The New Year started with a bang: the entry into force of a few important changes in Dutch employment law. This article gives an overview of these changes, as well as other important legislative developments and the legislator's New Year's resolutions.
The Balanced Labour Market Act
On 1 January last, the Balanced Labour Market Act ('Wet Arbeidsmarkt in Balans' or 'WAB') entered into force. The most relevant changes are set out briefly below.
Additional statutory ground for dismissal
Before this date, there were eight limited grounds for dismissal, on which an employer could base a request for dismissal at the authorities. The new act has introduced a new, cumulative ground, allowing employers to come to a dismissal decision based on a combination of grounds, which are not sufficient on their own to justify a dismissal. For example, the combination of a poor performance case and a disturbed employment relationship. This additional ground is called the 'i-ground'. The expectation is that as a result of the introduction of this ground, it will be easier for employers to terminate employment agreements. There is a flip-side to this coin: if the court terminates employment based on this cumulative ground, it may grant the employee an additional severance payment of maximum 0.5 the applicable transition payment on top of the statutory transition payment (the statutory severance payment on termination of employment in the Netherlands), and possible additional reasonable compensation.
Furthermore, the way the transition payment is calculated has changed. Now, employees are entitled to the transition payment from the start of their employment, instead of after two years. Furthermore, the calculation covers the whole duration of employment rather than rounding up per six months period. The employee is entitled to one third of his or her gross monthly salary (including holiday allowance, 13th month, average bonus and other fixed salary components) per year of service. For partially worked years the calculation is made pro rata.
The maximum transition payment is set at EUR 83,000 gross or a maximum of one years gross salary in case this would be higher than the EUR 83,000 gross.
Extension chain rule
The WAB also has consequences for the Dutch 'chain' rule, which determines how many fixed-term employment agreements an employer and employee can agree upon before the employee is entitled to an indefinite contract. The new act allows...