Update Employment Legislation – Q1 2018
Employment & Benefits Update
This update is to inform you of relevant developments in the first quarter of 2018 in the field of employment legislation.
The following nine subjects will be discussed:
- Roadmap for replacement of DBA
- Draft bill introducing additional birth leave
- Expansion of powers of works councils regarding the remuneration of directors of large companies
- European agreement on revised Posting of Workers Directive
- Proposal of the European Commission for a European Labour Authority
- Act implementing the GDPR
- Bill amending the Remuneration Policy Financial Enterprises Act
- Draft bill on equal pay
- Draft bill Act on the balanced labour market
1. Roadmap for replacement of DBA
On 9 February 2018, the Minister for Social Affairs and Employment (SZW), Mr W. Koolmees, presented a Letter to Parliament containing the time schedule for replacement of the Dutch Assessment of Employment Relationships Deregulation Act (Wet deregulering beoordeling arbeidsrelaties, the DBA Act) and the details of the measures intended to replace the DBA Act. The letter states that the suspension of enforcement of the DBA Act has been extended until 1 January 2020. This means that, until that time, no fines or additional assessments will be imposed on clients or contractors if, in retrospect, an employment relationship is established. Furthermore, the possibilities for enforcement on malicious persons will be expanded as from 1 July 2018. The government will provide more clarity as to the term ‘relationship of authority’ before 1 January 2019. The new Act, which will make a new client statement mandatory for some self-employed workers without staff (ZZPs), is expected to take effect on 1 January 2020.
2. Draft bill introducing additional birth leave
On 20 February 2018, the draft bill for the Act introducing additional birth leave was published on internetconsultaties.nl. In the coalition agreement, it had been agreed to expand the leave for partners in the event of the birth of a child from two days’ paid leave to five days’ paid leave, and an additional five weeks of unpaid leave. During that five-week period, partners will, however, be entitled to a benefit from the Employee Insurance Agency (UWV), equal to 70% of the daily wage (up to a maximum of 70% of the maximum daily wage). In addition, the adoption and foster care leave will be extended from four to six weeks, subject to a benefit equal to 100% of the daily wage. Incidentally, in this draft bill, Minister Koolmees did not include the advice as published by the Dutch Social and Economic Council (SER) on 16 February. SER advocated, among other things, simplification of the rules, different financing and statutory payment of parental leave.
3. Expansion of powers of works councils regarding the remuneration of directors of large companies
On 23 January 2018, the Lower House of Parliament adopted the Bill on Expansion of powers of works councils regarding the remuneration of directors of large companies. The legislative proposal is now before the Upper House. In a previous newsletter, we already described the contents of this legislative proposal. Another legislative development in the field of the remuneration policy for directors is the revised Shareholder Rights Directive (2017/828/EU). This directive must be implemented in Dutch legislation by 10 June 2019. The directive includes rules for listed companies on the remuneration of directors and supervisory directors. On 27 February 2018, the draft bill legislative proposal implementing the directive was published on internetconsultaties.nl. The Combined Company Law Committee (Gecombineerde Commissie Vennootschapsrecht, GCV) of the Dutch Bar Association and the Royal Dutch Association of Civil-Law Notaries (KNB) had advised the Ministry of Security and Justice not to introduce any stricter national rules, based on the opinion that a certain degree of flexibility in the application of the remuneration policy is advisable. Click here for the GCV advice.
4. European agreement on revised Posting of Workers Directive
On 1 March 2018, the European institutions reached agreement on the new Posting of Workers Directive. The new directive, which is yet to be worked out in further detail, requires equal pay of employees who are posted to another Member State and the employees in the host country itself on multiple elements. The new legislation is to take effect in mid-2020. Click here for more information on the agreement.
5. Proposal of the European Commission for a European Labour Authority
On 13 March 2018, the European Commission presented a proposal for a regulation on the establishment of a European Labour Authority. The European Labour Authority is intended, together with the national labour inspectorates, to trace and tackle bogus schemes in the construction and transport industries. The EC's ambition is to have the European Labour Authority up and running in 2019. The main duties of the authority will be to collect and share information, to promote collaboration among national authorities and dispute resolution/mediation in the event of cross-border disputes. Among those who are critical of the EC proposal is the FNV trade union, stating that the European Labour Authority in its current form is a paper tiger. The European Commission has also presented a set of recommendations to give flexworkers and ZZPs access to the social systems in their countries.
6. Act implementing the GDPR
On 14 March 2018, the Lower House of Parliament adopted the Act implementing the General Data Protection Regulation (GDPR). The week before, VNO-NCW employers’ association and the Dutch Federation of Small and Medium-Sized Enterprises (MKB‑Nederland) had sent a letter to the Lower House requesting that further rules be set by a General Order in Council (Algemene Maatregel van Bestuur, AMvB) on the processing of employees’ medical information. Minister Dekker for Legal Protection does, however, not wish to go into this in greater depth until a later stage. He intends to submit that proposal for consultation in 2019.
7. Bill amending the Remuneration Policy Financial Enterprises Act
On 15 March 2018, the assembled opposition, with the exception of the SGP and Forum voor Democratie parties, submitted a Bill to the effect of limiting the remuneration granted to bankers. Subsequently, on 3 April 2018, the Finance Minister, Hoekstra, sent a letter to the Lower House announcing a study of three statutory measures, which are different from those in the private members’ legislative proposal of the opposition. First of all, Hoekstra will study the expansion of the ‘claw-back’ possibilities. This would involve the introduction of a statutory obligation to recover part of the fixed remuneration in excess of a certain minimum of directors in the event of state aid to a bank – or insurer. In addition, he will review the possibility, in the event of shares and other elements of the fixed remuneration, the value of which is related to the market value of the bank's own company, to introduce a statutory obligation for directors and other employees to retain those shares for at least a number of years. Finally, Hoekstra will review the possibility to impose the obligation on companies to render public account of the relationship between the remuneration policy and the social role of the company. He will thereby also look into the possibility of a role for regulators.
8. Draft bill on equal pay
On 29 March 2018, the private members’ legislative proposal, with which the four left-wing parties PvdA, SP, GroenLinks and 50Plus, wish to impose the obligation on employers to ensure equal pay for men and women, was published on internetconsultatie.nl. The legislative proposal provides for a certificate for employers if the remuneration policy is in order. This certificate must be renewed every three years. If a company fails to close the gender pay gap, and thus to obtain a certificate, the SZW Inspectorate can impose a fine. In addition, companies will have to report on the pay differentials in their annual reports, explaining why there may be a difference and what the company intends to do about it. This will allow the works council to monitor compliance.
9. Draft bill: Act on the balanced labour market
On Monday, 9 April 2018, the government published the draft bill Act on the balanced labour market on internetconsultaties.nl. The draft bill works out the details of several measures already mentioned in the coalition agreement ‘Vertrouwen in de toekomst’ (Towards the future with confidence). As the government indicated earlier, it intends to submit a legislative proposal to the Lower House in the third quarter of 2018, so that the publication of this draft bill is on schedule. The relevant act should take effect on 1 January 2020.The measures mentioned in the draft bill regard the following seven subjects:
1. Provisions on succession of fixed-term contracts
The maximum term for successive fixed-term employment contracts will be extended from two to three years. In addition, the bill will introduce the possibility, in a collective bargaining agreement to reduce the interval from six to three months if recurrent temporary work is concerned that can be performed for a period not exceeding nine months. This exception is broader than the existing exception for seasonal labour. Finally, an exception will be introduced for substitute teachers in primary education in the event of replacement due to illness.
2. On-call contracts
For employees with employment contracts with a deferred duty of performance, and without fixed working hours (zero-hours and ‘min-max’ contracts), a new rule will be introduced. The employer must notify the employee at least four days in advance of the times at which the work is to be performed. In the event of shorter notice, the employee will not be under the obligation to comply with the call. A term of less than four days may be agreed in the CAO. Furthermore, it is proposed that, if the call is withdrawn within four days of commencement of the work, the employee will be entitled to payment of wages for the period for which he was called. Finally, employees with zero-hours contracts will be able to terminate their employment contracts subject to a notice period of four days (or such shorter term as agreed in the CAO), without any liability to pay a compensation, rather than the current one-month notice period.
A separate equal treatment requirement will be included in the Dutch Placement of Personnel by Intermediaries Act (Wet allocatie arbeidskrachten door intermediairs, Waadi) (which cannot be varied from in the CAO to the employee's detriment), comprising the primary and secondary terms of employment that are also being used by the client, with the exception of pension. Furthermore, the government proposes to declare an exemption for the special provisions of the Dutch Civil Code (DCC) relating to agency work agreements. In line with the exemption of Article 7:691 DCC for an agency work agreement in the context of payrolling, the possibility, in the CAO, to agree that six agency work agreements can be entered into during a maximum period of four years (before being converted into a temporary employment contract for an indefinite period of time) will be restricted to agency work agreements not concluded in the context of payrolling.
4. Reasonable grounds for dismissal
A new ground for dismissal will be added to the reasonable grounds for dismissal of Article 7:669 (3) DCC: the i-ground. This ground means that there must be a combination of circumstances consisting of two or more grounds for dismissal (c‑h) to such an extent that the employer cannot reasonably be required to continue the employment contract. This may be offset by a higher maximised compensation in addition to the transitional compensation for the employee. Such compensation cannot exceed fifty per cent of the transitional compensation to which the employee is entitled in the event of termination of the employment contract.
5. The probationary period
A probationary period of five months will be possible for employment contracts for an indefinite period of time – rather than the current maximum of two months – if the employment contract is the first one as between the parties. In addition, it will be possible, in the event of an employment contract for a limited period of two years or more, to agree a probationary period of three months. Here, too, the employment contract must be the first one as between the parties.
6. The transitional compensation
Finally, an entitlement to compensation will be introduced in the situations where a small-sized employer dismisses employees in view of discontinuation of his business to retire or on account of sickness.
Furthermore, in the present legislative proposal, the government wishes to arrange, in view of the Bill already before the Lower House regarding measures in respect of the transitional compensation in the event of dismissal for commercial reasons or on account of long-term disability, that the transitional compensation can be offset only if the employee has been sick for two years.
With respect to the entitlement to, and the accrual of, the transitional compensation, two measures are proposed. Firstly, it is proposed to provide for entitlement to transitional compensation from the start of the employment contract, rather than only after two years. This will be offset by the second measure: abandonment of the increase of the transitional compensation after the employment contract has continued for ten years. In the current situation, employees receive a higher transitional compensation for the years of service after ten years (1/4 monthly salary per 6 months rather than 1/6 monthly salary per 6 months).
7. Contributions differentiation
The government proposes to replace the sectoral differentiation in the Unemployment Benefits (WW) contributions by differentiation according to the nature of the agreement. This means that the sector classification will no longer be relevant to the WW contributions, and that, for the future, two WW contributions will be introduced that will apply to all employers: the low contribution for permanent contracts and the high contribution for flexible contracts.
The above-mentioned subjects of the draft bill for the Act on the balanced labour market will be worked out in further detail by the Employment & Benefits team in the next few weeks. Check the LinkedIn page of Employment & Benefits or the Loyens & Loeff website.
Should you have any questions regarding this update, please contact your trusted adviser of our Employment & Benefits team of Loyens & Loeff.
Hermine VoûtePartner Attorney at law
P. Hermine E. Voûte, attorney at law, is chairwoman of the Employment & Benefits practice group. She has over 31 years’ all-round experience in employment law, with a particular focus on high-profile dismissals, restructurings and collective dismissals, and co-determination procedures.T: +31 20 578 59 75 E: email@example.com
Klaas WiersmaPartner Attorney at law
Klaas Wiersma, attorney at law, is a member of the Employment & Benefits practice group. He has over 19 years’ all-round experience in employment law, with a particular focus on the employment aspects of, mostly international, M&A-deals, co-determination procedures, restructurings and collective dismissals, and cross-border employment.T: +31 20 578 59 60 E: firstname.lastname@example.org