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Are you ready for the WAB?

Are you ready for the WAB? 2

Introduction On 28 May 2019 the Upper House of the Dutch Parliament approved the legislative

To achieve this, the WAB contains many different measures, most of which will enter into

proposal for the Balanced Labour Market Act (Wet arbeidsmarkt in balans, WAB). The

force on 1 January 2020. This brochure outlines the main points (for more details we

aim of the WAB is to offer flexible employees greater security, to make dismissal law

refer you to the papers of the Upper House). At the end of this brochure you will find a

more unambiguous, simpler and cheaper, and to give the Unemployment Insurance Act

checklist for employers so you can check whether your organisation is ready for the WAB.

(Werkloosheidwet, WW) a more activating effect.

In this edition: - Transition payment - On-call contracts - Fixed-term employment contracts - Cumulative ground for dismissal - Payroll constructions - Unemployment insurance contribution - Checklist for employers - Contact

Are you ready for the WAB? 3

Transition payment The difference in dismissal costs between flexible and fixed contracts is being narrowed

Step 1: Has the employee worked for one or more full years?

through the change in the composition of the transition payment.

If so, calculate this part and then go to step 2. If not, go to step 2. Formula = (1/3 gross monthly salary) x number of years of service

A simpler formula for calculating the transition payment After 1 January 2020, the number of years of service and age will no longer play a role for

Step 2: Has the employee worked for a few days, weeks or months?

the composition of the transition payment. Until 1 January 2020, the years of service after

Formula = (gross salary / gross monthly salary) x ((1/3 gross monthly salary) /12)

the tenth year will still have greater weight in the calculation, and employees aged 50 years and older will still receive a higher transition payment for years of service after the tenth year.

Example calculation WThe employee has had an employment contract for nine years and five days.

The employee has a right to a transition payment even with short employment

The gross monthly salary was €3000. The first step is to calculate the transition


payment for the first nine years of service: (9 x (1/3 x €3000)) = €9000.

This means that an employee is entitled to a transition payment even with an employment

The second step is to calculate the transition payment for the five days.

contract of a few months, weeks or days. Even if the employee is dismissed during

The gross salary must first be calculated. In this example it is 40 x €20 = €800

the trial period, in principle he is entitled to a transition payment. When calculating

(assuming a working week of 40 hours and a gross hourly wage of €20).

the transition payment, amounts are not rounded to whole months worked. For short

The following formula is then applied: (€800/€3000) x ((1/3 x 3000)/12) = €22.22.

employment contracts, the amount to which the employee is entitled is calculated

The total transition payment in this case is therefore €9,022.22 gross.

proportionally. The calculation method for the gross monthly salary (as laid down in the Decree concerning Wage Definition relating to Compensation for Notice Period and Transition Allowance (Besluit loonbegrip vergoeding aanzegtermijn en transitievergoeding en de Regeling looncomponenten en arbeidsduur) will be maintained. The transition payment can be calculated, following the two steps below (which new formula is added to the Decree concerning the Wage Definition (see the proposed changes to the decree)).

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Are you ready for the WAB? 4

Transitory law applies for dismissals initiated in 2019 If (i) dismissal proceedings have been initiated in 2019 before the Employee Insurance Agency (UWV) or the court, (ii) notice of termination has been given in 2019 or (iii) the employee has agreed to his or her resignation in 2019, the current calculation method will still apply. If one of the parties subsequently lodges an appeal in dismissal proceedings in 2020, the new calculation method will then apply. The possibility to deduct costs from the transition payment is broader As from 1 January 2020, employers may deduct from the transitional payment any costs that were incurred to promote the employeeâ&#x20AC;&#x2122;s knowledge and skills when taking on a different position within the employerâ&#x20AC;&#x2122;s organisation. The other conditions for deducting costs, as contained in the Conditions for Deducting Costs from Transition Payments Decree (Besluit voorwaarden in mindering brengen kosten op transitievergoeding) continue to apply.

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Are you ready for the WAB? 5

On-call contracts On-call workers no longer need to be permanently available for work

A very short notice period applies to on-call workers with a zero-hours contract

On-call workers are not required to respond when being called upon if this call-up is not

For on-call workers with a zero-hours contract, a notice period of four days applies, or a

made known at least four days beforehand. This minimum call-up period of four days can

shorter period if laid down in a CAO (instead of the current notice period of one month).

be shortened in the collective agreement (CAO) to 24 hours beforehand. A call-up must be notified to the employee in writing or electronically. Tip On-call workers have greater income security

Employees do not need to respond to a call-up within the four-day period, but you

An on-call worker retains his or her right to wages if the employer cancels all or part of the

may of course ask employees whether they want to come to work.

assignment or changes the times of the call-up within a period of four days (or the shorter period under the CAO). The employee therefore will be paid the wage for the cancelled hours. In case of a change, the hours no longer worked are regarded as cancelled hours.

Employers are required to make an offer for a certain number of working hours

Moreover, the employer must change the call-up in writing or electronically. It is not

after twelve months

possible to notify a change orally.

Following an on-call contract of twelve months, employers must make an offer to on-call workers to lay down the number of working hours in an employment contract. The idea is

The Dutch Civil Code contains a definition of the on-call contract

that the longer the employment contract lasts, the more the responsibility of the employee

The aim is to provide greater clarity as to what an on-call contract means. This definition

shifts to the employer to take action (after all, employees may claim a certain number of

is elaborated on further in a Decree. Employers are required to state on the wage slip of

working hours after three months).

on-call workers that they have an on-call contract and whether this has been concluded for a fixed period or indefinitely.

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Are you ready for the WAB? 6

The working hours will be based on the average of the past twelve months

Employers must make an offer for a fixed number of hours before

In determining the number of working hours, all the hours for which the employee was

1 February 2020

entitled to wages will be taken into consideration; periods of illness and the hours where

All on-call workers who have been in the employer’s employment for twelve months on

a call-up was withdrawn too late therefore also count. In addition, in calculating these

1 January 2020 must receive an offer. Transitory law also applies for older cases;

twelve months, employment contracts which have succeeded each other with breaks

these are employees with a zero-hours contract or a min/max contract who have been

of no more than six months are added together. Employment contracts with different

employed for longer than twelve months on 1 January 2020. Employers must also make

employers are also added together if the employers can reasonably be considered to

an offer to this group before 1 February 2020. For this group too, the previous twelve

be each others’ successors with respect to the work performed (successive terms of

months will be taken in determining the fixed number of working hours.

employment). The offer must be made by the employer in the thirteenth month The employee then has one month in which to accept the offer, but may also turn down the offer and continue to work a flexible number of hours. If the employee does not accept the offer, the employer must make an offer again after twelve months. An offer made remains valid if the employee leaves the employer’s employment and takes up employment again with the employer within a period of six months. If an employer does not make an offer, the employee is entitled to wages not received from the moment that the employer should have made the offer, assuming the average number of working hours in the previous 12 months of the employment, and possibly the applicable statutory increase.

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Are you ready for the WAB? 7

Fixed-term employment contracts The maximum period of successive fixed-term employment contracts will once

The new measure enters into force immediately

again be three years

The maximum period of three years will also apply to employment contracts concluded

The maximum period after which successive fixed-term employment contracts become

before 1 January 2020.

employment contracts for an indefinite period is being extended from two to three years. The maximum number of successive fixed-term employment contracts remains at three. Consequently, it is once again possible to conclude a year-long contract with an


employee three times.

The first fixed-term employment contract (for six months) has been concluded from 1 April 2018 to 1 October 2018. This is followed by a second fixed-term

Greater flexibility for employers because a shorter interim period can be agreed

employment contract (for a period of twelve months) with a term from 1 October

in a CAO

2018 to 1 October 2019, and a third fixed-term employment contract (of twelve

If there are more than six months between two fixed-term employment contracts,

months) from 1 October 2019 to 1 October 2020. In this case, as a result of the

counting begins again under the provisions on succession of fixed-term employment

WAB entering into force, no employment contract for an unlimited period arises.

contracts (ketenregeling). This interval of six months remains unchanged, but the WAB makes it possible to deviate from this in the CAO, where the interval can be reduced to three months if the nature of the work so demands. That is the case with recurring temporary work that can only be performed for a maximum of nine months. In primary education, temporary employment contracts are exempt from the ketenregeling where it concerns supply teachers replacing a teacher due to illness.

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Are you ready for the WAB? 8

Cumulative ground for dismissal Dismissal is made easier because the existing grounds for dismissal can be

In the case of dismissal on a cumulation ground, the court may award an extra


payment to the employee

Alongside the existing statutory grounds for dismissal, there is now a new ground for

This extra payment is in addition to the transition payment to which the employee is

dismissal: the cumulative ground (i-grond). This is a cumulation of the other grounds,

automatically entitled. The extra payment amounts to a maximum of 50% of the transition

which together can therefore form a single ground for dismissal. The i-grond is explicitly

payment to which the employee is entitled. It is therefore a kind of punitive levy for the

not a catch-all ground such as the â&#x20AC;&#x2DC;h-grondâ&#x20AC;&#x2122;, which is for situations that do not come

employer, because the employer did not succeed in fully substantiating a separate

under one of the other grounds. This means that if, for example, there is a slightly

ground for dismissal. The court can award the extra payment but does not have to do

damaged working relationship, a slightly unsatisfactory performance and a slightly

so. Based on the facts and circumstances of the case, the court will give reasons as to

imputable act on the part of the employee, these three grounds together can form a

whether this extra payment is due, and if so how much, so there is no statutory formula

single ground for dismissal. How exactly this will work in practice will have to become

for calculating the extra payment. The extra payment does not prevent a fair payment

clear in court decisions.

from being awarded.

Not all existing grounds for dismissal can be cumulated Only the grounds for dismissal contained in Section 7:669(3), parts c to h, of the Dutch Civil Code may be combined. These include: unsatisfactory performance, imputable acts or omissions, a damaged working relationship and the catch-all ground (the h-grond). Commercial circumstances (a-grond) cannot therefore be included in the cumulation.

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Are you ready for the WAB? 9

Payrolling Payrolling remains possible as a means to take over some of the employersâ&#x20AC;&#x2122; tasks, but

Separate standard for equal treatment of payroll employee is contained in

is becoming much more expensive for employers. The idea is that payrolling may not be

the Waadi

used as a tool to compete on employment conditions.

Article 8a of the Placement of Personnel by Intermediaries Act (Waadi) states that the payroll employee is entitled to at least the same pay and employee benefits as the

Payrolling will no longer be equated with agency work

employerâ&#x20AC;&#x2122;s employees in similar positions. What the same employment conditions are,

In order to make a distinction between agency work contracts and payroll agreements,

is determined based on the employment conditions of employees with an equivalent

a definition of the payroll agreement is contained in the Dutch Civil Code. As a result,

or similar position in the company. If the company does not have such employees, the

the lighter regime under employment law that applies to agency work contracts no

employment conditions applicable to equivalent or similar positions in the sector within

longer applies to payroll employees. This means, inter alia, that the permitted number of

which the company operates will be considered. Deviations from Article 8a of the Waadi

temporary contracts is the same as for a regular employment contract, and it is no longer

to the detriment of a payroll employee in an agreement or CAO is not permitted.

permitted to terminate the employment contract immediately (by means of a temporary employment clause (uitzendbeding)).

Payroll employees do not receive the same pension, but an adequate pension Payroll employees do not receive the same pension as employees employed by the

Two elements distinguish payrolling from agency work

company to which the payroll employees are posted, but are indeed entitled to an

These two elements deal with the fulfilment or otherwise of an allocative function on

adequate pension. What this means still has to be elaborated on further. This part of the

the labour market (an active role in recruitment and selection) and the exclusivity of the

WAB will only enter into force in 2021.

workerâ&#x20AC;&#x2122;s posting. A payroll agreement exists if the employer does not fulfil an allocation function and the employee is posted exclusively to a single client. In order to determine whether the posting is exclusive, at any rate the oral and written agreements, the duration of the posting and the relationship between the payroll employee and the hirer concerning practical matters such as holiday and involvement in personnel policy such as job appraisal interviews will be considered. Incidentally, each individual will be assessed to see whether payrolling or agency work applies; after all, a business can perform various different activities.

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Are you ready for the WAB? 10

An on-call agreement may only be concluded with a payroll employee under certain conditions The exclusion of the obligation to continue paying wages for a payroll employee during the first six months is only possible if this is established practice at the hiring company, or it is included in a CAO that applies to that company. Client must inform contractor about the applicable employment conditions The employment conditions that apply to payroll employees on the grounds of Article 8a of the Waadi must be notified in writing or electronically by the hiring employer to the party that makes these workers available. The same applies for the employment conditions of agency workers or other workers made available. â&#x20AC;&#x192;

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Are you ready for the WAB? 11

Unemployment insurance contribution The government believes that the differentiation in contributions contained in the

At present there is a differentiation in contributions per sector; the costs for the first

Unemployment Insurance Act (Werkloosheidwet, WW) can contribute to making a

six months of the WW are allocated per sector. Under the WAB, the existing sectoral

permanent contract more attractive. Under the WAB, the existing sectoral differentiation

differentiation will be abolished with effect from 1 January 2020 as regards the

for financing unemployment benefits is abolished and is replaced by a differentiation in

unemployment insurance contribution. Currently a few payments for the Health Insurance

contributions, depending on the nature of the contract.

Act (ZW) and the Return to Work (Partially Disabled Persons) Regulations (WGA) are still funded from the sector funds, for which employers pay an amount over and above

The unemployment insurance contribution for temporary employment contracts

the WW part of the sectoral contribution. Here too, the sectoral differentiation will be

will be five percentage points higher than for permanent employment contracts

abolished. The government will develop an improved and future-proof contribution

With effect from 1 January 2020, the sectoral unemployment insurance contribution will

system for the ZW and the WGA for small and medium sized employers.

be replaced by a contribution differentiation, depending on the nature of the employment agreement, whereby a lower contribution percentage applies to contracts for an indefinite

An exception applies for young people with a part-time job

period compared to fixed-term contracts. The difference between the high and low

An exception is being made for people younger than 21 years with fixed-term

contribution can be as much as five percentage points, but the exact unemployment

employment contracts for less than twelve hours a week. The higher WW contribution

insurance contributions will only be published at the end of 2020.

will not apply to them.

The sectoral structure is no longer relevant for the unemployment insurance contribution but still (partly) for the Health Insurance Act and the Return to Work (Partially Disabled Persons) Regulations

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Are you ready for the WAB? 12

Checklist for employers Do you employ workers with a zero-hours contract or a min-max contract?

Is there a chance that you will submit a request to the subdistrict court to

Bear in mind the new call-up period of four days and a notice period of four days for

terminate the employment contract for a worker during the second half of 2019?

employees with a zero-hours contract.

Bear in mind that it will be easier to dismiss workers with effect from 1 January 2020 because of the new cumulative ground for dismissal. In some cases, it may be better to

Also check how long these employees have already been in your employment. Are there

submit requests to terminate an employment contract on or after 1 January 2020 if it is

any employees who have already been in your employment for twelve months or more on

uncertain whether there is a single valid ground for dismissal.

1 January 2020? In that case, make sure that they have received a written offer for a fixed number of working hours before 1 February 2020.

Do you have payroll employees or agency workers working in your business? Bear in mind the difference in employment conditions between (i) agency workers,

Do you employ workers with a fixed-term employment contract?

(ii) payroll employees and (iii) employees who are directly employed by you. The WAB

Bear the new rules in mind, which may mean that you can conclude another fixed-term

has made the difference between the last two groups very small.

employment contract with a worker. Take note: the maximum number of temporary employment contracts remains three (apart from exceptions).

As a hiring employer, you are also responsible for the correct payment of the workerâ&#x20AC;&#x2122;s wages (ketenaansprakelijkheid). It is therefore also important to check for each individual

Employees whose temporary employment contract expires on or after 1 January 2020

worker whether he or she is an agency worker or a payroll employee.

and is not renewed are in principle entitled to a transition payment. Bear in mind the new obligation to provide information, which applies to employers to Do you intend to dismiss an employee in the second half of 2019?

whom payroll employees, agency workers or other workers are posted.

Dismissal from 1 January 2020 may possibly be cheaper; it will depend on the number of years of service, the age of the worker and whether there is a single valid ground for

Have you already amended the information on your employeesâ&#x20AC;&#x2122; wage slips?

dismissal or a cumulative ground for dismissal.

The wage slip must state whether the employment contract has been concluded for a fixed or an unlimited period. The number of working hours must also be made clear, as also whether an on-call contract applies. Finally, the pay slip should also state if the employment contract is a temporary agency contract or a payroll employment agreement.

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Are you ready for the WAB? 13

Contact For any questions or advice, do not hesitate to contact your regular contact person, or one of the other members of the Employment & Benefits team.

Hermine Voรปte

Jan Bart Schober

Employment Partner

Tax Partner

T +31 20 578 59 75

T +31 20 578 54 51



Klaas Wiersma

Hans van Ruiten

Employment Partner

Tax Partner

T +31 20 578 59 60

T +31 10 224 64 18



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