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24 April 2018

The Netherlands: draft bill aims to revise employment security act

The employment security act that was introduced in 2014 has been much criticised by some of the coalition partners of the incoming government. The social affairs ministry has announced a reform of the act and of the 'flexicurity' that is a characteristic of the Dutch labour market.

The current coalition government announced plans to modify the Employment Security Act (‘Wet Werk en Zekerheid’) and launched an online consultation with proposed changes. The coalition recognised in its coalition program that the flexibilization of the Dutch labour market has been excessive, with too much flexibility and less security. In February 2018, the national bank revealed in a report that the share of the flexible segment of the workforce, comprising employees on flexible contracts and own-account workers, had increased by a much greater extent than elsewhere in Europe. According to the bank, the weaker negotiating position of workers on flexible contracts has caused a decline in the labour share of income.

The former government had adopted the Employment Security Act in 2014 that aimed to reduce job insecurity by decreasing the differences between permanent contracts and temporary contracts. The measures entered into force in 2015. The maximum number of consecutive fixed-term contracts was limited to three for a maximum period of two years instead of three years previously. The fourth contract would be deemed to be of indefinite duration. The gap between two temporary contracts was extended from three to six months. However, the functioning of the act was criticised from the start. According to employers, the act was not flexible enough. 

The consultation paper’s draft proposals include a longer probationary period (increased from two to five months), the possibility to license workers based on accumulated service, a reduction of the transitional redundancy pay for workers with a long period of service and the reintroduction of a maximum period of three years for three consecutive temporary contracts. The act provides on-call workers with more rights (the obligation to stay on-call is eased, workers have to be paid in case the call is annulled). Employers that offer permanent jobs will profit from lower social security contributions (to the unemployment fund).  

Trade union FNV has sharply criticised the proposed measures. The FNV said that most proposals will lead to more job insecurity and cheaper redundancy schemes. According to the union, the act will make the scope for direct labour contracts even smaller with, as a result, more pressure on an already vulnerable labour market position for workers. The union refers to the fact that the flexibility in the Netherlands is among the highest across Europe. In a decade, 500,000 permanent jobs have been shifted into flexible and insecure jobs.     

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