New Employment Laws in the Netherlands: Reforms to Reflect the Gig Economy and Parental Leave Rights

In recent months, the Dutch government has legislated a number of changes to employment law.

Platform Labor

As with other countries, Dutch employment law has been struggling to keep up with modern forms of employment, such as the “platform labor” of the gig economy. The legal definition of “employment” does not fit neatly with the models used by companies that provide workforce-as-a-service by means of simple on-demand online platforms. The lack of clarity over employment rights has, among other things, led to a loss of social security rights for low-income workers in this sector.

The Dutch legislature has proposed a revision of employment law to reflect modern working practices. The legislation has not been finalized and adopted yet, and we will report further when the final version is implemented, but it is expected to reduce the disproportionate difference in rights and benefits between employees and other “flexible” workers. Changes are expected to cover a minimum rate for self-employed workers, obligatory pension arrangements, employer’s contributions, provisions on succession of fixed-term employment contracts, and grounds for termination.

Other than the issue of platform labor, there have been other changes to Dutch employment law. Those include:

Paternity Leave Extended

Paid leave for partners of mothers who recently gave birth has been extended by two days to one week. As before, this leave must be taken within one month of the date of birth. The entitlement will be substantially extended next year from one week to five weeks – effective from July 1, 2020. The partner will then be entitled to 70 percent of his or her salary, and the time for taking the leave is extended to within six months of the birth.

Reimbursement of Severance Pay on Long-term Sickness

Employers will be reimbursed by the government after paying severance to employees who are discharged after a long-term sick leave. Under Dutch law, an employer is responsible for paying 70 percent of the income of an employee on sick leave for two years. After two years of sick leave, an employer may end the employment contract. That termination, however, triggers an obligation to pay severance pay. Many felt this was unfair to employers, which by then had already paid two years of sick pay. In response, the government has passed legislation enabling employers to be refunded by the state for severance paid to employees discharged after two years of sick leave. Refunds apply to qualifying terminations from July 1, 2015 but cannot be claimed back until April 1, 2020.

Expatriate Tax Allowance Cut

Expatriates hired outside of the Netherlands to work within the Netherlands are entitled to pay no taxes on 30 percent of their salary for eight years. In a blow to expats, that period has been cut to five years, after which they will be taxed in full on all earnings as applies to other employees.

New Entitlement to Emotional Distress Compensation

Partners and family members of employees who are seriously injured or killed during an accident at work are entitled to fixed damages for emotional distress up to a maximum of €20,000.

Written by Maartje Oliemans-Ouwehand of Wieringa Advocaten and Roger James of Ogletree Deakins

© 2019 Wieringa Advocaten and Ogletree, Deakins, Nash, Smoak and Stewart, P.C.