Changes in Dutch law

Changes in Dutch employment law

Starting January 2015 a new Dutch employment law has been the source of many changes. This new law has a large effect on employment contracts.

This post was reviewed and updated on 27 September 2020

Changes in employment law

  • Obligation of notification of termination. One month before the termination of a definite contract of 6 months or longer, an employer must notify the employee whether the employment agreement will be extended. If the employer does not notify the employee, he has the right to claim salary during the period in which the employer is too late. He can claim up to a maximum of one month’s salary.
  •  Prohibition of a trial period in fixed term contracts of 6 months or less. This prohibition is applicable to contracts that commence after January 1st 2015;
  • Prohibition of a non-competition clause in fixed term contracts (unless the contract specifies the necessity of such a clause in light of severe company interests). Applicable to all contracts that are entered into after January 1st 2015;
  •  The stipulation, “no labour, no salary”: an employee is not entitled to salary when not performing activities, has changed. The new rule is “no labour, still salary, unless the non-performance is seen as at the risk of the employee”. This change  secures a deviation of the burden of proof in favour of the employee. It is still possible to exclude applicability of this clause for the first 6 months of the contract. However, the exclusion can no longer be extended indefinitely by collective labour agreement.

The old regulation stipulated that an organisation could hire an employee on the basis of fixed term contracts three times and/or for a maximum period of 3 years. Also, the chain was cancelled when there had been a minimum period of 3 months and one day between following contracts. As of July 2015 this rule changed. Now, an employment agreement for an indefinite period is established when:

  • a maximum of three contracts is exceeded;
  • the maximum time frame of 2 years is exceeded;
  • and in both of the abovementioned situations there is a period of no more than 6 months and 1 day in between two following contracts.

To sum up: the amount of temporary contracts remained the same. However, the period that those contracts comprise, cannot be more than 2 years. Furthermore, the employer needs a “time-out” of at least 6 months and 1 day to cancel the chain. For example, as of July 1st 2015 it is possible to get a fixed contract of 6 months which is then extended with another 6 months, to end with a contract of 1 year. A chain of consecutive 1-year-contracts will however result in an agreement for an indefinite period after 2 contracts (i.e. after 2 years).

 

Termination of employment agreement 

There are various routes for termination of employment agreements, depending on the cause of termination. Termination based on extensive incapability or economic reasons, must be executed through UWV. Termination based on “personal” reasons, like malfunctioning, disturbed relationship, must be addressed by the Cantonal Judge. Please note this change has left the possibility of an amicable settlement unaffected.

Also, as of 2015, the employer does not need consent of UWV or the Cantonal Judge in order to terminate the employment agreement once the employee has reached the AOW eligible age.

Irrespective of the termination-route (UWV of Cantonal Judge) the employer has to pay a “transition compensation” (transitievergoeding). This compensation replaces the severance payment (ontslagvergoeding) and is calculated differently.

The transition compensation is calculated as follows: for every year of service less than 10 years, the employee receives 1/3 of his monthly salary. For every year of service that exceeds 10 years, half of his monthly salary is granted. In 2017, in total a maximum of € 77.000,- applies, unless the employee’s yearly salary exceeds that amount (in which case this higher amount counts as maximum).

The transition compensation is not due in case of severe fault of the employee, for example in case of termination due to an urgent cause. Temporary employees are also eligible for the transition compensation, as soon as the temporary employment relation reaches a period of two years (without renewal/extension of the contract).

  • In case of severe culpability of the employer, a Judge may grant the employee an additional “reasonable” compensation;
  • Given the above, the sub-district Judge formula no longer applies in procedures that are entered into after July 1st 2015. In negotiations on amicable terminations, the transition and possible additional compensation are leading;
  •  The procedure of “manifestly unreasonable dismissal” no longer exists;
  • In case of amicable termination (mutual consent, settlement agreement), a reconsideration period of 14 days has been introduced on behalf of the employee. Within those 14 days, the employee may withdraw his consent, which leads to continuation of the employment agreement or reopens negotiations. The employer is obliged to inform the employee about that possibility;
  • Obligation to provide education. This stipulation is especially of importance in cases concerning malfunctioning.
  • All termination decisions (Cantonal Judge, as well as UWV) can be appealed in front of the Court of Appeal and the Supreme Court.
  • The Extraordinary Labour Relations Decree 1945 (BBA 1945), is extinguished.

Of course we will keep you informed of developments, such as on transitional law and the relationship between the changes and ongoing collective agreements.

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If you have any questions or would like more information, please do not hesitate to contact us.