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Netherlands

6 December 2018

Netherlands: draft proposals for labour reform

The Dutch government has come up with draft amendments to labour legislation that aims to reduce the legal gap between working as a permanent worker and as a temporary worker. To this end, the rules for making workers redundant will be eased while the period temporary staff can work on short contracts will be extended from two to three years. The trade unions criticise the plans as a policy that will reduce job security for workers.

The ministry of social affairs and employment published its proposals for a revision of several parts of the country’s labour legislation. The draft legislation should encourage firms to recruit more staff on permanent contracts. The government had expressed in the coalition agreement its intention to present proposals that could put an end to the apparently unlimited growth of flexible jobs. The statistical office CBS revealed in the spring of 2018 that the country is the European ‘flex-champion’, with nearly two in ten 25- to 45-year-olds employed in 2017 as temporary, on-call or agency worker or trainee.

The draft law prescribes among, other things, that workers are entitled to a permanent contract after three years and will be entitled to a redundancy allowance (the so-called transition allowance that aims to stimulate the transition to another job) right from the start of a labour contract. Moreover, employers will have the possibility to make workers redundant due to different dismissal grounds: the so-called ‘i-ground’. With this option, the employer can submit a dissolution request. A judge can then determine that the worker receives an additional compensation in addition to the transition payment. The probation period in an employment contract for an indefinite period will be prolonged to a maximum of five months. Other planned provisions are that a worker with a zero-hours or an on-call contract will only be obliged to respond to a call if the call is at least four days in advance. By incorporating recent jurisprudence in the Netherlands, the revision guarantees so-called payroll workers the same primary and secondary working conditions as regular workers who are directly employed by the employer. Finally, employers will have to pay a higher unemployment premium for workers on a flexible contract than for workers on a permanent contract.

Th social partners expressed strong reservations after publication of the proposals. Trade union FNV criticised the lack of ambition and said that the planned changes will not have the desired effect. The union said that legislation that prolongs the trial period of workers and eases the redundancy process will never lead to more permanent jobs. Trade union CNV reacted in a similar way and said that the new legislation even might result in the opposite of its intention, with an acceleration of flexibility and less job security for workers. CNV has started a petition against the planned revision. 

NBBU, one of the employers’ organisation in the temporary agency sector said that, although the aim is to fight against recruitment practices that circumvent the regulations of temporary work, the effect will be ‘an attack to flex-work’. NBBU criticised the fact that the new legislation is not tailor-made and will make agency work in general more expensive. The general employers’ organisation VNO-NCW and the temporary agency sector’s biggest employer organisation ABU had already formulated similar opinions during an Internet consultation in April 2018.

Criticism was also expressed by the government’s main advisory body in legal affairs, the Council of State. The Council stated that the revision aimed at restoring the balance between permanent and flexible employment contracts will not tackle the problem. The Council has labelled the government’s plans inadequate and said the plans could easily lead to new problems elsewhere in the labour market.

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