FAQ’s

FAQ’s

What is the Labor Market in Balance Act?

The Labor Market in Balance Act (Wet arbeidsmarkt in balans in Dutch, or WAB) is the Netherlands’ new law governing employment and dismissal law. The Act was approved by the Dutch Senate in May 2019 and entered into force on January 1, 2020, less than five years after the introduction of the Dutch Work and Security Act.

What is the main purpose of the Labor Market in Balance Act?

As you can tell by the title, the main objective of the Labor Market in Balance Act is to bring the labor market in the Netherlands into balance. The law seeks to do this by bridging the gap between employees with permanent contracts, who have the most rights and protections under the law, and employees with temporary contracts, who have little or no rights and protections under the law.

What are the different types of employment contracts in the Netherlands?

Dutch employment law regulates the working relationship between employers and employees in the Netherlands. There are two main types of employment contracts in the Netherlands: fixed-term, or temporary, contracts and indefinite-term, or permanent, contracts. Employees with flexible work agreements include payroll staff and stand-by workers.

What is a fixed-term employment contract?

A fixed-term employment contract is a contract that has a set start and end date. Employers in the Netherlands are required to notify employees with fixed-term contracts about whether the contract will be renewed or not at least one month before the contract’s end date.

What is an indefinite-term employment contract?

An indefinite-term employment contract is a contract that has no end date, meaning there is no intention on the employer’s part to limit the duration of the contract. The required notice period for employees with indefinite-term contracts depends on the term of employment, as follows:

• Less than five years: one month
• Between five and 10 years: two months
• Between 10 and 15 years: three months
• More than 15 years: four months

What is payroll staff?

In the Netherlands, the term “payrolling” is used to describe the practice of outsourcing staffing. An employer in need of staff has the option of hiring workers through a payroll company or employment agency, rather than hiring employees directly. Under the Labor Market in Balance Act, payroll staff have virtually the same legal rights and protections as permanent employees, including the right to uniform employment conditions and the same protections against dismissal.

What is a stand-by worker?

Stand-by workers, also known as on-call workers, are employees who are only obligated to work when called upon by their employer. Two types of employment contracts available to stand-by workers in the Netherlands are zero-hour contracts and min-max contracts. Under the WAB, stand-by workers are entitled to receive four days’ notice from their employers in advance of when the work must be completed. Prior to this law, on-call workers were required to be on-call at all times.

What is the extended “chain provision?”

One of the more significant changes implemented by the Labor Market in Balance Act is the extension of the “chain provision,” which pertains to the employment relationship between employers and employees who have a chain of successive fixed-term employment contracts. Under the Dutch Work and Security Act, employers in the Netherlands could complete three temporary contracts within a period of two years, with a maximum interruption period of six months between contracts before being required to offer the employee an indefinite-term contract. Under the Labor Market in Balance Act, the chain provision is extended to three years.

What is transition pay?

Transition pay (transitievergoeding, in Dutch) is a type of compensation available to employees in the Netherlands who are involuntarily dismissed from employment. This can include having your employment contract terminated or not having your fixed-term contract renewed on the initiative of your employer. Transition pay, also known as transition compensation, was first introduced on July 1, 2015, with the Dutch Work and Security Act.

Am I entitled to transition pay?

Prior to the WAB, employees in the Netherlands were only eligible for transition pay after having worked for the same company for two or more years. As such, it was a common practice for Dutch employers to offer employees a 23-month contract so they could avoid the transition pay obligation. Fortunately, the WAB changed that. Under the new law, employees are entitled to transition pay from their first working day, including a probation period.

How much transition pay can I receive?

The amount of transition compensation you are entitled to is calculated based on your salary and total years of service. Under the Labor Market in Balance Act, you are eligible to collect transition pay equal to one-third of your gross monthly salary for each year of employment, plus a pro-rated payment for each month and day short of one full year. The amount of transition pay you can receive in the Netherlands is currently capped at €83,000, or one year’s salary, whichever amount is greater.

What is a collective labor agreement?

A collective labor agreement is a written agreement specific to a company or business sector that contains the rules for all employees regarding salary, working hours, payment during illness, termination of employment contracts, and more.

What is a settlement agreement?

A settlement agreement, also known as a termination agreement, is an arrangement under which an employee and employer reach an amicable agreement about ending the working relationship. This is known as mutual consent. You are still entitled to transition pay in the case of termination by mutual consent via a settlement agreement.

What are the grounds for dismissal?

Unlike in other countries, Dutch employers can only fire their employees if they have a valid reason for doing so. Prior to the entry into force of the Labor Market in Balance Act, there were eight specific grounds on which a Dutch employer could base a request for dismissal from employment, known as “grounds for dismissal.” These were as follows:

1. Economic reasons,
2. Long-term illness or disability,
3. Repeated absence due to illness or disability,
4. Poor performance,
5. Culpable acts on the part of the employee,
6. Conscientious objection,
7. Seriously damaged working relationship, and
8. Other circumstances which are such that the employer cannot be reasonably expected to allow the employment relationship to continue.

The WAB introduced an additional ground for dismissal, known as the “cumulative” ground, which allows Dutch employers to request the termination of an employment contract on the basis of a combination of circumstances consisting of two or more grounds for dismissal (3-8 only).

What is the dismissal procedure?

There is a specific legal procedure that Dutch employers must follow if they wish to terminate an employee’s employment contract. Your employer can only legally dismiss you if he or she obtains a dismissal permit from the Employee Insurance Agency, goes to court to dissolve the employment contract, has your consent, does so during your probation period, or in the case of a summary dismissal for an urgent cause.  

What if I was dismissed because I was sick?

Dutch employment law prohibits employers from terminating the employment contracts of employees who are on sick leave. However, after two or more years of an employee not being able to work because of a long-term illness or disability, employers are permitted to submit a request to terminate the employment relationship, so long as they have satisfied all of their obligations during the sick-leave period. Employees in the Netherlands who are dismissed due to a long-term illness or incapacity for work are entitled to transition pay for the full period of employment.

What is the transition payment compensation scheme?

As of April 1, 2020, Dutch employers can apply to the Employee Insurance Agency to be compensated for transition payments made to employees who were dismissed after two years due to a long-term illness or disability. This law is known as the Transition Payment Compensation Scheme and it aims to discourage the practice of employers keeping the employment contracts of long-term ill employees “dormant” to avoid paying the transition fee upon dismissal.

What is the Employee Insurance Agency?

The Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen in Dutch, or UWV) is an independent administrative agency commissioned by the Ministry of Social Affairs and Employment. If you are employed in the Netherlands, you may encounter the UWV if you face dismissal at work or cannot work due to an illness or disability.

What is a collective redundancy?

Collective redundancy is a term used to describe a situation in which a Dutch employer dismisses or proposes the dismissal of 20 or more employees within a period of three months and within a single district of the UWV. One of the most common reasons for a collective redundancy, also known as a collective dismissal, is economic necessity due to a business reorganization or restructuring.

How can an employment law attorney help?

Dutch employment law is extremely protective of employees and with an experienced labor and employment law attorney on your side, you can ensure that your legal rights are protected with regard to matters such as your employment contract, dismissal law, unemployment benefits and more.