The new Employment Law in the Netherlands: ‘Wet Arbeidsmarkt in Balans’

With the introduction of the ‘Wet Arbeidsmarkt in Balans’ (WAB) the government wish to achieve a rebalancing of the Dutch labor market. It is a response on the new Employment Laws which became effective in 2015. The main purpose of the new law is to turn the tide with regards to the increasing number of short-term temporary employment contracts and to make it more attractive for employers to offer permanent employment instead. The following changes will become effective when the new legislation is implemented.

Extended period of probation

The maximum probation period will be increased from 2 to 5 months for permanent employment contracts

For temporary employment contracts the following probation periods applies:

  • A contract of 6 months or less, no probation period is allowed;
  • A contract between 6 months and 2 years, a probation period of 1 month is allowed;
  • A contract longer than 2 years, a probation period of 3 months is allowed.

No probation period can be agreed if the employment contract succeeds another employment contract with the same employer, unless the new agreement clearly demands different skills of, or creates clearly different responsibilities for the employee.

A probation period may also not be agreed if it concerns an employment contract that succeeds another employment contract with a different employer who, with regards to the work performed should be considered the successor of the previous employer.

Non-compete clause not valid in case of cancellation in the period of probation

If the non-compete clause has been agreed between employer and employee, such non-compete clause will become invalid and ineffective if the employment contract is cancelled during probation period. Unless such non-compete clause is necessary due to compelling business or service interests and the employer communicates this to the employee in writing or electronically and with motivation. Notice as referred to in the previous sentence has to be given as soon as possible after the termination if the employee terminates the employment contract and simultaneously with the cancellation if the employer terminates the employment contract.

Expansion of the maximum number of succeeding temporary contracts

New legislation will introduce more possibilities to offer an employee temporary employment contracts. The period that it is maximally allowed for employers to offer the same employee succeeding fixed-term employment contracts (within a period of 6 months) will be extended to 36 months. The maximum number of fixed-terms contract remain three.

Currently Dutch employment law provides a maximum of 3 fixed-term contracts for a total maximum duration of 24 months, including the intervals, shorter than 6 months, between contracts. Deviations are only allowed through collective agreements, with an alternative maximum of 48 months and 6 different contracts.

Obligation to offer contract with fixed number of hours after 12 months of on-call contract

In the event of a call-contract, the employer will be obliged to offer the employee for a fixed number of hours if the call-contract duration exceeds the 12 months. This offer must be done within one month, in writing or electronically, for a fixed number of hours, which has to be at least equal to the average number of hours worked in the preceding 12-month period. For the calculation of the 12-month period, employment contracts, which have succeeded each other at intervals of six months at most are added together. The term for acceptance of the offer for the employee is at least one month.

Allowing for a combination of grounds for termination

As it currently stands employers are not allowed to combine the reasonable grounds for termination provided by law.

The grounds currently are (summarily described):
a. Reduction in the amount of available work;
b. Long-term incapacity for work (> 24 months);
c. Frequent absenteeism with unacceptable consequences;
d. Malfunctioning;
e. Culpable conduct or omission of employee;
f. Refusal of work due to conscientious objection without the possibility of adaptation;
g. Disrupted employment relationship;
h. Conditions other than a. to g. which are such that continuation cannot be required.

The new legislation implements changes to the fact that each ground has to stand on its own to service as a termination ground. A new ground will be introduced that provides the possibility to terminate an employment contract by which two or more grounds can serve as a combined ground for termination.

It this occurs, the situation is such that the employer cannot reasonably be required to continue the employment contract.

Transition fee

Currently the employer is obliged to pay the employee a transition fee at termination of the employment contract, unless the duration of such employment contract was shorter than two years. New legislation will introduce that the transition fee is also payable if the duration of the period of employment was shorter than two years.

The method for calculating the transition fee is going to change as well: 1/3 of one month’s pay for each full year of the agreement and a pro-rata part of that yearly amount for the period that is shorter than a year.

Under certain specific circumstances, the employer can request compensation from paid transition fees from the authorities (the UWV).

Required change to the payslip

The new legislation obliged employers to include the form of employment contract on the salary lip of the employees. This means that each salary slip will need to state whether the employee is employed indefinitely, a fixed term or on-call basis.

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