In legal terms, anything you have agreed verbally constitutes a contract. Of course, to provide evidence of exactly what you have agreed, it is sensible to put the agreement in writing (or have it put in writing).
Premium differentiation
In order to be eligible to pay employees’ contributions at the reduced rate, the law requires a written employment contract. This requirement is set out in Article 2.3 of the Wfsv Decree. The Supreme Court confirmed in 2014 that this requirement is justified.
The higher contribution rate currently applies in a number of designated sectors to employees on fixed-term contracts.
WAB
On 1 January 2020, the Balanced Labour Market Act (WAB) will come into force. Under this Act, a high and a low contribution rate will apply across all sectors. The low rate may be applied to employees on permanent contracts. From 2020, both the high and low contribution rates will be the same for all sectors.
The implementing regulations, which were amended following the introduction of the WAB, include a requirement that the employer must include (a copy of) the written employment contract in their payroll records. It is not yet clear whether the payroll processor’s records may or must also contain such a copy.
Written employment contracts are not always in place for employees who have been working for an employer for a long time. It is unclear whether the terms of employment must then be set out in writing once again. However, in the case of employees whose fixed-term contracts have been converted to permanent contracts by operation of law, a permanent employment contract will still need to be drawn up.
Payslip
The new implementing rules also require that the nature of the employment contract be stated on the (digital) payslip provided to the employee and in the payroll tax return to be submitted to the Tax and Customs Administration. Naturally, this information must be entered into the payroll records. The changes to the payslip layout will be implemented by the payroll software suppliers.