The Balanced Labour Market Act (Dutch WAB) came into force on 1-1-2020.
This newsletter gives a short summary and tips that you can already take into account.
Less than three years after the Work and Security Act (Dutch WWZ) was introduced, the WAB needs to fix it. The idea is that the WAB makes it more attractive to hire employees on a permanent basis. The government wants to achieve that mainly by making flexible employment less flexible..
The WAB contains a number of changes in the area of: dismissal law, flexible work, transition allowance and the chain regulation. Dismissal is simplified and the chain regulation increased again to 3 years.. Payrolls and flexible contracts are more expensive and after a year, an on-call employee has the right to fixed hours.
Chain Regulation per 1-1-2020
• A contract becomes a permanent contract after a period of 3 years and 3 contracts. The period between a number of contracts must be more than 6 months, otherwise they count in the chain.
• So you can give 3 contracts in 3 years. There must be more than a 6-month gap to re-start the chain from the beginning.
• This also applies to contracts entered into before 1-1-2020.
Example: Jeroen works for you as a sous-chef. He has worked in your kitchen since May 1, 2019. You gave him a contract (1st) of 7 months, which ends on December 1, 2019.
You want to keep him on after December 1, 2019 and offer him a one-year contract (2nd) until December 1, 2020. After that, you offer him another contract (3rd) until December 1, 2021. The next contract (4th) is a permanent contract. In terms of chain duration, you could have given him a 3rd contract until May 1, 2022.
Transition Allowance per 1-1-2020
• The transition allowance is always 1/3 monthly salary per year. There is no longer an exception for the over fifties.
• Everyone is entitled, immediately, to compensation if the employer terminates the contract.
• Even an employee who has been employed for a month of six months, has the right to compensation. This can be more expensive for long-term employment and older employees.
On-call contract per 1-1-2020
• You are required to offer each on-call worker a contract after 12 months for the average number of hours worked per month in the previous year.
• If on 1-1-2020 they have worked for you for more than 12 months, you are required make them an offer before 1-2-2020.
• On-call employees must be called up at least 4 days in advance.
• It may be wise not to allow on-call contracts to last longer than 11 months
Example: You regularly call up Carolien to help when colleagues are ill. This time it's for somewhat longer, the colleague's illness is long term, it appears she will be replacing her colleague for more than a year. After a year, you must offer Carolien a contract for the average number of hours she has worked in the past year. What happens when the colleague recovers and returns to work?
Example: In addition to her studies, Petra works approximately 10 hours a week in your warehouse as an on-call worker. Instead of an on-call contract, you could also give Petra an annual contract for 520 hours per year, whereby you agree that the working hours will be flexible. In that case, you must pay a monthly wage (520/12 = 43.33 hours per month). In this case, this contract is not covered by an on-call contract, with all the associated advantages.
Dismissal per 1-1-2020
• As of 2020, you can group together several reasons for dismissing an employee, this is known as cumulative grounds; a combination of grounds for dismissal.
Unemployment insurance premium per 1-1-2020
• You pay a lower unemployment insurance premium for an employee with a permanent contract than for a temporary or flexible employee.
What to do before 1-1-2020
1. Check your current contracts and make sure that a following contract expires 1-1-2020 if you want to use a longer chain duration.
2. Calculate and decide when you might want to part ways; in 2019 or in 2020. There are no online calculation tools available (yet) for the new calculation of the transition allowance.
3. Check how many on-call employees you have in service, the average hours they have worked in the past 12 months and determine whether or not you want to renew the contract or not.
4. It might be a good idea to review ongoing, difficult personnel files again to see whether the reasons for dismissal change.
5. Make sure the type of contract is mentioned on the pay slip so the details are sent along with the payroll tax return.
There will still be a lot of information published about the WAB and, just as with the WWZ, not everything will be immediately clear. Make sure you know what risks you may be running and try to prevent any problems.