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Global employment briefing: Netherlands, May 2013

  • Netherlands
  • Employment law - HR E-Brief

23-05-2013

Plans to change Dutch employment law

On 11 April 2013 the Dutch Government reached an agreement with Trade Unions and employer associations regarding various social rules, regulations and arrangements (“Social Accord”). Although this Social Accord addressed various subjects, the most significant from an employment law aspect are considered below.


Changes to the law of dismissal

One of the major changes proposed, which has been a subject of political discussion in the Netherlands for several years, is a change to the law of dismissal. The two primary bases for dismissal are to be retained, so that employers will still be able to request permission from the governmental body, UWV, to give notice of termination or to request that the Cantonal Judge dissolves the employment contract. However, the changes proposed will affect which of these grounds an employer is able to pursue.

From 1 January 2016 an employer will no longer have free choice over which dismissal ground to pursue as this will depend on the reason(s) for dismissal. Dismissals for economical, organisational or technical reasons and those arising after two years of sickness absence will only be handled by UWV. Dismissal on other grounds will be dealt with by the Cantonal Judge. An additional change will also mean that appeal against the decision of the UWV or Cantonal Judge may be raised by either party.

It is hoped that as of 1 January 2016 the changes will make the dismissal process more consistent and also make it easier for employers and employees to terminate employment contracts by mutual consent. Even so, in the five years following implementation, increased litigation seems likely whilst interpretation of the new regulations is clarified. One practical effect is also likely to be that Trade Unions and Works Councils will be more actively involved in the preliminary stages of the dismissal process.


Unemployment benefits

From 1 January 2016 eligibility for State unemployment benefits will decrease gradually from a maximum of 36 months to 24 months by 2019. This will be accompanied by supplementary unemployment benefit schemes provided by employers through collective bargaining agreements and the sharing of responsibility to pay unemployment insurance premiums as between employers and employees. Currently, only the employer pays these premiums.


Transitional payments

For employees who have been employed for 2 years or more prior to dismissal, employers will have to pay a transitional allowance (to a maximum of EUR 75,000 or one year’s salary, if higher). This amount may be reduced if the dismissal is due to the employee’s culpable behaviour . The Social Accord contains a transitional provision for employees aged 50 years and older and with ten years or more employment. In the case of culpable behavior by the employer, the Cantonal Judge could grant an additional severance payment.

These proposals are expected to decrease dismissal costs for employers drastically .


Consecutive fixed term contracts

Current law in the Netherlands provides that fixed term employment contracts will be automatically deemed indefinite contracts if, in aggregate, they exceed three years’ duration or if more than three fixed term contracts are concluded consecutively with intervals of three months or less.

From 1 January 2015 , contracts entered into within a two year period and with an interval of no more than 6 months will lose their fixed term status and be deemed contracts for an indefinite period.


For further information, please contact:

Tessa Bender
Associate
Tel +3120 5600 607
tessabender@eversheds.nl

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