On 3 April 2023, the Minister of Social Affairs and Employment (the Minister) sent a new progress letter to the House of Representatives regarding the reform of the Dutch labour market. This letter follows on from the earlier letter of 5 July 2022. In this news item, we inform you of the main points of the latest letter.

Reducing (financial) differences between employees and self-employed

The government considers that there are significant differences between employees and self-employed in tax and social security treatment. As a result, employees do not always work with the type of contract appropriate to the nature of the work. This also encourages (forced) false self-employment (schijnzelfstandigen). The government therefore wants to take several measures to reduce these differences. For instance, the self-employed deduction will be reduced from EUR 6,310 in 2022 to EUR 900 in 2027 and the tax-deferred retirement reserve for self-employed will be phased out. There will also be measures to encourage pension savings for self-employed people. The Future Pensions Bill (Wet toekomst pensioenen) introduces an employment-neutral pension framework.

There will also be a compulsory disability insurance for self-employed. This provides a financial safety net for self-employed people who become incapacitated. It also prevents risks from being passed on to society. The intention is to include all IB entrepreneurs (entrepreneurs subject to income tax rules) - with and without staff - and working partners in the circle of insured persons. The director-major shareholder and those who receive income from other activities are not included in the circle of insured persons. Furthermore, the government chooses to apply a waiting period of one year in its elaboration. This means that it is necessary for self-employed persons to bridge one year of illness before this insurance is paid out. Self-employed people can negotiate a shorter waiting period through private insurance if they wish. Every self-employed person insures for a standard benefit of 70% of last-earned income up to the limit of 143% WML (statutory minimum wage). The benefit will be a maximum of 100% of the WML (statutory minimum wage).

Finally, the possibility for self employed to enter into a collective bargaining agreement will be examined, in line with the guidelines given by the European Commission for this purpose. Furthermore, self-employed people will be given a position in government advisory bodies such as the Social and Economic Council (Sociaal-Economische Raad, SER) and the Labour Foundation (Stichting van de Arbeid, STAR). To this end, a bill has been submitted.

Countering false self-employment

The government wants to clarify the regulations surrounding the assessment of employment relationships. The open norm 'working in the service of' (authority) from the Dutch Civil Code will be further coloured by case law. To this end, three main elements will be identified: material subordination (supervision, instructions, etc.), the organisational embeddedness of the work, and - as a contraindication for the existence of an employment contract – entrepreneurship within the relevant employment relationship. In addition, the government is working on a so-called 'civil-law legal presumption of an employment contract', linked to an hourly rate. The rate limit for this is still to be determined (possibly rate between 30 and 35 euros). This will strengthen the position of workers with a weaker negotiating position. They can more easily claim their rights (based on an employment contract).

The government also wants to improve and strengthen enforcement on false self-employment in the short term and lift the enforcement moratorium completely by 1 January 2025 at the latest. In the meantime, the Tax Authorities (Belastingdienst) will deploy more capacity within the framework of the enforcement moratorium.

Reducing differences between permanent and flexible contracts

The government wants to narrow the differences between permanent and flexible contracts. To this end, the government distinguishes several measures.

Labour committee

The government also wants to create a labour committee to improve access to justice. That labour committee should focus on all vulnerable workers (including migrant workers). There are three areas in which access to justice can be improved for those workers: improvement in the provision of information, improving access to professional support and low-threshold dispute resolution with opportunities for mediation and de-escalation. This also includes the possibility of adequately improving access to justice by strengthening existing organisations or structures.

Reintegration and continued salary payment during illness

The government is taking a measure to give employers earlier clarity on the reintegration of long-term sick employees, with reintegration in the second year focusing in principle on the second track (i.e., with another employer). Small and medium-sized employers (up to and including 100 employees) can already get clarity on the possibility of permanently replacing an employee after one year of illness, so that they can continue their business operations. In the second year of illness, the employer remains responsible for helping the sick employee reintegrate with another employer if the first track is closed. The UWV also tests for this, after the second year of illness. Should the employee recover in the second year, and the employer has not yet permanently filled his position, the employee retains the right to resume his own position. Larger employers remain subject to the current reintegration obligations.

Staff Retention Crisis Scheme

There will be a Staff Retention Crisis Scheme (Crisisregeling Personeelsbehoud). Employers can claim this if they have at least 20% less work across the entire company. The scheme will be aimed at absorbing crises and calamities that fall outside the regular business risk. By this, the government means small-scale calamities, as we know from the Working Time Reduction Scheme (Werktijdverkorting), and larger crises such as the Covid-19 pandemic. Employers indirectly affected by a calamity or crisis may also qualify for the scheme. For example, in the case of another lockdown due to a pandemic. In such a case, the hospitality industry must close its doors, and as a result suppliers such as beer brewers may also temporarily have less work. A company can avail of the scheme for a maximum of six (6) months. An employer has two options if it wants to use the scheme. The first option is for the employer to make it easier for employees to temporarily do other work in their own company, including at another branch of the company. In addition to the above redeployment option, the employer can choose to have employees work at least 20% less. 80% salary is paid on the number of hours not worked, with the total salary not to fall by more than 10%. Also, the employee's income may not fall below the statutory minimum wage. If the employer opts for this, the employer can apply for a 60% allowance for the wage costs of the hours not worked. This possibility ensures that employers who temporarily have less work do not bear the full wage costs themselves and therefore do not have to lay off staff. At the same time, the employer remains responsible for a significant part of the wage costs. This contributes to an incentive for efficient use of the scheme. Before an employer submits an application to make use of (one of these) two options, the employer must seek advice from the company's works council on the submission of the application and specifically on the contingency, the 20% working time reduction and the choice of redeployment and/or employee contribution. Finally, there will also be a duty of information towards the trade unions.

The Minister plans to put the necessary legislation into internet consultation around the summer, so that it can be presented to the House of Representatives in spring 2024. We will of course keep you informed of further developments. For questions, please contact your contact at Loyens & Loeff.