Many employers from abroad find the current labour law in the Netherlands quite rigid. For those, there is good news: a new labour law (the WAB) will be introduced shortly. Both Houses of Parliament (the Tweede Kamer and the Eerste Kamer) have voted for the new labour law that will come into effect per 2020. In this article you will read about the main changes and their impact.
Current labour law
Under the current labour law in the Netherlands, employers may offer three contracts for an definite period within 2 years time. Since the introduction of this limitation, many Dutch employers divided the periods as efficiently as possible. Many newcomers received a contract for 6 months, followed by two contracts for 8 months. Offering another contract would automatically mean that the employee would have a contract for an indefinite period.
In some industries it has become common practice to let go of the employees who had three labour contracts within 2 years. Reason for this is that it is difficult to fire an employee. Just one reason could be used whereas in practice we see that most of the times dismissal is due to various reasons. Moreover, companies are obliged to pay a transition compensation to a fired holding a indefinite term contract.
To avoid this all together, more and more companies started to work with freelance personnel (ZZP’ers), payrollers (on an external payroll), on-call employees and temporary staff via a temp agency. In 2003, almost 1.000.000 employees worked on a flex contract. By the year 2018, this number had trippled. The Dutch government would like to see this change. They prefer to have more contracts for an indefinite period, so that people in the Netherlands have more job security and fewer unemployment benefits are claimed. A few years ago, the Dutch government proposed an addition to the current labour law, with the intention to regulate the use of freelance personnel. However, it did not have the desired outcome, as there remains a substantial demand for flexibility on the Dutch labour market.
New labour law
The new labour law intends to regulate the labour market, giving somewhat more possibilities on the one hand, restricting the use of flex personnel on the other hand. The main changes are:
- three contracts for definite periods in three years possible;
- all employees who work under a contract (definite or indefinite) will be entitled to a transition compensation if their contract is ended by the employer;
- the transition compensation will be lower than before for employees who had a long standing contract;
- firing an employee will be possible using more reasons;
- payrollers will have to work under the same conditions as employees on the company’s own payroll;
- on-call employees will get more certainty of income.