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Global Compliance Desk – Netherlands

Employment Law Changes 2020

What’s New: The Dutch Senate adopted new legislation to bring the labor market into balance effective January 1, 2020. The new legislation aims to reduce the gap in legal protection and monetary differences between fixed- and indefinite-term employed employees.
Outcome: The new legislation includes additional termination grounds, changes in statutory severance payments, and extension of the duration of fixed-term contracts to 36 months, on-call employment amongst other legal protections.

On 1 January 2020, the legislative proposal for the Labor Market in Balance Act (the Wet Arbeidsmarkt in Balans Act) will enter into force. The aim of the Act is to decrease the gap between fixed – and indefinite-term staff in legal security and financial distinctions. The Dutch government intends to encourage employers to offer longer-term or permanent employment agreements.

Duration of Successive Fixed-term Employment Contracts Extended to 36 months
Under present legislation, the highest length of successive fixed-term agreements is three consecutive fixed-term contracts of jobs within 24 months. The Act expands the time-limit to 36 months. The contract is therefore transformed into an unlimited employment contract after 36 months or the fourth fixed-term employment contract. This is a reversal of the Work and Security Law reform.

Notification for On-Call Employment Contracts

Current legislation does not control the length of time between calling the employee by an employer and reporting to work by the employee. Under the new Act, employers must provide on-call employees with notice of at least four days in advance and pay on-call employees if work is canceled within four days. A collective employment arrangement may reduce the notice to 24 hours. Furthermore, after a year, employers are obliged to offer guaranteed working hours to the on-call employee, which must be based on the average number of hours worked over the past 12 months.

Other New Regulations

  • Additional Termination Ground
  • Transition Allowance Changes
  • Adequate Pension Plan for Pay-rollers
  • Lower Unemployment Insurance Contributions

Major Take Away
The length of fresh fixed-term agreements could be considered by companies to maximize the permitted time span, which could be up to 36 months.

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