The biggest changes in Dutch labour law will come into force

The following reflect the biggest changes in the regulations on dismissal law since 1945. During this year we expect to inform you about our first practice experience during a seminar. For now, we would like to highlight the key changes

DISMISSAL
The purpose of new dismissal law according to the government: it should be more fair and cheaper. There will be only one fixed route for grounds for dismissal: for grounds of long term disability and or economic reasons, the Dutch Employee Insurance Implementing Agency (UWV) needs to be addressed. All other grounds are at the jurisdiction of the Cantonial Court. The employer can therefore no longer choose between the two of them for any given case. Besides, the grounds for dismissal will be judged more strictly. No forum shopping of different grounds for dismissal is allowed. The employer simply should choose one of the grounds that the new legislation offers. Procedural measures are incorporated as well. Under the new law it will be possible to appeal all the way to the Supreme Court.

NO SERVERANCE PAYMENT BUT A SO CALLED TRANSITION COMPENSATION
All employees who are employed longer than two years with the employer are entitled to a Transition compensation. The former Cantonial Court formula will no longer apply. The Transition compensation is equal to one third of a month salary, for every full year of service. Half a month salary per full year of service applies to someone who has been employed for over 10 years. The compensation is maximized at EUR 75.000,-- or a full year salary for employees who earn more than that. For “small scaled” employers a (temporary) limitation applies to the above. They only have to pay a Transition compensation in case the initiative of termination is taken by the employer. 

CHAIN OF EMPLOYMENT AGREEMENTS FOR A DEFINITE PERIOD OF TIME
Until June 30, 2015 it is possible to enter into 3 employment agreements for a definite period of time, within a period of 3 years. The last agreement then ends by operation of law. As of July 1, 2015 this is different. As from then it is only possible to enter into 3 fixed term contracts within a period of 2 years. This chain may be interrupted by a period of no longer than 6 months of unemployment before the chain starts again (currently this is 3 months). 

UNEMPLOYMENT
After 6 months of unemployment all jobs are considered fitting jobs and therefore in principle have to be excepted by the employee. This measure should provide an incentive for people to find another job as soon as possible and no longer use unemployment benefits. Besides, employees can keep 30% of every Euro they earn on top of their unemployment benefits, as far as the wages they earn are lower than the salary they earned before they became unemployed. 

FIRST EXPERIENCES OF MANDATORY NOTIFICATION
As you undoubtedly already know since January 1, 2015 for fixed-term employment agreements, a so called mandatory “notification duty” for the employer applies: the employer must inform the employee at least 1 month before the expiry date of the written contract, if the employment agreement will be continued and if so, under what conditions. Meanwhile, there have been some Cantonial judges who “fined” employers for 1 gross month salary because they forgot to fulfill their notification duty, or did not realize they had one. It seems that it is allowed to fulfill the notification duty when entering into the employment agreement. It thus becomes a part of the employment agreement itself and it is allowed to state that the employment agreement will not be continued when the fixed term contract expires. This does not come across as friendly to the employee, but it eliminates the risk of the event that the employer forgets to notify the employee in due time.


By: Vincent Breedveld
Ruig & Partners