As of July 1, employers in the Netherlands have to deal with a number of important changes in the field of HR and employment law. These include changes in the areas of pensions, minimum wage and the continued payment of wages for sick employees who are already entitled to state pension. In addition, on July 1, 2023, employees’ legal holidays for 2022 will expire. Below you can read all about all these matters.
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Pension Act adjustment July 1, 2023
On 30 May 2023, the Dutch Senate passed the Future Pensions Act (Dutch: Wet toekomst pensioenen, hereinafter “Wtp”). This law is a consequence of the pension agreement that the Dutch government concluded with employee and employer interest groups in 2019. The most relevant provisions of the Wtp can be summarized as:
- The basic principle was that Dutch pensions are saved for collectively, and now we see a change towards individual pension savings.
- To facilitate greater flexibility in the amount of pension payments, the new system allows pension funds to use the proceeds from investments of pension money more quickly to increase pension payments. At the same time, pensions are also allowed to decrease in bad economic times.
- Personal pension accrual: henceforth, pensions in the Netherlands will consist of the contribution paid in by the individual concerned, plus the return that that contribution has generated during accrual.
- To remove the pressure of putting in contributions in the last years of one’s career, from now on, the contributions paid by workers at any age will benefit their own pension.
With the above changes, the Dutch pension system appears to be changing from a state-run system, to a more individually designed provision. This means more choice in the risk profile of the investments made for the pension and more transparency in how the pension is built up. In that context we note however that the expectation is that in the Netherlands there will remain a distinction between the pension contributions of working people and pension insurances, such as disability insurance, dependents insurance or survivor’s pension insurance. These will remain under the direction of the employer.
Pension funds must meet the deadline of Jan. 1, 2028, to make the necessary changes for this new system.
Minimum wage adjustment effective July 1, 2023
A slightly less extensive legislative change, but one that is certainly no less far-reaching in the field of personnel and payroll management concerns the statutory increase in the Dutch minimum wage. This increase will become active immediately upon the amendment of the Minimum Wage and Minimum Holiday Allowance Act (Dutch: Wet minimumloon en minimumvakantiebijslag, hereinafter: “WML”) taking effect on July 1, 2023. By that date, any necessary changes to the payroll must therefore also be implemented. Specifically, the change when it comes to employees 21 years and older involves the following:
|(Excluding 8% holiday allowance pay)||Minimum wage as of Jan. 1, 2023||Minimum wage as of July 1, 2023|
|Per month||EUR 1,934.40||EUR 1,995, –|
|Per week||EUR 446.40||EUR 460.40|
|Per day||EUR 89.28||EUR 92.08|
All the amounts mentioned above are calculated based on full-time employment and will have to be applied proportionally in the case of part-time work. Furthermore, this minimum only applies in cases where there is no collective bargaining agreement applicable to the sector and/or employer. In cases where there is, the collective agreement will have to be followed. Does your organization have questions about the application of the changes in the minimum wage? Please send them to us, replying to this newsletter. Our specialists will respond as soon as possible.
For minimum youth wages and hourly wage rates, click here:
Adjustment of term of wage payment obligation as of July 1, 2023
As of July 1, 2023, the so-called “salary continuation obligation” for employers of employees who are already entitled to a state pension (Dutch and hereinafter: “AOW”) will be reduced to 6 weeks. If the AOW entitled employee continues to work and unexpectedly becomes ill or injured, there is currently an obligation for their employer to continue to pay wages for 13 weeks. This 13-week period is a result of transitional regulations based on earlier changes in Dutch employment law.
As of July 1, 2023, transitional law no longer applies, and a new statutory wage payment obligation of 6 weeks will apply. This means that if an AOW-eligible employee becomes sick after July 1, 2023, they are entitled to 6 weeks of wage payment. If the AOW-eligible employee became ill before July 1, 2023, then the 13-week wage continuation obligation will continue to apply. If no collective bargaining agreement applies and no agreements have been made in the employment contract, the salary during the period of illness will be 70% of the salary to the extent that the salary does not exceed the maximum daily wage.
Legal holidays to expire July 1, 2023
In addition to the minimum wages within your organization, the (statutory) legal holidays of Dutch employees must also be an area for attention as of next July 1. This is because the legal holidays for the year 2022 will then expire. For a good understanding of this regulation, we list the most important points regarding holidays below:
- In 40 hour workweek employment, every working person in the Netherlands is entitled to at least twenty holidays per year (which are called legal holidays).
- In the case of part-time or irregular working hours, four times the (average) working hours per week are counted.
- Many workers are also entitled to additional holidays based on their collective bargaining agreement/company regulations and/or individual labor agreement. These holidays (being more than the 20 legal holidays) are called non-statutory (Dutch: bovenwettelijke vakantiedagen)
- Legal holidays are valid for 1.5 years. This means that each year on July 1, the legal holidays accrued in the previous year expire.
- In other words, on July 1, 2023, the 2022‘s legal holidays will expire.
- However, expiration is only possible if the following conditions are met:
- The employee must have been able to take the holidays.
- As an employer, you must have informed the employee well in advance of the holidays expiring.
For Crowe Peak customers, the payroll program Loket automatically voids remaining legal holidays. This, while employees – if the above conditions are not met – may still be entitled to the days in question. Therefore, please notify us immediately if this is an issue in your organization. Please note! Legal holidays (unlike non-statutory holidays) may not be paid out. The reason behind this is that every employee is supposed to be able to take time off.
In this context, it is important to note that the non-statutory holidays are valid for five years. The next important deadline in this regard is December 31, 2023. On that day, the non-statutory holidays of 2019 will expire.
Temporary law on transparency accelerated liquidation takes effect in November 2023
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