Legislative proposals Government Programme and SZW Budget

In the Government Programme of the coalition of 13 September 2024 and in the Budget of the Ministry of Social Affairs and Employment (SZW) that was submitted to the House of Representatives on Budget Day, Tuesday 17 September 2024, the Government indicates that it will continue several bills already initiated by the previous Government and will also initiate new bills. In this article, we will briefly discuss the most important bills. Our discussion is based on the texts as they are currently known, which are generally proposals submitted for internet consultation by the previous government. It is not yet clear whether the current government  will adopt these proposals unchanged or modify them in certain respects.

More security for flexible workers act

The bill was available for internet consultation from 10 July 2023 to 4 September 2023 and, after approval by the (then) Council of Ministers, was sent to the Council of State for advice in March 2024. The bill contains the following measures.

Conversion of fixed term contracts into indefinite term contracts

Temporary contracts cannot be used indefinitely. The main rule currently is that after the third temporary contract in a row or after a series of contracts that accumulate to a period of more than 3 years (this can also be after only two consecutive employment contracts) a contract for an indefinite period will arise by operation of law. If there is a period of more than 6 months between the contracts, a new ‘chain of contracts’ can be applied. This 6 month interval will be scrapped and replaced by an administrative expiry period of 5 years (60 months). This means that a new chain of employment contracts can only start after 5 years. For students and pupils working no more than 12 hours a week, an interval of 6 months will apply. For seasonal work, the current possibility of shortening the interval to 3 months remains. Also, the exception from the chain rule for employment contracts concluded in the context of work-based learning pathway remains in place. It will no longer be possible to deviate from the chain rule by collective labour agreement, neither for the total duration nor for the maximum number of temporary contracts allowed.

Basic contract replaces on-call contract; on-call contracts only for pupils and students

In principle, on-call contracts (zero hour contracts, min/max contracts) will be replaced by basic contracts, whereby, in addition to a guaranteed minimum agreed working hours, only 30% additional working time availability can be required from the employee. On-call contracts are only possible for pupils and students and for temporary agency workers in phase A (the first 52 weeks).

Act on Basic Disability Insurance for Self-Employed Persons

The bill regulates compulsory insurance against loss of income in case of incapacity for work for self-employed persons. The premium is a maximum of approximately 195 euros per month. The benefit amounts to 70% of the profit but not more than 70% of the minimum wage. Self-employed persons who have been unable to earn the minimum wage for a year due to illness are then entitled to this benefit, up to the state pension age. It is possible to opt out of this scheme, and thus to take out private insurance. Certain conditions apply. For example, the amount of the disability benefit may not be lower than that of the public insurance, the premium must be at least equal to that of the public insurance and the insurance must continue until the state pension age. In addition, there will be transitional law for existing insurances.

Act amending the reintegration obligations in the second year of illness of employees at small and medium-sized employers

The proposal regulates that when a sick employee after 1 year of illness reintegrates, small and medium-sized employers can choose to continue the reintegration with another employer (track 2) in the second year of illness.

It is proposed that small and medium-sized employers (up to and including 100 employees) with consent of the employee, under certain conditions, have the option after the first year of illness to terminate the reintegration through the first track (with their own employer) and, from the start of the second year of illness, to focus entirely on reintegration in the second track (i.e. with another employer). The reintegration of the sick employee in the first track will then be terminated. In that case, the employer no longer has to keep the (own) position of the employee available (not even after full recovery) and no longer has to reintegrate the employee in a position within its organisation. In the second year of illness, the reintegration of the sick employee is then fully focused on the second track.

There remains an obligation to continue paying wages and reintegration for 104 weeks. This period is not shortened.

Modernisation of the Non-competition Clause Act

This bill was available for internet consultation from 4 March 2024 to 15 April 2024. In brief, the bill adds the following elements to the current regulation of the non-competition clause in Article 7:653 of the Dutch Civil Code:

• A non-competition clause can be agreed for a maximum of one year.
• The compelling business or service interests must always be substantiated, so not only as is already the case for fixed-term employment contracts but also for indefinite employment contracts.
• The employer must pay compensation to the employee if and as long as he holds the employee to the non-competition clause, then it is half a month’s salary for every month the restriction lasts (or a higher amount if agreed).
• The non-competition clause is only valid if and as long as the employer invokes it.
• The employer can only invoke the clause if he does so in a timely manner (no later than one month before the end of the employment contract) and informs the employee in writing that and for what period he invokes the clause.

Provision of Personnel (Accreditation) Act (Wtta)

This bill, which was submitted to the House of Representatives by the previous government on 6 October 2023, introduces an admission system for companies or legal entities that make workers available (suppliers). From a date yet to be determined after 2027, suppliers will only be allowed to supply workers if they have been admitted to do so by the Minister of Social Affairs and Employment. To be admitted, suppliers must be able to demonstrate compliance with relevant laws and regulations, submit a Certificate of Good Conduct (VOG) and provide financial security. Hirers may only do business with admitted suppliers. The Dutch Labour Inspectorate supervises the admission requirement and can fine both suppliers and hirer if they do not comply with the rules of the admission system. The bill is currently scheduled for plenary consideration in the House of Representatives on 2 December 2024. If passed, it will go to the Senate for further consideration. In a letter dated 25 October 2024, the Minister of Social Affairs and Employment indicated that it is not feasible for the bill to enter into force on 1 January 2026 and for enforcement to commence on 1 January 2027. Further dates have yet to be determined.

Limiting compensation scheme for transition payment in case of long-term disability to small employers

If an employer terminates the employment contract due to long-term disability of the employee after the employee has been incapacitated for work for two years, the employer can, on the basis of the current Article 7:673e Dutch Civil Code, be compensated for the (transition) payment paid to the employee (to a certain extent) by the Labour Office (UWV). The government has announced that it will introduce a bill that limits this compensation scheme to employers with less than 25 employees. The intention is that this will apply from 1 July 2026. Employers with 25 or more employees will then no longer be compensated. The bill has yet to be published.

Want to know more? Feel free to contact Cara Pronk and Steven Sterk