Work and job security act – The measures outlined

The most important changes, that became effective per 1 January 2015 and that will become effective per 1 July 2015, are summarized below.

CHANGES EFFECTIVE 1 JANUARY 2015

TRIAL PERIOD: trial periods may not be agreed in contracts shorter than 6 months. This applies to all employment contracts concluded on or after 1 January 2015.

NONCOMPETITION CLAUSE: temporary contracts may no longer automatically include a noncompetition clause. If a noncompetition clause is included, written substantiation is required demonstrating that it is ‘necessary because of substantial business or service interests’. If employers invoke the noncompetition clause they must be able to prove that these interests exist. This applies to all employment contracts concluded on or after 1 January 2015.

NOTIFICATION PERIOD: for temporary contracts of 6 months or longer employers must ‘notify’ employees at least one month before the contract ends whether or not the contract will be continued (and if so, on what conditions). If an employer does not fulfil this obligation then it must pay an employee one month’s salary, if claimed by the employee. The notification period will apply to all temporary employment contracts that end on or after 1 February 2015.

NO WORK, NO PAY BECOMES NO WORK WITH PAY: : the basic principle of law is that an employer is obliged to continue paying an employee’s salary if the employee’s failure to work is due to circumstances that can be attributed to the employer (e.g. fire or other business contingencies as a result of which the work cannot be carried out). This risk may be excluded for a maximum of six months in the employment contract. And for temporary employment contracts this may be deviated from in collective bargaining agreements up to a maximum of 78 weeks (i.e. 1.5 years).

CHANGES EFFECTIVE 1 JULY 2015

THE DISMISSAL LAW: The reason for dismissal determines which of the two obligatory routes will apply in a given case:

  • an application must be made to the work placement branch of the Employee Insurance Agency (UWV WERKbedrijf) for a dismissal permit for business reasons, and in the case of long-term work disability;
  • for all other person-related reasons, and where the working relationship is damaged, the case must be brought before a court with the power to set aside the employment contract.

The rules that must be applied when commencing proceedings at the Employee Insurance Agency (UWV WERKbedrijf) are laid down in two ministerial regulations, namely, the Redundancy Regulation of 23 April 2015 and the UWV Dismissals Procedure Regulation of 23 April 2015.

Introduction of appeal and cassation against decisions given by the Employee Insurance Agency (UWV) and the setting-aside by the court. Employees must contest their dismissal before the court within 2 months of the date of dismissal, and therefore also invoke the possible nullity thereof.

INTRODUCTION STATUTORY TRANSITION PAYMENT: a transition payment is due on termination of an employment contract of two years or more. The well-known subdistrict court formula ceases to apply.

For the first 10 years, the transition payment is 1/3 of a month’s salary for each year in the job. For the second 10 years, the transition payment is 1/2 of a month’s salary for each year in the job subject to a maximum of € 75.000 or one year’s salary. This payment must be used for training, retraining or outplacement.

Transitional rules will apply until 2020 for employees who are over the age of 50 and have been in the job for more than 10 years. The transition payment for this group is set at one month for each year of employment ‘above the age of fifty’ with an exception for small and medium-sized businesses with fewer than 25 employees to which the ‘usual’ transition payment applies.
The transition payment can be reduced or even set at zero if payment of the full amount would put a company’s continuity in jeopardy, or lead to even more dismissals. Moreover, no transition payment is due if the employee is guilty of serious imputable acts or if he has reached legal retirement age and his employment is terminated for this reason.

A subdistrict court has the power to award a severance payment on top of the transition payment in the event of serious culpability. The law prescribes no limits on this payment but pursuant to the explanatory notes to the Work and Job Security Act this must be restricted to ‘special cases’.

Under certain circumstances costs relating to the employability of the employee e.g. those relating to training may be deducted from the transition payment. Here it is important that this is also agreed between employer and employee. See also the Decree conditions subtracting costs transition payment of April 2015 for other costs that may be deducted from the transition payment.

INTRODUCTION STATUTORY RIGHT TO TRAINING: employers are obliged to ensure that their employees are given the opportunity to take courses or receive training necessary for the proper performance of their jobs. If inadequate performance is established, the employer must be able to prove to the court that the employee was given the opportunity to follow courses/training.

COOLING-OFF PERIOD IN SETTLEMENT AGREEMENTS: irrespective of whether or not employees have legal representation, they will be entitled to a statutory cooling-off period of 2 weeks which takes effect on the date that the settlement agreement is entered into. Employees may at any time during these two weeks terminate the settlement agreement for reasons of their own. This cooling-off period must be included in the settlement agreement failing which the period will be extended to three weeks.

CHANGES TO STATUTORY RULE GOVERNING SUCCESSIVE FIXED-TERM EMPLOYMENT CONTRACTS: the 3 x 3 x 3 rule for successive fixed-term employment contracts will be changed to 3 x 2 x 6. Or in other words: no more than three temporary contracts in any two-year period with gaps of six months. This may be deviated from in a collective bargaining agreement but only if the nature of the work makes temporary contracts necessary, with a maximum of 6 temporary contracts in any 4-year period, again with 6-month gaps.

CHANGES TO THE UNEMPLOYMENT INSURANCE ACT: the maximum duration of the publicly financed unemployment benefits (currently 38 months) will be reduced progressively by one month each quarter with effect from 2016. With effect from 2019 the maximum duration of these benefits will be two years. After six months of unemployment employees will have to accept jobs below their level.

D.H. Oolbekkink
Employment law

June 2015

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