The Balanced Labour Market Act (WAB)

The Balanced Labour Market Act (WAB) has recently been adopted by the Senate.
The new act, which will enter into force on 1 January 2020, aims to reduce the differences between permanent and temporary employment contracts. Amongst other things measures include making employer costs more expensive and easing dismissal rights.
Summarized below you will find the most important changes.

Cumulation ground for dismissal

A new ground for dismissal is introduced in addition to the existing grounds for dismissal:
the so-called cumulation ground. Currently, dismissal is only possible if one of the eight grounds for dismissal is fully met. The cumulation ground gives the court the option to combine several reasons for dismissal. The cumulation ground cannot be used for dismissals for commercial reasons or for long-term occupational disability.

The flipside is that in the case of a dismissal on the cumulation ground, the court may award the employee an extra fee on top of the transition allowance (and possibly the fair compensation) up to a maximum of 50% of the transition allowance.

Transition allowance

Under the WAB, employees will already be entitled to a transition allowance from the first day of their employment (including the probationary period). At present, an employee is only entitled to a transition allowance if he has been employed for at least two years.

The accrual of the transition allowance is reduced for employees who have been employed for a long time. In the future, each employee will accumulate 1/3 monthly salary per year. At present, this accrual starting from a 10-year employment is 1/2 monthly salary per year. Under the new act this accrual for long term employment will be cancelled.

Sequence System

The current sequence system of a maximum of three temporary employment contracts in two years will be extended to a maximum of three temporary employment contracts in three years.

The current rule that the sequence is suspended after a period of more than six months will remain unchanged.

However, the option is offered to limit this period to three months in a collective labour agreement. This is only possible in the case of recurrent temporary work that can be done for nine months per year as a maximum (e.g. seasonal labour).

Scheme sequence system

 Years Agreements Suspension
Present 2 3 6 months
Per 1-1-2020 3 3 6 months

 

Payrolling

Payrolling employees must be treated the same in terms of employment conditions as employees employed by the client.

The definition of the temporary employment contract is not changed.

Payrolling employees are entitled to an adequate pension scheme. This measure however will be postponed until 1 January 2021.

On-call contracts

Under an on-call contract, the employer has to call the on-call worker at least four days in advance. If he does not do this timely, the on-call worker is not obliged to obey the call.

If the employer does call the employee timely, but withdraws the call within those four days, the on-call worker remains entitled to the wages over the period for which he was called.

In a collective labour agreements, this term of four days can be shortened to one day.

The employer will be obliged to offer an employment contract after one year for the number of hours the on-call worker has worked on average in the preceding year.

Note:

There is a transitional agreement for employees who already are employed on a flex contract for 12 months or more on January 1st 2020. Employers need to offer them a fixed contract on the average hours in the preceding year.
So all flex contracts need to be screened now so it is known which employees need to get the fixed contract offer.

For on-call employees also the cancellation period will change. At present this is one month.
With the new Act this will be 4 days or less according to the collective labour agreement, so in some cases it is even 1 day.

 

Unemployment Insurance Act (Werkloosheidswet, “WW”)

For employers, the WW contribution will be lower when an employee is offered an employment contract for an indefinite period instead of a temporary employment contract.

The lower premium only applies when:

– The employment agreement is for indefinite time;
– The employment agreement is written;
– The employment agreement is not an on-call contract

Those terms will be mentioned in the wage tax filing to the tax authorities. So therefore this needs to be checked and added if not complete in the payroll system.

The employer is obligated to mention the type of contract on the payslips, so indefinite or fixed.

Paid hours according to the employment agreement

In 2 cases the employer needs to correct the lower WW premium to the higher one:

– The employee with an indefinite contract is leaving within 2 months after starting the indefinite contract;
– The employee has more than 30% extra paid hours than mentioned in the employment contract within the calendar year. This only applies to employees who have an indefinite contract for less than 35 hours a week.

Note:

In the last case it is good the check the non-paid extra days and holidays for those employees and pay them in 2019. If this will be paid in 2020 there is a risk the extra hours will reach the 30% limit and in that case the higher WW premium applies and should be correct.