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Work and Security Act

6-3-2014

As per 1 July 2015, the Work and Security Act enters into force. As a result, new rules for terminating employment contracts, flexible employment and the Dutch Unemployment Insurance Act (WW) are applicable.

Below is a list of the most important changes of these new rules:

Flexible Employment

The following changes entered into force with effect from 1 January 2015:

  • A trial period may no longer be included in fixed-term employment contracts with a term of six months or shorter.
  • A non-competition clause may no longer be included in fixed-term employment contracts except in case of compelling business or service interests that have been substantiated in writing.
  • An obligation to give notice will apply in case a fixed-term employment contract of six months or longer ends. The employer has to inform the employee in writing about whether or not it will continue the employment contract no later than a month before it ends. In case the foregoing is not observed the employer has to pay the employee maximum one monthly salary.

The changes as to the trial period and the con-competition clause will apply to employment contracts that were concluded on or after 1 January 2015. The changes as to the obligation to give notice, applies to employment contracts ending after 31 January 2015.

In addition, the new rules as to successive fixed-term employment contracts enter into force with effect from 1 July 2015:

  • No more than three successive fixed-term employment contracts can be concluded and the maximum term of successive fixed-term employment contracts is two years. The period with which the chain of contracts can be broken will be six months in stead of three. The new rules apply to successive fixed-term employment contracts that are concluded after 1 July 2015. The new rules as to successive fixed-term employment contracts do not apply to employees up to 18 years who work less than 12 hours per month.

 Dismissal Law

The following rules regarding dismissal enter into force with effect from 1 July 2015:

  • The employer can only give notice of termination with the written consent of the employee. This does not apply, among other things, if the employee is still in the trial period, the employer has permission of the Dutch labour office (UWV) or in case of urgent reasons.
  • The employer can only terminate an employment contract based on a reasonable ground.
  • The ‘dual system’ (the labour office and court route) remains but the employer can no longer choose via which route it will bring about the dismissal. In case of dismissal for economic reasons and after long-term disability the employer has to follow the labour office route. In case of dismissal due to other reasons, for example a disturbed employment relationship, the court route should be followed.
  • The employer or employee who does not agree with the decision of the court or the labour office can lodge an appeal.
  • The time required for processing the application for termination of the employment contract via the labour office or the court can be deducted from the notice period as long as one month notice term remains.
  • In a collective labour agreement the reflection principle can be deviated from.
  • A general obligation for employers to offer employees training has been included. On that basis, the employer is obliged to provide employees the possibility to follow training that is necessary for the performance of their position. In addition, the employer has to allow the employee who is no longer able to carry out his position to follow training that is necessary in order to continue the employment contract. When deciding upon a dismissal request, the court and labour office can take into account the extent to which the employer has complied with this obligation.
  • The court formula and the compensation payment in case of unfair dismissal no longer apply. In principle, an employee whose employment contract is terminated, is entitled to a so called ‘transition allowance’. Also employees with a fixed-term employment contract of at least two years are entitled to the transition allowance if the contract is not extended. The employee is entitled to ⅓ monthly salary per year of service and ½ monthly salary for each year of service above ten. If the employee is under 18, months in which less than 12 hours of work were carried out, are not included. Employees, who are over 50, are entitled to one monthly salary per year of service until 2020. The maximum transition allowance is € 75,000 gross or an annual salary if this is higher. The court can grant a higher transition payment in case of serious imputable acts or omissions of the employer. In addition, an employee is not entitled to the transition allowance if he has acted imputably.
  • For small employers (fewer than 25 employees) a transitional arrangement for calculating the transition allowance applies until 1 January 2020. In case of dismissal for economic reasons, the years of service from before 1 May 2013 can be left out of consideration.
  • After termination of the employment contract through a settlement agreement or after the employee’s written consent with the employer’s notice of termination, the employee should be given a 14 day reflection period in which he can cancel his agreement without having to state his reasons. After having received the employee’s written consent with the notice of termination, the employer is obliged to inform the employee within two days on the possibility to cancel the agreement. In case of a settlement agreement, the possibility to cancel the agreement should be mentioned in the agreement itself. If the employer fails, the employee has a reflection period of 21 instead of 14 days.

Unemployment Insurance Act

  • By agreeing with the employer’s notice of notice of termination, employees will not become culpably unemployed.
  • People who are entitled to unemployment benefits for more than six months have to accept all available work, also if such work is less paid.
  • The maximum duration of unemployment benefits will be gradually reduced from 38 to 24 months. Collective labour agreements can provide that employers have to pay unemployment benefits for an additional 12 months after the maximum term has expired.

The change as to accepting suitable work enters into force with effect from 1 July 2015 and the gradual reduction of unemployment benefits term will enter into force from 1 January 2016 through 1 January 2019.

Source: Work and Security Act