At the close of the old year...

At the last minute of the old year, the minister published two parliamentary letters that we do not want to withhold from you. One deals with the conditions for the low ww premium under the Labor Market in Balance Act (WAB) and the other deals with the Compensation Scheme for Transition Compensation in case of long-term disability. 

House letter dated December 9, 2019: conditions for the low premium

You can't have missed it: on January 1, 2020, the WAB will take effect. Part of it is the WW premium differentiation according to the nature of the contract. There will be a distinction between a low and a high WW premium. To make offering a permanent contract more attractive for employers, starting January 1, 2020, an employer will pay a low WW premium over the salary of an employee with a permanent contract and a high WW premium over the salary of an employee with a flexible contract.

To qualify for the low premium, conditions do apply: the low WW premium
may be paid for employees with a written employment contract for an indefinite period, provided there is no on-call contract. In other cases - apart from some specific exceptions - the high WW premium applies.

Note that employment contracts that have been converted from fixed to indefinite due to the passage of time do not meet these conditions! The employer must have entered into a written agreement with the employee that shows "indefinite time. It must also appear on the employee's salary slip. With the parliamentary letter, the minister announced to give employers some more time, namely until April 1, 2020, to get this administratively right.

In concrete terms, this means that you have until April 1, 2020, to agree on a new contract or an addendum to the existing employment contract with the employee that states that there is indeed an indefinite employment contract. If this is not arranged before April 1, 2020, the high premium will still be due retroactively as of January 1, 2020.

This measure may be reason to take another look at employment contracts and adjust them where necessary. In our opinion, however, an addendum is preferable because it is less complicated. Should you need help in drafting such an addendum, we would be happy to assist you.

Parliamentary letter dated December 12, 2019: compensation scheme for transition allowance

You also cannot have missed the Supreme Court's November 8, 2019 ruling on the issue of dormant employment. For completeness, please refer to my earlier article on the subject, see here.

With the parliamentary letter, the minister wanted to explain how the judgment relates to the compensation scheme, but also to address other ambiguities. From the letter, I summarize for you key points as follows:

• In view of the transitional law of the transition compensation, the Minister calls on employers to terminate dormant employment contracts before January 1, 2020. Based on the Supreme Court's ruling, employers are obliged to agree to an employee's proposal to terminate the (dormant) employment contract by mutual agreement while granting compensation equal to the transition fee as would be due upon termination of the employment contract after 104 weeks.

That date is - in the case of dormant employment - before Jan. 1, 2020. After January 1, 2020, the accrual of the transition compensation will change. The transitional law provides that if the end of the 104 weeks of illness lies before January 1, 2020, but the procedure to terminate the employment contract starts after January 1, 2020, the compensation will also be calculated according to the new calculation. This can lead to a "compensation gap. In case of termination by mutual agreement, the employer must have reached an agreement with the employee before 1-1-2020. The actual termination date can then be after January 1, 2020, by the way.

• The compensation is a maximum of the transition allowance until the employee has been sick for two years ("the first maximum") and also a maximum of the wages continued to be paid during two years of illness ("the second maximum").

If the employee received a benefit during the two-year waiting period, such as an early IVA or sickness benefit (under the no-risk scheme), then the employee probably received less "wages during illness. This could result in the salary continued to be paid during illness being lower than the transitional compensation paid, thus also compensating for a lower amount.

This consequence could result in employers being discouraged from hiring employees with a history of illness or disability, according to the minister. The minister is going to investigate this further and has decided not to allow this second maximum to take effect April 1, 2020, which means that "just" the full transition compensation will be eligible for compensation.

• Given the large number of expected applications that the UWV expects, a decision on the application will not be made within the regular period of 8 weeks that applies under administrative law. Employers should expect a period of about 6 months.

Do you still have employees with dormant employment contracts? If so, the advice is definitely to reach an agreement with your employee in 2019. We will be happy to help you with that, too.