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25 July 2019 / article

Legislative proposal to prevent circumvention of the Standards for Remuneration Act (WNT) in the health care sector

In the spring of 2016 minister Plasterk already attempted with the draft bill for the Evaluation-act WNT to fill a number of gaps he had identified in the Standards for Remuneration Act (Wet Normering Topinkomens, WNT). However, on the advice of the Council of State, the measures aimed at preventing the circumvention of the WNT in the healthcare sector were removed from the bill at that time. In a letter dated 22 February 2018, minister Ollongren and minister Bruins announced that they have reconsidered this decision, and with some delay, the draft bill to prevent circumvention of the WNT (the Draft Bill) has recently been published for consultation.

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Among other things, the ministers intend for the Draft Bill to broaden the scope of the WNT by abandoning the link to accreditation under the Care Institutions Accreditation Act (WTZi accreditation) and broadening the definition of ‘affiliated legal entity’.

Abandoning the link to the WTZi accreditation

Under current legislation, the WNT only applies - in short - to institutions that have been admitted on the basis of the Care Institutions Accreditation Act (Wet toegelaten zorginstellingen, WTZi). The ministers wish to abandon this link to WTZi accreditation because (i) it is not always clear to organisations whether they have an accreditation because this can also be obtained by operation of law, (ii) in September 2017, the draft bills for the ‘Act on the accession of healthcare providers’ and ‘Act amending the accession of healthcare providers’ were submitted, as a result of which the WTZi accreditation will be replaced by a system of accreditation permits, and in particular, because (iii) there is a loophole since under the current regulations ‘subcontractors’ who provide care on behalf of a WTZi institution are not subject to the WNT. A senior official of a subcontractor can, therefore, earn a salary that is above the remuneration ceiling. The ministers are of the opinion that this encourages undesirable circumvention of the WNT by means of company law arrangements.

On the basis of the Draft Bill, the WNT will apply to a healthcare institution that, in short, meets the following three conditions:

  1. the institution belongs to the category of institutions as referred to in Annex 1 of the WNT as set out in the Draft Bill (these are the categories that are currently also referred to in the WTZi Implementation Decree);
  2. the institution provides insured care; and
  3. the institution employs at least two persons, at least one of whom is a care provider.
    The purpose of this measure is not to change the scope of the WNT in terms of the type of healthcare institutions, but to extend the applicability of the WNT to subcontractors.

Extension of the definition of 'affiliated legal entity'

If, in addition to his remuneration at a WNT entity, a senior official (within the meaning of the WNT) also receives remuneration from other non-WNT entities, this remuneration is not included in the assessment of compliance with the remuneration ceiling unless this remuneration is received from an affiliated legal entity (as defined in the WNT). The sum of the remuneration received by the senior official from the WNT entity and the affiliated legal entity may not exceed the remuneration ceiling applicable to that WNT institution.

The term 'affiliated legal entity' currently only has a 'down' effect: the subsidiaries (dochtervennootschappen) of a WNT institution are regarded as affiliated legal entities. The ministers want to broaden the concept so that it will also work 'upwards' and the parent organisation of a WNT institution will also fall under the WNT. In this way, it will no longer be possible to ‘circumvent’ the WNT by having a senior official of a WNT entity employed in whole or in part by the parent organisation.

Chain provision with respect to the regulations for interim senior officials

Another gap that the ministers wish to fill in this Draft Bill concerns the improper use of the regulations for interim senior officials. Interim senior officials are subject to a higher remuneration ceiling for the first 12 months in which they perform work for a WNT entity on the basis of a contract other than an employment contract. This is provided for in the law because interim senior officials, as a rule, incur higher costs than senior officials who are employed. The current Act does not explicitly stipulate that this arrangement does not apply to a person who has previously worked for the same WNT entity as a senior official under an employment contract. The purpose of the amendment to the WNT is to remedy such improper use of the regulations for interim senior official by providing in the WNT that a person who has been a senior official at a WNT institution at any time during the previous 12 months cannot make use of the interim senior official regulations, but is directly subject to the normal rules of the WNT.

Transitional law

The proposed amendments increase the number of legal entities covered by the WNT. Senior officials of institutions that will become subject to the WNT as a result of the amendment to the WNT will be subject to the transitional rules already laid down in the WNT: remuneration in excess of the WNT remuneration ceiling will be permitted for a maximum period of four years after this new legislation has come into force. After this four-year period, remuneration will be reduced to the institution's ceiling over a three-year period.

The same transitional rules apply to senior officials whose remuneration will be covered to a greater extent or entirely by the WNT as a result of the change in the definition of an 'affiliated legal entity'.

There will be no transitional rule with regard to the introduction of the chain provision with respect to the regulations for interim senior officials.

As was the case at the time of the draft bill for the Evaluationact WNT 2016, there were various critical responses to the Draft Bill during the internet consultations. We now have to wait and see how the final Bill will turn out. We will inform you as soon as there is more news in this regard.

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