The Dutch Cabinet announces reforms in the labor market
The Budget Memorandum and the Tax Plan for 2019 have been presented. Here are the highlights for the labor market.
The 'Opportunities for the future' section of the Budget Memorandum 2019 endorses the government's desire for a smooth, balanced labor market. There is not much news on this part, as the intentions of the cabinet were already known. However, the changes are very significant to HR.
Labor market and economy
In the Budget Memorandum 2019, the Cabinet first makes room to determine the importance of a good labor market for the economy: “To ensure that well-performing companies continue to grow and innovate, a smooth labor market is important, so that workers and employers can work in a way that matches their preferences, skills and the type of work.”
Current problems in the labor market
Next, it reveals what is wrong in the current system: “However, the institutional differences between permanent and flexible employees contribute to too many choices being made on the basis of costs and risks, such as continued payment of wages, dismissal rules, and collective agreement provisions. For example, the Netherlands has strict protection against permanent contracts in comparison with other OECD countries. The costs and risks of such a permanent contract can be avoided by taking an employee on a temporary basis (for which Dutch rules are flexible from an international perspective).”
“Another option is to hire a self-employed person. A self-employed person can offer a cheaper net income than employees due to tax benefits, such as the self-employed deduction and the SME profit exemption. Many self-employed people have consciously chosen to undertake business and make an important contribution to society and the economy. However, the ZZP-shelf (ZZP means one-person entrepreneurs) must be well organized. It is not the intention that people feel compelled to work as a freelancer at low rates or that there is unfair competition between workers.”
Solution: Wet labor market in balance
A short while further, the Cabinet broadly unfolds the plans: “The Cabinet is taking steps towards a labor market that is more in balance. With the proposal for the Labor Market Act in balance, the government strengthens the legal position of on-call workers and payroll employees. It adapts the so-called chain provision, in order to match flexible contracts better with the nature of the activities. The Cabinet also makes it more attractive to enter into a permanent contract, for example by adding a cumulative ground to the reasonable grounds for dismissal, an extended probation period, more balance in the accrual of the transition allowance, and a differentiated unemployment premium according to contract type.”
The most important step mentioned in this passage, the proposal for the Labor Market Act in balance, was even given attention in the Throne Speech. Currently, this law is for advice to the Council of State. It is expected to enter into force on 1 January 2020.
Independent commission
The Budget Memorandum 2019 states: “The government will set up an independent committee to investigate whether our current system is still in line with the labor market of today and the future. The job market and the way people work are fast changing. The government, therefore, wants to see whether, in the long term, the various systems of labor law, social security, and taxation still tie in with a changing economy and labor market.”
BY PAUL POLEY ON 18 SEPTEMBER 2018 LABOR MARKET, DISMISSAL
Source / Courtesy of the website: Xpert HR