV gives permission to terminate your employment contract, you are entitled to payment of the statutory transition payment, amounting to 1/3e of your monthly salary multiplied with the years that you worked for your employer. In some cases, a social plan applies. A social plan is a contract between your employer and the group that talks on behalf of the employees: the unions or the works council. A social plan contains agreements to deal with the consequences of a restructuring for you. Based on the social plan, you may be entitled to higher compensation than the statutory transition compensation.

Termination by agreement

In the Netherlands, if you are on an indefinite term contract, your employer can only terminate your employment contract as a result of a restructuring with prior permission of the UWV as stated in the above, or with your permission. If you are impacted by the restructuring, you will usually have been informed of this in a meeting with your manager and received a letter with a termination agreement enclosed. It is always wise to have the agreement checked by a lawyer. Usually, the agreement will offer a budget for reimbursement of lawyer’s fees.

More information

We understand that reorganisation, especially when you are impacted, involves a lot. We are happy to review your termination agreement, assist you in UWV proceedings or, if you are in need of a trusted partner, to help you and explain the overall process. Please feel free to contact me or one of our other employment lawyers.

Extra savings in a pension scheme: be careful!

Introduction

The pension system in the Netherlands is a multi-pillar system designed to ensure that people have a secure and adequate income in retirement.

It has three main components:

  • The first pillar is the AOW (Algemene Ouderdomswet), which provides a basic state pension to all residents over the age of 67 (the age is subject to change due to ongoing reforms).
  • The second pillar consists of occupational pensions, which are employer-sponsored plans. These pensions are managed by pension funds, insurance companies and Premium Pension Institutions (PPI) and are based on collective agreements between employers and employees.
  • The third pillar consists of individual savings, which include private pension savings and insurance. These are voluntary and provide additional income in retirement.

Defined Contribution (DC) schemes

With regard to the second pillar, many employers in the Netherlands offer DC schemes. After the Dutch pension reform, this will even be the only option. In most DC schemes, it is possible to save extra for your pension. If you die before retirement age, your accumulated pension capital will be returned to your survivors (wife and/or children). This is called ‘restitution’.

After the reform, however, extra saving in your pension scheme might not be a good idea. Why?

What is restitution?

In Dutch pension law, restitution literally means the return of your accrued pension capital to your survivors if you die before reaching retirement age.

There are several variants, but the most common is that 100% of the accrued pension capital is available after death for the (improved) survivor’s pension (in Dutch: ‘nabestaandenpensioen’).

With restitution, this capital is thus used to improve the survivor’s pension, and your partner and children benefit from the pension capital you have personally accumulated. Restitution is popular in DC schemes. However, with the Future Pensions Act (Wet toekomst pensioenen (Wtp)), it seems that restitution has come to an end.

For many participants, this is how they perceive their individual pension pot: it is their own money and, like all other assets, it will be available to their next of kin after their death. This is all the more true if additional voluntary contributions are made.

After the reform

However, the possibility of restitution will disappear. If you die before retirement, your capital goes to the pension administrator, who distributes it to the other pensioners in the portfolio. This means that the ‘extra saving’ option is no longer attractive. What is the point of saving extra if your money is disappearing into other people’s pension pots?

More information

If you have any questions regarding pension after reading this article. Please contact me or one of our other pension lawyers.

Important changes regarding the 30% ruling

If you are a highly skilled migrant in the Netherlands recruited from abroad, you might qualify for the 30% ruling. This ruling has been subject to changes in 2024. What impact will this have on you? Keep reading to find out.

What is the 30% Ruling?

The 30% Ruling, also referred to as the 30% facility, is a tax benefit provided to highly skilled migrants relocating to the Netherlands for a specific job position. Eligible individuals under the 30% Ruling are exempt from paying taxes up to 30% of their gross salary in the Netherlands. This arrangement allows employers, under certain conditions, to allocate up to 30% of the employee’s salary as a tax-free allowance for a period of 60 months (or five years). The purpose of this reimbursement is to offset the additional expenses that international employees may face when moving to a new country for work. Both the employee and the employer must agree in writing for the ruling to be applicable. Effective from January 1, 2024, the 30% ruling has been adjusted to the 30/20/10% rule.

Decrease to 30/20/10% rule

Employees who apply for the 30% ruling in 2024 will not receive the full benefit for 5 years. This adjustment affects new arrivals only and does not impact current recipients. The reduction will be implemented gradually in three stages:

  • For the initial 20 months, you can benefit from a tax-free portion of 30% of your salary.
  • In the subsequent 20 months, the tax-free portion decreases to 20% of your salary.
  • In the final 20 months, the tax-free portion is further reduced to 10% of your salary.

Moreover, starting from January 1, 2024, the tax benefit is capped at an annually adjusted maximum salary amount. For guidance on this change, you can seek advice from us.

If you are a highly skilled employee and you started your employment in or before December 2023, you can make use of the ‘old’ 30% ruling. Therefore you are still entitled to a tax-free allowance of 30% of your gross salary for 5 years.

Garden leave

Garden leave affects the entitlement to the 30% ruling. The applicability of this ruling stops one pay period after the last pay period in which work in fact has been performed. So if you are exempted from work, the tax benefit ceases to apply. A transfer of the ruling to a new employer could be at risk as well. Therefore, signing a settlement agreement that includes a period of exemption from work can be detrimental. We can provide guidance on this matter.

Visa

If employees with a visa for highly skilled migrants become unemployed, they have up to 3 months to find a new job that meets the criteria. This period is intended for securing a new position with another recognized sponsor and cannot exceed the duration of your highly skilled migrant permit. If your residence permit expires sooner, you have less than the 3 months’ time. The period for finding a job starts on the day on which your contract was terminated.

If you can’t find new employment that meets the visa requirements before that date, the IND may revoke your residence permit. In this regard, the termination date of the employment contract arising from a settlement agreement is crucial. GMW lawyers in The Hague can provide guidance on this issue.

Any questions?

The 30% tax-free benefit will be reduced in 2024, but the eligibility for reimbursement of extra-territorial costs continues to be important for employees relocating to the Netherlands. For further advice and information on how this adjustment will affect you, please contact us.

The redeployment condition: what can be expected from your employer?

An employment agreement can, in principle, only be terminated if the following conditions have been met:

  1. There is one of the reasonable grounds for dismissal provided for by law;
  2. Redeployment of the employee to another suitable position within the company is not possible.

If the employer has not met both of these conditions, the employment contract can cannot be terminated without the employee’s consent.

In this article, I will focus on the second condition: the redeployment condition. The redeployment obligation means that the employer must make an effort to place the employee in another position within the company. Because it is not clear from the law what an employer must do in the context of the redeployment obligation, I clarify this in this article.

An active approach

An employer is expected to take an active attitude. The employer must really make an effort to try to redeploy the employee. Pointing out open vacancies within the company to the employee is insufficient to meet the redeployment obligation.

If there is a vacancy open for a suitable position, the employer must act proactively. This means that the employer must invite the employee for a job interview or offer the position straight away. An employer must be able to provide justification if it rejects the employee for a position suitable for the employee.

Personal approach

An employer is also expected to adapt its approach to the employee. This may mean, that the employer has personal discussions with the employee and removes possible barriers.

In certain cases, the employer may also be expected to offer training to make a position suitable. Again, the employer is expected to take an active and leading role. The employer must enrol the employee in courses or training. Merely offering training opportunities is insufficient to meet the redeployment obligation.

Companywide redeployment

If the employer is part of an international group, the employer must look into the possibility of redeploying the employee to another entity of the company. The employer will need to engage in conversation to discuss the possibility of redeployment to another global location.

Suitable position

The employer must try to place the employee in a suitable position. Case law shows us that a position is considered suitable if it matches knowledge, experience and education.

Please note that if an employer has made sufficient efforts to redeploy the employee, it has fulfilled its obligation in this regard. If there is reasonable ground for dismissal, the employee’s refusal of a suitable position may therefore result in the employer being able to successfully terminate the employment contract.

Conclusion

As the above shows, much is expected of an employer under the redeployment requirement. What specifically can be expected from an employer in fulfilling the redeployment obligation will have to be assessed on a case-by-case basis.

Please contact us if you have any questions about the redeployment condition. We would be happy to advise you about what can be expected from your employer and whether you can reject a suitable role.

Important for tenants in the Netherlands: new protection rules!

Do you rent your house in the Netherlands? If so, as a tenant you are protected against the landlord if, for example, he charges too high a rent, does not repair defects or does not want to repay the deposit at the end of the tenancy. The tenant can go to the Rent Commission or the subdistrict court, which will then give a ruling and, if necessary, order the landlord to repair or pay.

Good Landlord Act

From 1 July 2023, the Good Landlord Act applies. This contains additional obligations for the landlord. If the landlord does not comply with these obligations, the municipality has the option of imposing an administrative fine on the landlord. That fine can amount to €25,750 in extreme cases, and up to €103,000 in repeat offences. In certain cases, the municipality also has the option of temporarily taking over the management of the leased property. These are far-reaching measures.

New obligations for landlords and their enforcement

The Good Landlord Act changed/clarified the following:

  1. a) The landlord does not dircriminate. He uses a clear and transparent selection procedure and motivates his choices. He shall put his working method in writing
  2. b) The landlord shall refrain from intimidation
  3. c) The deposit may not exceed two months
  4. d) The tenancy agreement shall always be in writing
  5. e) The tenant is informed in writing of his rights and obligations, insofar as these are not included in the tenancy agreement
  6. f) The municipality opens a municipal hotline, where tenants can address complaints
  7. g) The municipality is authorised in certain cases to introduce a permit requirement by ordinance. In that ordinance, the municipality can attach conditions to the licence that relate to good landlordship, rent and maintenance. When renting to labour migrants, rules regarding the accommodation and facilities can also be set.
  8. h) The rental agreement must state: the term of repayment of the deposit (14 days without settlement, 30 days with settlement of costs), the details of a caretaker the tenant can contact, the contact details of the municipal hotline, which service costs are due, that an annual overview of the service costs breakdown must be provided.
  9. i) No more service charges may be levied than permitted by law
  10. j) No mediation fees may be charged to the tenant if the mediator also acts for the landlord
  11. k) When renting to migrant workers, the rental agreement must be recorded separately from the employment contract
  12. l) Information on further rights and obligations must be recorded in a language the migrant worker understands

If a landlord fails to comply, the municipality may impose a fine. In case of multiple fines, or if a landlord does not comply with the applicable licence conditions, the municipality may take over the management of the rented property. It can then set the rent at the legal maximum, collect the rent and install necessary facilities. At the landlord’s expense, of course.

More information

Fortunately, most landlords are good ones. Should you still face a problem with the landlord, then please contact us. We will be happy to act for you.

Changes to Dutch employment law: some things to watch out for

Dutch employment law is constantly changing. 2024 is no different with several interesting pieces of legislation are in the pipeline. Seliz Demirci from GMW Lawyers has the lowdown on the changes to Dutch employment law.

Given the caretaker status of the government it is unclear if this draft legislation will become law. And if so, when it will come into effect. Nevertheless, these are the changes to employment legislation you may be faced with in 2024 and 2025.

1 Changing rules to prevent sham self-employment.

In March 2023, the Supreme Court ruled that delivery drivers working for Deliveroo should not be regarded as self-employed workers, but as employees. This means they are entitled to the protection and benefits enjoyed by employees. Such as minimum wage, holiday pay, sick pay and protection against dismissal.

This piece of legislation aims to combat this type of sham self-employment by, among other things, bringing in a presumption that there is an employment contract, with employees earning below € 32.24 an hour.

The legislation is due to come into effect on the first of July 2025, but may be amended before then. The potential practical implications are significant for both employers and freelancers, from employment law and tax point of view.

2 Changes to the sick leave system in the second year of illness

This proposal is aimed at small and medium-sized businesses. Under the current rules, when an employee becomes ill, the employer is required to continue paying at least 70% of the salary for 104 weeks.

During this period, the employer is expected to do what is possible to reintegrate the employee into suitable work. The focus here is on having the employee return to his own job with the same employer. This is called the first track.

In addition, the employer (usually from the second year of illness) can also explore  reintegration with another employer. This is called the second track. Both tracks should run in parallel.

The proposed new law gives small and medium-sized businesses the right to focus exclusively on the second track. I.e. external instead of internal reintegration from the start of the second year of illness. The employee must agree to this.

If this law is passed, employers will no longer have to keep the employee’s position open from the second year of illness. And their position may be filled by someone else. That being said, the employer must continue to pay wages until the 104th week of illness. They also have to continue to make efforts to reintegrate the employee with another employer.

3 Better job security for flexible workers

The current law allows employers to offer workers call-out or zero hours contracts. The employee only works the hours they are called in to cover and does not get paid if they are not called to work. The government aims to strengthen the position of on-call and temporary agency workers by abolishing zero hours contracts.

Rules covering multiple short term contracts are also being amended. At the moment, the employee should be given a permanent contract after three years or after three consecutive temporary contracts with the same employer. If this does not happen, the employer can wait six months and then hire the same person again on a temporary contract.

If the legislation is passed, the six-month interval will be increased to five years, making it more difficult for employers to repeatedly hire an employee on a temporary basis.

4 Mandating a confidential advisor for staff

In 2023, parliament passed a bill requiring employers to appoint a confidential counsellor as part of efforts to reduce bullying and other undesirable behaviour in the workplace. This shouls help create a safe working environment for all employees. This legislation regulates the basic tasks involved and strengthens the legal status of the confidential counsellor in the private sector and other organisations.

Small companies with fewer than 10 employees are exempt from the requirement for the time being.

5 Amending the non-competition clause

Under current law, employers are legally allowed to impose a non-compete clause with a broad scope. The government wants to tighten and reform the legislation relating to non-competition clauses to make it easier for employees to move on in the labour market.

Among other things, the non-competition clause will be legally limited in duration and geographical scope. Employers must also justify the compelling business interest underlying a non-competition clause in permanent employment contracts, and departing employees must also be paid compensation if they comply with the non-competition clause.

These plans are currently being developed into a bill and will be submitted for consultation before being sent to the lower house of parliament. As yet it is unclear when the new law will come into effect.

More information

Should you encounter any problems with your employment contract, redundancy and a competition clause, feel free to contact us. We will be happy to assist you.

Bring your pensions abroad! New EU Court cases!

Many employees who want to move to another EU member State want to bring their pensions with them. Even a lump sum should be possible. However, the Dutch State made this practically impossible.

This week the EU Court found that this is a violation of the EU Treaty, the free movement of workers. This will have serious implications for those who want to move their pensions abroad.

The case

It should be recalled that the social protection of workers is one of the imperative requirements in the general interest which may justify a restriction on the exercise of the fundamental freedoms recognised by the EU Treaty.

The need to guarantee lifelong pension benefits as required by the Netherlands –  can therefore be invoked to justify a restriction on the free movement of workers.

However, in order to satisfy the requirements of EU law, the national legislation must be suitable for achieving the objective pursued and must not go beyond what is necessary for that purpose.

By imposing certain obligations on the pension institution established in a Member State other than the Netherlands to which a worker who takes up employment in that other Member State wishes to transfer the value of his pension rights, the national legislation at issue cannot, of itself, prevent the risk that the worker will opt to receive his pension in a lump sum and cannot guarantee that the worker will receive his supplementary pension regularly during his retirement.

Beyond what is necessary

Moreover, the legislation in question goes beyond what is necessary to achieve that objective. As soon as workers leave the Netherlands to take up employment in another Member State and transfer the value of their pension rights to that State, it is for that other State to decide whether or not to allow all or part of the pension to be paid to those workers in the form of a lump sum.

If that amount is lost or spent in full, it is for that State to bear the financial burden of that loss, if any. In this case, the value of the pension rights after the transfer would no longer be income from Dutch sources, but income from the new country of residence.

Consequently, the restriction on freedom of movement for workers in question is not justified.

Comments

The Dutch Pension legislation is in many respects not EU proof. There are several cases and complaints pending. The above judgements of the EU court strengthen these complaints.

More information

For questions please contact our lawyer and professor EU Pension Law Hans van Meerten.

Claiming extra termination compensation as a highly skilled migrant

As a highly skilled migrant (in Dutch: “kennismigrant”) your position as an employee is less strong than the position of a regular employee. First of all, your right to stay in the Netherlands depends on your temporary residence permit to live and work here as a highly skilled migrant. That type of permit is linked to having paid work. If you lose your job as a highly skilled migrant, there is a great chance that you will also have to leave the Netherlands. As a highly skilled migrant, you can use this threat to your advantage in case of an impending dismissal. We will explain this further in this article based on a recent decision of the Arnhem-Leeuwarden Court of Appeal.

Vulnerable position upon termination of employment contract

If you are a highly skilled migrant and are no longer employed, you will be given a three-month search period to find another place of employment with a so-called sponsor employer (in Dutch: “erkend referent”). If you do not succeed in finding a new job as a highly skilled migrant during this search period – with the conditions that go with the residence permit to work as a highly skilled migrant – you will have to leave the Netherlands. This also applies to your family members, because their right to stay in the Netherlands depends on the highly skilled migrant’s right of residence.

Additional termination compensation of € 60,000 for a highly skilled migrant

An employer must take such a vulnerable position into account when considering possible dismissal. This is what the Arnhem-Leeuwarden Court of Appeal ruled on September 4, 2023. The employer in that case had failed to do so. A few months after the start of the employment contract, that employer (a so-called sponsor employer, of course) had announced its wish to terminate the employment contract of the highly skilled migrant. To enforce that wish, the employer filed a request for dissolution of the employment contract with the court. The employment contract was dissolved by the judge, also because – due to the employer’s behavior – the highly skilled migrant no longer had confidence in continuing the employment contract.

However, the judge did find that there was so-called “serious culpability” on the part of the employer. A factor in that conclusion was that the employer had not taken into account the employee’s vulnerable position as a highly skilled migrant worker when he wanted to terminate the employment contract quickly. In the event of seriously culpable conduct, an employee is entitled to fair compensation. In this case, the court of appeal awarded fair compensation of €60,000 gross, after a short employment period of less than a year.

The negotiation position of a highly skilled migrant

A court therefore expects the employer of a highly skilled migrant to take into account the possible very drastic consequences that come with the residence status of a highly skilled migrant. As a highly skilled migrant, you can benefit from this in the event of impending dismissal. By negotiating a possible amicable termination of the employment contract through a settlement agreement, you can ask for a higher compensation because of this risk of losing your right of residence. Compared to a regular employee you, as a highly skilled migrant, therefore have an additional interest in a higher compensation or in keeping your job: namely, the interest of you and your family to be allowed to stay in the Netherlands.

More information

Do you have any questions? Or would you like more advice about your rights as a highly skilled migrant in the event of a dismissal? Then please do not hesitate to contact us.

Dutch international succession law: be wise and be informed

It is wise during life to think about what you want to happen to your assets after death. This is perhaps even more true for expats. In the case of international influences it is not always possible to predict in advance how your estate will be settled. However, you can get informed about this and – in most cases – take control.

After a decease, it must be determined which law applies to the settlement of the estate. After all, each state has its own rules of law. Within the European Union this question is answered on the basis of the EU Regulation on succession law. As will be explained below, it is nevertheless not always easy to determine the applicable law.

Choice of law

According to the aforementioned EU Regulation a choice of law can be made during life (by will). You can choose the law of the state of your nationality at the time of the choice of law or the time of death. Your estate will then be settled according to the law of this nationality.

If no choice of law is made, the general rule applies. In that case, the law of the state of the last habitual residence is applied. The last habitual residence is not the same as domicile: it is the social residence. Meaning, the country with which the person’s social and civic life is most closely connected. To determine this, important factors include the length of residence in the state as well as the circumstances and reasons for residence. This can already generate quite a bit of discussion.

Once the applicable law has been determined, we are not there yet. This is because the EU Regulation uses a system whereby not only the succession law of the designated state is applied, but also the international law of this state. This means that the law of the designated state can refer to the law of another state. Are you still following?

What does the Court say?

The problem is best explained by a recent decision of the District Court of The Hague dated January 25, 2023 (ECLI:NL:RBDHA:2023:882). In that case, testator had the Dutch nationality, but lived in Sri Lanka at the time of death. Testator had assets in both countries, including real estate and bank accounts. The Dutch court in the end declared the law of Sri Lanka applicable. But this did not end the matter. Indeed, according to the EU Regulation, Sri Lanka’s international law had to be applied. Sri Lanka’s international law referred to the law of the Netherlands for certain parts of the estate.

The conclusion in this case was that the real estate located in Sri Lanka should be settled under the law of Sri Lanka and the remaining property (real estate and all property rights in any state) under Dutch law. It is difficult to imagine that testator foresaw this during his lifetime.

The applicable law can have far-reaching consequences for how your estate is settled. There are different views in states on important issues such as the legitimate portion (a minimum child share for disinherited children) and the rights of a surviving spouse. As follows from the above, without a will with a choice of law, it is not always possible to predict how your estate will be settled. If you want to avoid surprises, get informed about the different law systems and, if desired, record your choice of law.

More information about  the Dutch international succession law?

Should you encounter any problems during the settlement of an estate, feel free to contact GMW lawyers. We will be happy to assist you.

Working from home: right or privilege?

Before the Pandemic, working from home was not facilitated by all employers. During the Pandemic, we proved altogether that (long-term) working from home and/or working at a different location than the office can work very well. It also had many positive consequences. For example, people could live further away from work if they did not have to come to the office every day and not having to commute every day reduces the pressure on the environment. Therefore, some companies kept (one or more) standard ‘working from home’ days and other employers even offered as an employment benefit the opportunity to work from a different – sometimes foreign – location. But what are your rights if your employer does obligate you to come to the office (again)? Working from home: right or privilege?

Employment condition and working from home request

In your employment contract or the collective labour agreement (CLA or in Dutch ‘CAO’) a right to working from home can be included. In that case, your employer cannot change this right unilaterally without cause. Only if your employer has an overriding interest in revocation of your right to work from home, he might be allowed to do so. Always consult a lawyer if your employer wants to change your employment conditions unilaterally.

If your employment contract or CLA lacks a right to working from home, you can file a request for working from home. You have to meet the following conditions:

  • On the desired starting date of working from home you are working for your employer for at least six months;
  • The company you work for consists of at least ten employees;
  • Your request is in written form;
  • Your request is done at least two months before the desired starting date.

In exceptional cases, such as a child or partner that suddenly gets long-term ill, the condition of doing the request at least two months before the desired starting date and having been employed for at least six months is not applicable.

Your employer can only deny your request if he has a good reason for this. For example, when serious problems occur in the working schedule due to you working from home. The denial must be made known to you in writing within one month of your request. Without a written refusal within one month of your request, your request is deemed to be accepted and you are allowed to work from home.

Working from home safely and allowance

As in the office, it is the employer’s obligation to ensure a safe workplace. One of the ways to ensure this, is to offer you ergonomically sound work equipment, such as a desk and office chair, (ergonomic) mouse and keyboard etc. Your employer can also give instructions on how to work safely. Of course, it is also your responsibility to ensure a safe working environment, taking enough breaks and adopting the proper working posture.

To help reimbursing the costs that would not occur when working in the office, such as extra costs for water and electricity at home, the government allowed the employer to provide a working from home allowance of up to €2,15 per day.

More information

Do you have any questions? Or would you advice about dismissal in the event of reorganisation? Then please do not hesitate to contact us.

The employer’s duty of care

An employer has a duty of care. For instance, the employer has an obligation to protect the safety and health of his employees. In order to prevent employees from suffering damage during the performance of their duties, the employer must take measures. These measures include implementing a policy and giving safety instructions to employees.

With the advent of the #MeToo movement and anti-discrimination measures, the home-working policy during the Covid-19 pandemic and the growth of long COVID patients infected in the workplace, attention to the employer’s duty of care has increased. Employers are even more expected to ensure a safe working environment and atmosphere to prevent employees from suffering damages during work.

Seliz Demirci, employment lawyer at GMW lawyers discusses the content and scope of the employer’s duty of care in light of current topics.

Legal basis

Employers must prevent employees from suffering damage in the performance of their duties. Therefore, Dutch law stipulates that an employer must take the necessary measures. The concept of damage includes both physical and psychological damage. Psychological damage is particularly relevant in the context of sexual harassment. Does an employer breaches his duty of care? Then it is up to the employee to prove the existence of damage. He also has to prove that this damage arose in the performance of their duties. Did proven damage occur? Then the employer needs to prove their liability. The employer’s liability lapses if they demonstrate that they have fulfilled their duty of care. Is the employer not able to prove that they have taken the required measures for a safe working environment? Then they are liable. The bar for liability is therefore low.

(Sexual) harassment and discrimination

The law does not set specific conditions for fulfilling the duty of care. Whether the employer has fulfilled their duty of care will be judged on a case-by-case basis. The prevention of (sexual) harassment and discrimination in the workplace is important. Therefore, an employer may in any case be expected to appoint an (external) confidential advisor. He might also need to provide a complaints procedure. Not only does this enable the employer to demonstrate that they have fulfilled their duty of care, but the parties involved also know how to deal with a complaint. In addition, taking these measures can have both a repressive and a preventive effect.

The employer has not automatically fulfilled their duty of care merely by drawing up a complaints procedure and appointing a confidential adviser; more is expected of them. For instance, an employer has the obligation to respond adequately and in a timely manner to a complaint regarding sexual harassment or discrimination. He must take a complaint seriously and investigate it properly.

Working from home

The duty of care also extends to the home workplace, although the employer’s obligations are then more limited than those that apply within an office or factory. The employer must ensure that the employee has an ergonomically equipped workplace. This means providing a good and large enough desk, an adjustable desk chair, a properly adjusted monitor and associated aids. ‘Taking care of’ does not mean that the employer must purchase everything (new) for the employee, if the employee already has an ergonomically well-equipped workplace. The point is that the employer must establish whether and to what extent the employee has a good workplace at home.

Preventing burn-out

The employer also has the obligation to implement a policy that prevents the pressure of work from becoming too high and the employee from suffering burnout. Limiting the workload is part of this. This obligation also applies – and perhaps even more so – when working from home. Therefore, as an employer, ensure regular (team) consultation about work pressure and provide information about monitoring the balance between work and private life. It is also important for employees to raise the alarm in good time with their employer when the work pressure becomes too high.

Liability

When an employer has not fulfilled their duty of care towards their employees, they can be held liable. If that liability is established, the employee may claim compensation for material and immaterial damage suffered. An employment lawyer can explain your rights, risks and obligations, allowing you to make the best possible decisions.

More information on the employer’s duty of care

If you need to take legal action, our team of employment law experts can help you to work it out. Call us on 070 361 5048 or contact us via our easy online form.

Performance problems and PIPs

All companies aim to optimise performance, including the effectiveness of their employees. Godelijn Boonman of GMW lawyers explains more about performance problems and PIPs. What happens when employee performance becomes a problem and what does a PIP mean in practice?

When is performance a “problem”?

Simply put, a performance problem can occur whenever an employee repeatedly under-performs in their role. As soon as an employer informs an employee that there is a performance problem, such as poor performance, the problem exists.

While performance problems often negatively affect an employment relationship, a performance problem on its own does not automatically lead to dismissal. What happens thereafter is key.

In the Netherlands, both employer and employee are expected to try to solve issues such as performance problems together before the situation reaches the point where termination of employment becomes justified.

What is a PIP?

A Performance Improvement Plan (PIP) is often but not necessarily a formal document that defines recurring performance problems, specific improvement goals that an employee needs to achieve, a time scale for doing so and the consequences when not achieved. An employer can choose to implement a PIP on any employee who has a performance problem, except for an employee who has already been declared sick.  An employer will need to wait for the employee to get better first.

What does a PIP mean in practice?

We can view the implementation of a PIP in two ways:

1 – As an opportunity for the employee to improve, and/or

2 – As a signal that the employment is at risk.

By going through a PIP, an employer can give a poorly functioning employee the chance to succeed and perform well.

However, you can use a PIP to build a case for demotion or dismissal. As such, it should be a red flag signal to the employee; there is a significant problem.

PIP process

Once you implement a PIP, both employer and employee have obligations they must fulfill.

The employer has an obligation to help the employee turn their performance around by providing additional assistance, supervision or training. They must also document the PIP process.

The employee has an obligation to cooperate and actively participate in the PIP process. If the employee adopts a passive attitude, refuses to cooperate, or obstructs the PIP, then the employer can hold this against them.

Don’t get PIPped to the post

In practice, performance issues can quickly derail an employment relationship. If the implementation of the PIP does not lead to satisfactory performance, then it may be time to end the employment.

If you have an under-performing employee, or if your employer presents you with a PIP, it would be wise to seek legal advice. An employment lawyer can explain your rights, risks and obligations, allowing you to make the best possible decisions. Contact us now for all your questions related to performance problems and PIPs.

Tenancy agreements for residential accommodation

When you are planning to rent out your house, there is a lot to arrange and even more to consider. The most important of all is to draw up a good tenancy agreement. It would be wise to check the tenancy agreement before signing so you know your legal rights and obligations. There are three main categories of residential tenancy agreements, each with their own set of legal provisions. I this article I will shortly discuss the categories of tenancy agreements for residential accommodation and their legal aspects.

1. Tenancy agreement for an indefinite period of time

Generally speaking, one enters into a tenancy agreement for an indefinite period of time.

The tenant may terminate the agreement at any time. He does not need to explain the reason why he wants to terminate the agreement. He does however need to comply with a notice period, which is equal to period between two payment days (usually one month, maximum three months). And he has to give notice of the termination by registered letter or bailiffs writ (article 7:271 paragraph 3 DCC).

If you want to terminate the agreement as a landlord, you are limited by the statutory grounds for termination as listed in article 7:274 DCC, such as bad tenancy and urgent personal use. You are only allowed to terminate the tenancy agreement on the basis of one of these grounds of termination. For a landlord there’s a notice period of three to six months. This depends on how long the tenancy agreement has lasted. And just like the tenant, you have to give notice of the termination by registered letter or by bailiff’s writ. If the tenant agrees with the termination, the agreement is terminated. If the tenant does not agree, then you must  ask the court to terminate the agreement. In that case, the agreement is not terminated until the court decides and the decision is irrevocable (article 7:272 DCC).

Besides termination by notice, you can end a tenancy agreement by mutual agreement (article 7:271 paragraph 8 DCC). And by termination for breach of contract (article 6:265 and 7:231 DCC). This applies to all tenancy agreements, regardless of their duration.

2. Tenancy Agreements for an indefinite term with a minimum lease period of one or two years

This type of agreement ends after termination by the lessee or lessor after that specific period. Premature termination is not allowed. Following on from the above, the lessor has the obligation to refer to his specific (statutory) ground for the termination. This last type of tenancy agreement is under pressure, some people feel that this type of agreement cannot exist since the Property Rental Market (Measures to Facilitate Movement) Act 2015 came into effect. Others emphasize that the minister has indicated that this was however not the intent of the legislature. The Supreme Court has not decided on this subject yet

3. Tenancy agreement for a definite period of time of two years or less

You can also decide to use the agreement for a definite period of no longer than two years. (See article 7:271 paragraph 1 DCC). The tenancy agreement must then contain explicit provisions. Such as that the agreement is entered into for a definite period of time. In this case of two years or less in the sense of article 7:271 paragraph 1 DCC.

Article 7:271 paragraph 1 DCC allows you to rent out your house, without the tenant enjoying full rental protection. This means you are not bound by the termination grounds of article 7:274 DCC. Therefore, you can end the agreement by simple notification one to three months before the end of the tenancy agreement. The notification that the agreement will end on the agreed upon end date will then suffice.

It is not possible for you to terminate the agreement prematurely. If you notify your tenant in time, the agreement will end automatically. If you do not notify your tenant (on time), or if you extend or sign a new  tenancy agreement with the same tenants, the agreement will automatically convert into an agreement for an indefinite period of time. In that event, the tenants will enjoy full security of tenure.

A tenant may terminate the agreement at any time and he can do so by simple letter notifying his landlord that he wants to terminate the agreement. Also, he has to comply with the notice period. This period is equal to the rent payment term (usually one month, maximum three months).

4. Tenancy agreement for a definite period of time of more than two years

Finally, you can choose to rent out your house for a definite period of time of more than two years. This agreement is much alike the agreement for an indefinite period of time. As a landlord you may only terminate the agreement on the basis of one of the termination grounds of article 7:274 DCC. If your tenant does not agree with the termination, the agreement does not end until the decision of the court to terminate the agreement is irrevocable. Also, both you and the tenant have to terminate the agreement by registered letter of bailiff’s writ and you both have to comply with the aforementioned notice period of (usually) one month, respectively three to six months. Then, the agreement will end automatically on the end date.

This tenancy agreement differs from a tenancy agreement for an indefinite period of time in the sense that neither the tenant nor you may terminate the agreement prematurely. Both parties have to wait until the agreed upon end date. If you and your tenant wish to extend the tenancy agreement, this extension will convert the agreement into an agreement for an indefinite period of time.

Get help with your tenancy agreement for a fixed fee

Summarizing, the type of tenancy agreement is guiding for the security of tenure. In addition, one can include specific clauses with regard to nuisance, commercial hemp cultivation or illegal subletting, especially seeing on termination because of breach of contract or penalty stipulation.

Finally, over the last years a lot of municipalities have drafted housing bylaw (in Dutch: ‘huisvestingsverordening’), seeing on housing permits, housing evaluation points (number of points scored in a housing evaluation system to determine the rent), or putting a maximum to the amounts of tenants per house in certain areas. It is important to draft or check clauses regarding these subjects as well, since revoking a housing permit will cause major consequences for both owner and tenant

 

Need advice?

GMW lawyers can review your tenancy agreement or specific clauses. They can also provide you with a general legal advice for a fixed fee of EUR 750 including office costs and VAT or draft a tenancy agreement for a fixed fee of EUR 1250 including office costs and VAT.

This written advice contains an overview of your legal rights and obligations regarding the tenancy agreement. In addition, we point out any risks (or red flags) and offer suggestions to alter clauses if necessary. Based on this advice, you can then decide whether you want to use the tenancy agreement you’ve drawn up. Or if you would like to add, alter of remove any clauses.

Our fixed fee package covers only the review and initial advice – but our support does not stop there.

If you need further legal advice about renting out your house, assistance with understanding your rights and obligations, if you have a dispute, or if you need additional help with a specific situation, our lawyers can continue to help you according to our hourly rates.

Please feel free to contact one of our specialists for more information or to request our fixed fee service.

Top tips: Dutch employment contract 2022

So you’ve been offered a new job in the Netherlands in 2022. The position sounds good, the terms sound reasonable, and you’re excited to accept. Now you need to check the contract before you sign it. The only challenge is that you may not know much about Dutch employment law – making it tough to understand what each clause means for your rights.

Expat employment law expert Godelijn Boonman of GMW lawyers shares her tips for assessing and understanding a new employment agreement.

 

Know your contract type, know your rights

The first thing you need to ascertain is whether you are entering a contract for a fixed period (temporary) or for an indefinite term (permanent). This determines which rules will apply to your employment – and therefore determines your rights.

If your contract has an end date, it is a temporary contract. The maximum length of a temporary contract is generally 3 years.

 

Start well: probation period

If your contract includes a probation period (trial period), then you or your new employer can terminate the employment during the trial period without giving any reason. A probation period must be agreed in writing.

Temporary contracts of less than 6 months may not include a probation period. Temporary contracts for longer than 6 months may include a probation period of maximum 1 month. Indefinite contracts may include a probation period of maximum 2 months.

 

In between: conditions and changes

Your contract, together with any applicable general terms and conditions or Collective Labour Agreement, stipulates the conditions under which you agree to work. This includes key information such as the location of your workplace, your salary, hours, job title and the payment schedule.

In the Netherlands, you also want to check for:

Annual leave – full-time employees must receive a minimum of 20 vacation days per year, excluding national holidays.

Vakantiegeld – 8% of your annual salary is reserved as “holiday money”. This amount may be paid annually or otherwise – but it should always be mentioned.

Unilateral changes clause – if your employment terms contain a unilateral changes clause, then your employer can change the conditions of your employment without your prior consent. As this may include topics such as changing the location of your workplace, or a company requirement for corona vaccination, it is very relevant. Do note that an employer can not easily do this. Even though the contract has this clause, the employer needs to meet strict conditions before it can unilaterally change your contract.

 

End well: notice, termination and transition

Notice periods – unless otherwise agreed, an employee’s notice period is 1 calendar month. If you have been an employee for less than 5 years, then your employer’s standard notice period will also be 1 month. Note that you can agree upon different notice periods, but the employer’s notice period must be double that of the employee’s and a maximum of 6 months.

Termination – Temporary employment contracts terminate on the date they end. In the case of an indefinite contract, you can only terminate it: by the employee resigning, through a mutual termination agreement, via a UWV/court dismissal, or by summary dismissal (fired on the spot).

Restraint of trade – If your employment agreement includes non-competition, business relation or partner relation clauses, try to negotiate these upfront; they could limit your future options.

Transition – if your employer wants to terminate the employment, then they will need to pay you a transitional allowance. This comprises 1/3 of your monthly salary per year of employment.

 

GMW lawyers – experts in expat employment law

If you need help assessing your new employment agreement, contact our team of English-speaking employment lawyers for assistance. Call us 070 361 5048 or submit your question online.

 

 

Performance plans, illness and employment disputes

When an employee has performance issues or long-term illness, this can lead to disputes in the workplace. It could even lead to termination of employment. Both employee and employer have certain rights and obligations. What each party can do depends on the exact details of the situation. Expat employment law expert Godelijn Boonman shares key considerations.

Poor performance

When an employee is not performing well in their role, then an employer can take certain steps to address this. The employer may begin with an intervention such as a conversation about performance levels and what they need for the employee to improve. However, the employer may choose instead to create a Performance Improvement Plan (PIP) for the employee. A PIP is a formal document and is far more serious than a discussion.

Once an employer implements a PIP on their employee, both employer and employee must fulfil their obligations in the process. Both parties should try to remedy the situation before it reaches the point where termination of employment becomes justified.

The employer is obliged to try and help the employee improve their performance, for instance by providing the necessary assistance, supervision or training. The employer must document the entire PIP process.

The employee has the obligation to actively participate in their performance improvement process. The obligation is also on the employee to ensure that the employer is fulfilling their obligations in the process. If the employee adopts a passive attitude towards the planned performance improvement, refuses to cooperate in the process, or otherwise obstructs the implementation of their PIP, then the employer can hold this against them.

While a PIP can be used to help an employee succeed, it can also be used to build a case for demotion or dismissal. As such, it is a signal that your employment may be at risk.

But what happens if the poor performance of the employee occurs during long-term illness?

When the employee is declared sick

The moment that an employee is declared unable to work due to illness, whether physical or mental, their status becomes that of a “sick employee” – and both parties’ rights change. A company doctor (bedrijfarts) is the only person who can make this determination.

The employer has the obligation to pay the sick employee’s salary during the first two years of illness, regardless of how much work the employee can perform (in other words: regardless of their performance).

The employer cannot implement a PIP on an employee who was already sick.

Employers cannot dismiss a sick employee during the first two years of their illness on commercial grounds such as reorganisation. (Note that an employee – even a sick one – can always be fired on the spot if the strict criteria for summary dismissal are met.)

Under guidance from the company doctor, both the employer and the employee must work together to create a plan for reintegrating the employee into the organisation as they recover from their illness. This may entail the employee resuming their original duties, but if this is not possible, the employer may provide other “suitable work” for the employee to do instead.

If either party refuses to engage in discussions or to fulfill their obligations then this can lead to a dispute. It can sometimes even become grounds for terminating the employment relationship.

A dispute arises

Sick or under-performing? Truly sick, or just sick of the dispute? Questions like these can lead to an employment dispute.

Illness, performance issues and disputes are separate topics, but they often go hand in hand, and for good reason.

Is an employee’s performance questioned while they are already declared sick? Then the employee may feel that the employer is working against their recovery. When an employer informs an employee that they need to improve their performance, the employee could respond by reporting sick. The employer may then feel that the employee is working against their performance improvement.

In practice, performance issues, illness and especially disputes will often negatively affect the employment relationship.

If an employee calls in sick after a dispute has occurred, this is often qualified as inability to work due to situational inability. A company doctor can then assess if the employee’s inability to work is also due to sickness.

There are only 2 options

By the time a situation escalates to a dispute, it leaves you with only two options: you can either solve it together or solve it apart.

Option 1 – Solve it together

The employer and the employee can come to an agreement together. For instance through mediation, on how to resolve the dispute and thereby improve the employment relationship to the point where it can continue. If this happens, then the employee can maintain the employment.

Unfortunately, once the situation has escalated past a certain point, repairing the relationship is often not a practical or mutually acceptable solution.

Option 2 – Solve it apart

Can the employer and the employee not agree on how to proceed together? Then it is necessary to terminate the employment relationship so that they can part ways.

Due to the time and costs involved in dismissal via the courts/UWV, and because sick employees have protection from dismissal, the termination of employment frequently occurs by means of a settlement agreement. A settlement agreement is a written offer by your employer to give up your job and leave the company voluntarily. This happens often in exchange for a certain set of conditions.

Learn more about settlement agreements in this feature by Legal Expat Desk: Settlement agreements – what you need to know

Don’t wait – get advice

If a problem develops at work, don’t wait to address it. Time alone rarely solves a dispute, and it can escalate fast. If you are uncertain of your rights, getting good advice at the beginning can help you to make better decisions. Situations sometimes reach a point where it would be wise to seek legal advice. For example, when they implement a PIP, an employment dispute occurs, or when you need to terminate an employment relationship.

If you need help with an employment issue, our team of English-speaking lawyers can advise you. We can help you understand your obligations and avoid pitfalls. We can also ensure that the agreements you are making cover all the essential topics.

Contact us using our easy online form or call us on 070 361 5048 to start a conversation.

The diplomatic clause

Are you a diplomat who is about to be deployed to another country? Then it is possible for you to rent out your home for the time you are away, by including a so called ‘diplomatic clause’ in the tenancy agreement. This allows you to terminate the tenancy agreement and return to your home at the end of your deployment. Article 7:274 paragraph 2 DCC allows such clause, or a similar clause for landlords who wish to temporarily stay elsewhere for a different reason, but want to return to their home eventually.

Conditions of the diplomatic clause

The diplomatic clause is one of the grounds of termination the Dutch law allows. Do you want to successfully terminate the tenancy agreement on the base of the diplomatic clause? Then it must be clear that the tenant is entering into the agreement for a definite period of time. And that the tenant must vacate the home at the end of that period. You can explicitly determine this in the agreement. When giving notice of the termination, you must also specify to the tenant that you are invoking the diplomatic clause.

In the case when they prolong your deployment it is possible to extend the tenancy agreement. This could again be for another definite period of time as long as your your tenant agrees. The Dutch law allows such extension(s) with the retention of the diplomatic clause. Whereas they don’t allow an extension of a tenancy agreement for a definite period of time without a diplomatic clause. The extension would then automatically convert the tenancy agreement to an agreement for an indefinite period of time. Herein lies the advantage of the diplomatic clause.

Please note

There are a few things you need to be aware of when terminating the tenancy agreement by invoking the diplomatic clause. First, you must comply with the notice period. This notice period is three to six months, depending on the duration of the tenancy agreement. Second, if your tenant does not agree with the termination in writing, you must ask the court to terminate the agreement. The agreement does not end until the decision of the court is irrevocable. Third, you can’t invoke the diplomatic clause if you do not intend to live in your home upon your return. For example, if you want to use it as an atelier or otherwise.

Alternatives

Do you already know that your deployment won’t last more than two years? Then you can also choose to rent out your home for a definite period of no longer than two years (article 7:271 paragraph 1 DCC). In order to terminate such an agreement, you would only have to notify your tenant one to three months before the end of the tenancy agreement. The notification need to include that the agreement will end on the agreed upon end date. The agreement will automatically convert into an agreement for an indefinite period of time if you extend the tenancy agreement. This could also happen if you do not notify your tenant (on time). Therefore, if the time of your deployment or leave isn’t sure, this might not be the best option for you.

Besides the diplomatic clause, another ground for termination of a tenancy agreement is that you have an ‘urgent personal use’ for your house (article 7:274 paragraph 1, sub c DCC). However, for a successful termination you would have to prove that there is an urgency to get your house back, that you will use the house permanently again and that there are other suitable houses available for the tenant to rent.

How to avoid obstacles

Moreover, the interests of the property owner and the tenants will have to be weighed up, with an uncertain outcome. The judge could also oblige you to compensate moving- and furnishing costs of the tenant. And if you do not inhabit your house within one year, there is a risk that you have to pay the tenants compensation for the fact that they had to move without you returning to the house. By including a diplomatic clause in your tenancy agreement, you could avoid all these obstacles.

If you think a diplomatic clause is suitable for you,please do not hesitate to contact with one of our real estate lawyers.

Reorganisation and redundancy in the Netherlands

Employees in the Netherlands enjoy strong legal rights. They can only be dismissed for a limited number of reasons (grounds). One such reason for dismissal is redundancy for business economic reasons, for example during a company reorganisation. This article explains the process employers must follow and why a settlement agreement can be easier than dismissal via UWV procedure.

Read more

New job? Do the 5 point check

Being offered a new job is exciting, especially when it provides the next step to your career. You may want to sign the new contract immediately to secure the deal – but before you do, take a moment to quickly check these 5 points. They are key to your future rights at work.

Read more

How to get divorced in the Netherlands – a guide for expats

If you want to get divorced, and you live in the Netherlands, you need to:

  1. Confirm if you can get divorced in the Netherlands
  2. Get a lawyer. You cannot represent yourself.
  3. Find out how to get the best possible divorce. This includes making specific agreements about your children and other important matters.
  4. Go through the legal process of a divorce.

Read more

Why you don’t need a reason to get divorced in the Netherlands

According to Dutch law, it doesn’t matter why you want to get divorced. This fact surprises many expats. Antoine de Werd of GMW lawyers explains why this rule in Dutch law exists, and what it means for you.

Read more

Stalker banned from social media

On 4 December 2012, a court in Amsterdam made a unique ruling in preliminary relief proceedings. The court imposed a social media ban. The man in question was ordered to delete his hyves and Facebook profiles and his blog and may not take part in social networks for a period of one year.

Read more