Payroll update for the Netherlands – The Balanced Labour Market Act (WAB)
January 23, 2020 || LegalPayroll
The new year brings some important changes regarding the Dutch labour market. We have put together a a short overview of the changes that has come with new Balanced Labour Market Act – WAB with effect from the 1st of January.
The main objective with WAB is to make it more attractive to hire workers on a permanent basis as well as narrowing the gap between permanent and flexible labour. Below we have listed the main changes:
Succession of fixed-term contracts
Before:
A maximum of three contracts in a period of no more than two years.
From 1st January 2020:
The maximum term for successive fixed-term employment contracts is three years.
On-call contracts
Before
An on-call employee can be called up at any time. Each time the employee is called up, he or she was entitled to a payment of at least three hours, unless it is agreed in advance that the call is for a period shorter than three hours.
After six months, the on-call employee can claim a fixed number of hours.
From 1st January 2020
The on-call employee must be called up at least four days in advance.
If the assignment is cancelled or changed within this four-day period, the employee retains the right to continued payment of wages in accordance with the original call.
Agreements can be made for each individual CLA (Collective Labour Agreement) to shorten the four-day period to one day.
After 12 months, the employer must offer the employee fixed working hours. The number of these fixed working hours must equal the average number of hours worked over the preceding 12 months.
Unemployment Benefit (WW)
Before
The level of the unemployment benefit was depending on the sector classification.
From 1st January 2020
The level of the unemployment benefit is based on the type of contract the employee has.
Employers are obliged to specify on the employee’s payslip whether the employee in question has a temporary or permanent contract.
The unemployment benefit for a permanent contract is 5% lower than for workers with temporary contracts.
New ground for dismissal: the cumulation ground
Before
To terminate an employment contract, one of the eight grounds for dismissal had to be met.
From 1st January 2020
A ninth ground for dismissal is to be added, i.e. the cumulation ground. This ground for dismissal allows for an employee to be dismissed on the basis of two or more incomplete grounds for dismissal. Note however that if the cumulation ground is used, the court might decide that the employee is entitled to additional compensation from the employer.
Transition fee – severance pay
Before
As an employer, you only needed to pay an employee a transition fee when the employee had worked for you for two years or longer in case it was decided not to renew or to terminate the employment contract.
Level of the transition fee:
One third of a gross monthly salary for each year of service in the event of employment up to 10 years.
A half of a gross monthly salary for each year of service that exceeded 10 years.
From 1st January 2020
From the first day of their employment, employees are entitled to the transition fee as soon as the employer decides not to renew or terminate their contract.
Level of the transition fee: one third of the gross monthly salary per year of service.
Contract suspension term
Before
Suspension term of six months and one day.
From 1st January 2020
The regular suspension term remains six months and one day. However, individual CLAs may specify different suspension terms.
In the event of recurrent temporary work (seasonal work) that employees can perform for a maximum of nine months per year, the suspension term will be three months and one day.
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