Tax & Legal 13 April, 2023

Law changes as part of labor market reform

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Law changes as part of labor market reform

On Monday, April 3, Minister van Gennip of Social Affairs and Employment sent a progress letter to the House of Representatives. In it, legislative changes are announced that follow up on the plans to reform the labor market. These announced changes aim to provide more security for workers and, in addition, to give entrepreneurs more flexibility.

The main changes announced in the package of measures are still being fleshed out and have yet to be submitted to the House of Representatives and the Senate. We are following this reform closely and we will take you through the course of this legislative process.

Disability insurance for the self-employed

There will be a mandatory disability insurance for the self-employed, so that a financial safety net will be made available for this group in case of disability. The disability insurance will be subject to a one-year waiting period. This insurance will initially be mandatory only for IB entrepreneurs, not yet for director-major shareholders. By default, every self-employed person insures for a benefit of 70% of last earned income, up to the limit of 143% of the legal minimum wage. The benefit will be a maximum of 100% of the legal minimum wage.

The government is also exploring a so-called “opt-out” scheme. This means that there may be an option to opt out of public insurance if the self-employed person takes out private insunce with at least the same coverage and premium as the public variant. Through the opt-out arrangement, there will be an option for the self-employed to decide for themselves which insurance is appropriate for them, in order to meet individual insurance needs.

On-call contracts

The permanent employment contract must become the norm again. This means that zero-hours contracts and the current min/max contracts will be replaced by a new contract: a basic contract. In this basic contract it will be obligatory to define a minimum number of hours, also known as the scope of work. This should provide some security for this group of employees. This regulation will not apply to students and pupils.

Temporary workers and temporary employment agencies

Temporary workers will also be offered more security by shortening phase A and phase B: 52 weeks for phase A and 2.5 years for phase B. The employment conditions package of temporary workers will have to be agreed on at least an equivalent total package. The total package will have to be equivalent for both temporary workers and workers employed by the employer. Temporary employment agencies will also have to comply with certification requirements that will be monitored through the implementation of a certification system.

Chain arrangement

In order to prevent structural work from being filled in permanent temporariness, the interruption period that applies to chains of temporary contracts (currently 6 months) will expire. This will be replaced by an administrative expiration period of 5 years. Exceptions by collective agreement will no longer be possible, including for temporary workers. The exception is that the interruption period will not apply to students and pupils. For seasonal work, the existing legal possibilities will continue to apply. 

End of first-track reintegration obligations after one year

Small and medium-sized employers (up to 100 employees) can get clarity on the possibility of sustainable replacement of an employee after one year of illness, so that the employer can continue business operations. 

 In the elaboration, procedural safeguards will define how the employer and employees can agree on such arrangements. If the employer and employee do not reach an agreement on concluding the first track (return to current employer) and the employer still wants to conclude the first track, the employer must request permission from the UWV. If the first track is concluded, the starting point is that the employer can terminate the employment contract after two years, subject to conditions. The reintegration of sick employees in the second year of illness will therefore focus primarily on reintegration in the second track (with another employer).

Premium differentiation WW

The increased premium of 5% points when exceeding 30% does not apply when the employee has a permanent contract for at least 30 hours per week (currently 35 hours). The permanent basic contract will fall under the low WW premium.

Contingency Plan Staff Retention

Employers who are faced with a crisis or calamity that falls outside the entrepreneurial risk can appeal to the Contingency Scheme for Staff Retention. For the duration of up to six months, they can choose to have employees temporarily perform other work or have employees work at least 20% less, while retaining their unemployment benefits. 0% wages are paid on the number of hours not worked, with total wages not to fall more than 10%. Nor may the employee’s income fall below the legal minimum wage. If the employer chooses to do so, he can apply for a 60% allowance for the wage cost of the hours not worked.

The legislation is scheduled to be debated in the spring of 2024, so that by January 1, 2025, this package of measures will take effect.

Want to know more about labor law, legal minimum wage, contracts or anything else? Get in touch and one of our specialists will be happy to talk to you.

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