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Changes in Dutch employment law

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A lot changed in Dutch employment law in January 2015. There was a new law that had major implications for employment contracts. Since then, there have been a number of changes again. Since 1 January 2020, a number of new rules apply.

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.

New rules

The old regulation (which applied from January 1st 2015) stipulated that an organisation could offer employees 3 fixed term contracts  and/or for a maximum period of 2 years. For employment contracts that ended on or after 1 January 2020, a new chain rule applies. An employment agreement for an indefinite period is established when:

  • a maximum of three contracts is exceeded;
  • the maximum time frame of 3 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 summarize : the amount of temporary contracts remains the same. However, the period that those contracts comprise, cannot be more than 3 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 3 contracts ( and/or  after 3 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: You will receive 1/3 monthly salary per whole year of service from your first day of employment. The transition compensation over the remaining part of the employment contract is calculated according to the formula: (gross salary received over remaining part of employment contract / gross monthly salary) x (1/3 gross monthly salary /12 ).  In 2023, in total a maximum of € 89.000,- applies, unless the employee’s yearly salary exceeds that amount (in which case this higher amount counts as maximum).

Rules transition compensation explained

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.  Since 1 January 2020, an employee can receive a transition allowance from the first working day.

  • 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 withdrawal of the consent has to be in writing. The employer is obliged to inform the employee about that possibility. The deadline is three weeks if the employer has not explicitly referred to this option of dissolution in the settlement agreement;
  • 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.

Contact

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

Employment law: awarding a bonus

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These days, a bonus is almost a standard component of an employee’s terms of employment. Employees view a bonus in the same light as a pension and compensation for healthcare costs. However, a bonus is different from holiday pay, which is a permanent and non-negotiable salary component.

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‘It’s my way or the highway’ approach costs employer small fortune

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In the unlikely event you are faced with the dissolution of your employment contract because of (alleged) malfunctioning, it is good to know that judges might grant ample compensation when your employer lacks a complete personnel file of malfunctioning and has not given enough opportunity to improve yourself. Read further to learn why the ‘It’s my way or the highway’ approach will cost employers a small fortune.

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Preventing harmful behaviour in the workplace

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Harmful behaviour in the workplace can occur at any level and at any moment – be it by co-workers, supervisors, employers or clients. Going to court is often the last resort. However, a lot can be done to prevent this from taking place in the first place.

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Top tips: Dutch employment contract 2022

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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

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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.

How to lose your job in the Netherlands 2021

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There are not many ways to lose your job in the Netherlands – but each of them follows a different process and has different implications for your rights. Here’s what you need to know in 2021, and when to take action.

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Voluntary departures, forced redundancy & settlement agreements 2021

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The global impact of the pandemic continues as more and more companies cut their workforce. Whether you have been offered voluntary departure or a settlement agreement, or you have been forced into redundancy in 2021, here’s what you need to know.

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Settlement agreements – what you need to know

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As more and more companies move towards reorganisations and redundancies, voluntary leave programmes and settlement agreements are becoming a common topic of conversation. So what should you do if you are offered a settlement agreement? Is it worthwhile accepting, and what are the consequences? Here are some essential considerations.

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Reorganisation and redundancy in the Netherlands

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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.

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Losing your job in 2020 – key considerations

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There’s not much worse than facing dismissal, except perhaps for losing your job now in the current crisis. Companies are failing, jobs are scarcer, and just getting to an interview is more complicated. As an expat, the threat to residence makes this an even bigger issue. So, if the worst happens, here’s what you need to know about your legal rights and options.

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Dismissal law in the Netherlands 2020

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Dutch employment law has changed in 2020. With the introduction of a new act, the grounds for dismissal in the Netherlands have expanded. Here’s what you need to know.

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Say goodbye to shorter working hours – the WTV is discontinued

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On 17 March 2020, the Dutch cabinet announced that the WTV scheme for shorter working hours has been discontinued. Instead, employers affected by the coronavirus can apply for a new temporary measure designed to support employers, employees and entrepreneurs.

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New job? Do the 5 point check

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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.

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Changing employment conditions

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When an employer and employee sign an employment contract, both are bound by this contract, including the terms and conditions of employment. So what happens when an employer wants to change the employment conditions that were agreed?

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When to call a lawyer about work

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As an employee, you may be confronted with an unpleasant situation at work, such as a conflict, demotion or change in your employment conditions. In such circumstances, it can be difficult to know how to respond. Read more

The seven things you need to check in your new employment contract

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You’ve just got a new job, or perhaps you’re extending an existing position. You’ve just received a new employment contract. Before you sign your employment contract, there are some key clauses to which you should pay attention.

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Employee stock option rights and termination

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Have you been granted employee stock options, and are you now facing termination of your employment? Discover 5 key points to consider that will help you understand your rights regarding your stock options.

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9 Ways to lose your job in Holland

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As an expat, the most common reason to move to a new land is work – but which country will protect your rights in the workplace when you are there? Expat employment specialist Godelijn Boonman explains what makes the Netherlands a great choice for international workers.

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Why written notice is indispensable for employers

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In a time when we accept VOIP calls, sound bites and instant messaging as standard work tools, it can be tempting to believe that a verbal discussion is sufficient – but this is not always true. In the case of ending a fixed term employment contract, written notice remains essential.

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Things to consider when confronted with dismissal

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Even though the Dutch economy is growing again, many companies are still dismissing employees. Godelijn Boonman highlights the top 8 things to consider when confronted with dismissal.

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The non-competition or business relations clause

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Many employment agreements contain a non-competition clause or business relations clause. Employees would usually prefer to not agree to such a clause but they want the job and don’t want to annoy their new employer, so they sign.

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Can your employer enforce a salary cut?

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Can your employer enforce a salary cut? The good news is that, as a matter of fact, an employer cannot easily enforce such a measure.

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Employment contract: non-competition clause

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The non-competition, or non-compete clause is a clause that can be included in an employment contract between employer and employee. This clause states that the employee is forbidden, both during his period of employment and thereafter, to be employed by or associated with a company that performs work or provides similar services to the business of the employer, and that therefore could be in competition with the business of the employer.

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Employee rights: more clarity on fair compensation

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Since July 1 2015, under certain circumstances, employees have been entitled to fair compensation. A judgment by the Supreme Court in 2017 provided more clarity on how this compensation is calculated. This blog explains the situation in more detail.

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The Hague: international city of peace & justice

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With the 100th anniversary of the Peace Palace the international allure of The Hague is very well visible. Besides the International Court of Justice and the Permanent Court of Arbitration, The Hague has another 200 international organisations, and 111 embassies and consulates.

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Dutch labour law and your contract of employment

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Your employment contract may determine specific payment and work conditions, but Dutch law determines your rights as an employee in the Netherlands. There are a great many Dutch laws that apply, but some are especially relevant to international workers. Here are some expert tips on evaluating your employment contract under Dutch law.

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The do’s and don’ts of holidays

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Are you trying to figure out how much time you can take off for Christmas? Or how to spend those final few vacation days you have left at the end of the year? Or, maybe you’re lucky, and you’ll have more holiday days then you need this year.

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Redeployment after a termination

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In the Netherlands, employers must make an effort to reassign employees before they terminate them. But if you work for a large, multinational corporation, is your employer obligated to find a position for you anywhere in the world?

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Notice periods

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 Any employment contract in the Netherlands must stipulate a notice period for ending the contract. That is the amount of time an employee must give an employer before leaving a position. Employees can be penalised for failing to adhere to the notice period requirements, so here’s what you need to know.

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Employee or contractor? Recent changes in the Dutch business climate

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For companies who are deciding to establish an office in the Netherlands, the legal form of the business is important. Equally important are the people who are going to work for the company: does the company want to hire employees or contractors? These two are very different.

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Terminating an employee

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Do you have an employee you would like to dismiss? In the Netherlands, an employer cannot unilaterally end an employment agreement unless both parties have agreed upon a temporary contract which ends by operation of law.

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The Equal Treatment Act

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Direct discrimination? Indirect discrimination? What is the difference and who is protected in the Netherlands? Last week, a court in The Hague ruled in favour of a family who sued their school after the school scheduled the class photo on Eid al-Adha (Offerfeest). The court found that the school had indirectly discriminated against the students.

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Bonuses in severance pay

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Are you an employee whose contract is being terminated and are you offered transitional severance pay? Then you might wonder how the amount of severance pay is calculated. An issue that has recently been brought into question is whether or not bonuses are included when calculating transitional severance pay.

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The proportionality principle in Dutch employment law

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Dutch employment law strongly protects employees against dismissal. However, there are times when a termination is unavoidable. When a company reaches a point of economic deficiency where it is no longer possible to retain the same amount of employees, terminations will occur. There are a number of regulations covering the ways an employee can be terminated, one of which being the proportionality principle.

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Place of work determines applicable law

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Which national law is applicable when it comes to international employment contracts? Is this the country of the employer, employee, or the country where the organisation is located?

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Further increase of the state pension age in the Netherlands

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The state pension age, the age at which someone is entitled to the old-age pension facilitated by the state when you meet the requirements, is currently (in 2016) 65 years and 6 months. This age increases yearly, based on the increased life expectancy.

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The choice of law in the employment agreement

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When parties conclude an employment agreement, they can agree that this agreement shall be governed by a law chosen by them. Such choice of law applies when the employment agreement is international in nature. When all connecting factors point to one country, the obligatory provisions of that country are not set aside by the choice of law in the contract.

Explicit and implicit choice of law

Usually, a choice of law is explicitly taken up in a clause in the international employment agreement. Nevertheless, a tacit choice of law is also possible. This must be clearly demonstrated by the terms of the contract or the circumstances of the case. Examples of such indications are: a jurisdiction or forum clause, and references to a section of law of a country.

The impact of the choice of law

When the international employment agreement contains a valid choice of law, this does not mean this law actually governs the whole contract.

First of all, the application of overriding mandatory provisions of the law of a country cannot be restricted. Important sections of Dutch law which are considered overriding mandatory provisions are provisions regarding working conditions, working hours, and minimum wage. These provisions apply irrespective of a possible choice of law when the situation falls within the scope of Dutch law.

Second, a choice of law may not deprive the employee of the protection afforded to him by obligatory provisions under the law that would have been applicable to the contract without the choice of law. Most of Dutch labour law consists of obligatory provisions, and, most important, Dutch dismissal law is fully mandatory. This means that even when the law of another country is chosen by the parties in the employment agreement, it is possible that (parts of) Dutch law applies as well.

In conclusion

When no choice of law clause is taken up in the contract, this does not necessarily mean no choice of law has been made. Furthermore, when a choice of law is agreed upon, this does not always exclude the applicability of (parts of) the law of another country.

Not sure about which law applies to the employment agreement? Contact us for advice.

Immunity of international organisations in labour disputes

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Various international organisations are based in the Netherlands. These organisations enjoy a degree of immunity in order that they may remain independent and function without impediments.

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Start-up permit as of 01-01-2015

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As of 01-01-2015 it will be possible to apply for a residence permit to start-up a business which permit will be issued initially for one year.

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A work permit is valid in all EU member states

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Recently the European Court of Justice gave an important judgment regarding the assignment of non EU-workers within the EU.

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Stalker banned from social media

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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.

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Expat employment contract means temporary contract?

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In a 2013 case, a judge in Rotterdam decided that the expatriate employment contract under which a Cape Verdean employee performed work in the Netherlands, was a temporary employment contract. According to the judge, this expatriate employment contract was only a temporary addition to the permanent employment contract, which was concluded on Cape Verde.

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