Using fixed-term employment contracts has become more expensive for employers as a result of new regulations introduced in the Netherlands on January 1, 2020. The Dutch government wants to promote the use of permanent employment contracts (referred to in the Netherlands and many European countries as contracts for an indefinite period of time) and discourage use of less secure fixed-term contracts.
The key changes are the following:
- Unemployment insurance contributions are now cheaper for permanent contracts than fixed-term and other flexible contracts, with an accompanying obligation to provide greater detail in payslips.
- So-called “payroll employees” are entitled to the same benefits as regular employees who are performing the same job without a payroll company involved. Payroll employees are workers who have been recruited by the company for which they work, but “supplied by” a payroll company. The payroll company takes on the administrative obligations of the employer. By contrast, temporary agency workers may still be provided with less favourable benefits. Whether someone is a payroll employee or temporary agency worker depends on whether the employer recruited the individual itself and whether the employee is assigned exclusively to the hirer. If the employer does not recruit the worker itself and if the worker is assigned exclusively to the hirer, the work is defined as payrolling, even if of a temporary nature.
- The rules regarding zero-hour and on-call contracts have been tightened: an employee must now be notified a minimum of four days in advance of being required to work, and will be entitled to pay if the shift is subsequently cancelled within those four days. In addition, all employees working on flexible contracts have the right to choose fixed hours after they have worked on flexible hours for 12 months.
- Severance is now due for all employees whose contracts are terminated, whereas previously only employees who had been in service for more than two years qualified. Employers are reimbursed for this cost when it relates to employees terminated due to long-term sick leave.
However, there are some changes that employers will welcome:
- The period within which fixed-term contracts may succeed one another is restored to three years (previously, two), with a maximum of three contracts. The intermission period that starts a new series is six months. Once these triggers are reached the renewed contract will automatically be for an indefinite period of time.
- The grounds for termination of all employment contracts are extended in the sense that a combination of grounds will now be possible. Previously employers could not combine grounds for dismissal; each of the allowable grounds had to be met on its own. Now it is also possible to terminate employment on account of a combination of circumstances that would under the old law not separately warrant an employee’s dismissal.
Written by Maartje Oliemans of Wieringa Advocaten and Roger James of Ogletree Deakins International LLP
© 2020 Wieringa Advocaten and Ogletree, Deakins, Nash, Smoak & Stewart, P.C.