Tag Archive for: Work

Changes in Dutch employment law

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.

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The choice of law in the employment agreement

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.

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