LABOUR LAW AMENDMENTS
Download the Employment Law Changes Fact Sheet here.
With effect from 1 January 2015, as an employer, you risk a fine of one month's salary if you have not informed your employee in writing on time whether or not the employment contract will be continued. This is one of the consequences of the introduction of the Work and Security Act. This new legislation takes effect on 1 January 2015 and will be implemented in phases, with the most far-reaching changes coming into force on 1 July 2015. With this note, we inform you of the main changes and what consequences they may have for you.
The Work and Security Act contains a number of important reforms in the broad field of dismissal law and the Unemployment Insurance Act (WW). It also aims to discourage the improper and long-term use of flexible employment relationships and improve the legal position of flex workers.
Changes from 1 January 2015
Notice period
With a temporary contract of six months or longer, you must inform your employee in writing no later than one month before the end of the contract period whether or not you would like to continue the employment and, if so, under what conditions. If you fail to do so, your employee is entitled to compensation of one month's salary and, in case of late compliance, pro rata compensation. To claim this compensation, the employee must submit his claim to you within two months of the end of the contract. This notice period applies to contracts ending from 1 February 2015. A contract ending on 1 February should therefore be given notice no later than 1 January.
No probation clause
Temporary contracts of six months or less may no longer include a probationary period. This ban applies to new contracts entered into on or after 1 January 2015. A probationary period clause in contracts entered into before 1 January 2015 will remain valid.
Restriction of competition clause
If you enter into a temporary contract with an employee on or after 1 January 2015, you may only include a non-competition clause if serious business interests can justify it. If you do include a non-competition clause, you must justify the important business interests in writing in the contract. If you do not, the non-competition clause is invalid.
Transitional law
The above changes apply to contracts entered into on or after 1 January 2015, unless a collective agreement applies to which transitional law applies. Divergent provision may then still apply until the expiry date of the CAO but no later than 1 January 2016.
Key changes from 1 January 2015:
- Notice period of 1 month for temporary contracts of six months or more;
- No probationary clause in temporary contracts up to six months;
- In principle, no competition clause in fixed-term contracts.
Changes from 1 July 2015
Number of temporary contracts
From 1 July 2015, you will only be allowed to enter into three temporary contracts over a two-year period. The three-month interval, to break the chain of contracts, will be extended to six months. This new legislation will apply to contracts entered into on or after 1 July 2015. However, when renewing a contract on or after 1 July 2015, you should take into account the previously agreed contracts. When entering into new contracts, you can take this into account now. For example, you can choose to enter into two seven-month temporary contracts and one nine-month contract or have the new contract end before 1 July 2015. In doing so, you will avoid the right to a permanent contract and a transition fee.
Transition allowance
Upon termination or non-renewal of a contract, you as an employer will owe a transition fee to your employee as of 1 July 2015 if the employment lasted at least two years. The transition compensation is intended to compensate for dismissal on the one hand and to facilitate the employee's transition to another job on the other. The amount of the transition compensation depends on several factors, including employment history and monthly salary. In any case, the transition compensation amounts to a maximum of €75,000, unless your employee earns more on an annual basis. In that case, the compensation is a maximum of one year's salary. When entering into new contracts, you can already take this transition compensation into account now. For temporary contracts with a total duration of less than two years, you will not have to pay any transition compensation. For small companies, there will be a transitional arrangement allowing for a lower severance payment in case of forced dismissal due to a bad financial situation.
Changes to dismissal law
The option for dismissal between the subdistrict court and the UWV will disappear from 1 July 2015. The reason for dismissal will determine the dismissal route to be followed. Building a good personnel file will also become even more important. This is because the subdistrict court will no longer be allowed to dissolve a dysfunctional employee if no improvement plan is offered. In case of a dismissal by mutual consent, the employee will have the possibility to withdraw his consent to dismissal within 14 days or to dissolve the contract without giving any reason.
WW benefit
From 1 January 2016, the maximum duration of WW benefits will be reduced from 38 months to 24 months. This change will be phased in, with the WW duration being reduced by one month per quarter. Thus, by mid-2019, the maximum duration of 24 months will definitely be reached.
Key changes from 1 July 2015:
- Maximum 3 temporary contracts in 2 years (with an interval shorter than 6 months);
- Mandatory transitional compensation when terminating a contract of 2 years or more;
- Adjusting dual dismissal routes;
- Reflection period of 14 days on consent to dismissal;
- Decrease maximum duration of unemployment benefit.
In conclusion
In any case, we advise you to take stock of all your temporary contracts in good time. This way, you can prepare yourself for the new legislation and take into account the notice period as from 1 January 2015. If you would like to receive automatic notification well in advance if a temporary contract is due to expire, please contact our payroll department.
For questions or comments, please contact our employment lawyer Gert-Jan Brinkman on (024) 365 09 65 or by e-mail at gbrinkman@vwg.nl.
The purpose of this note is to outline a scheme. For the sake of readability, matters have therefore been simplified. VWGNijhof accountants and tax consultants is therefore not liable for the consequences of actions taken or not taken as a result of this memorandum.