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With the introduction of the ‘Labour Market in Balance Act’ (WAB), the legislator aims to balance the Dutch labour market. This is a response to the new labour legislation, which came into force in 2015. The new proposed legislative change has a significant impact on the payroll construction used in the Netherlands. Are you an employer dealing with payrolling and want more information on your responsibilities, obligations and rights within the employment relationship and cooperation with payroll organisations? The employment lawyers at Fruytier Lawyers in Business will be happy to provide you with appropriate legal advice.

No allocation function for employers

The distinction between the agency agreement and the payroll agreement is that the employer does not perform an allocation function with payrolling. In the case of a payroll contract, this means that an employment contract in which the employee is made available to a third party has not been achieved in the context of bringing together supply and demand in the labour market.

Termination of a payroll contract

Rules for termination currently applicable to payrolling will change. After the implementation of new legislation, payroll employees will have the same protection against dismissal and the same rights as a hirer’s own employees. If a payroll employer wishes to terminate the employment contract, such termination will be assessed based on the grounds for termination of the employment contract by the actual employer, or material employer.

Payrolling and the renewed conditions

If the reason is the reduction in the amount of work, the dismissal must be in line with the multiplier principle applied to the actual employer. The play-off principle determines the order in which employees must be dismissed in the event of termination of employment for business economic reasons. If there are insufficient grounds for dismissal or if the employer does not act in accordance with the ageing principle, the UWV will not grant permission for the termination and the employment contract cannot be terminated. With the advent of the WAB, these conditions will also apply to payrolling from 2020.

Equality for all employees

In addition, the new law requires equality for salaried and payroll employees working for a company. This concerns equality in pay, pensions and other conditions, such as childcare and additional services available to in-house employees. The main purpose of the legislative changes is to prevent abuse of payrolling for cost-related reasons. It is to be expected that these changes will have significant impact on the use of payroll construction in the Netherlands. Would you like to know more about this topic and the legal construction around payroll contracts? Contact one of our specialists.

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