Employment law update: what will change July 1, 2024 and includes the new coalition agreement?

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1. Changes effective July 1, 2024
   1. Minimum wage up
   2. Employee mobility reporting requirement
   3. Determination of disability percentage WIA
2. Status of zzp legislation
   1. Lifting of enforcement moratorium
   2. Status of bill Clarifying assessment of labor relations and legal presumption
   3. Bill on Basic Disability Insurance for the Self-Employed under consultation
3. Announced changes and the coalition agreement
   1. Competition clause
   2. Security flex workers
   3. Reintegration second year of illness
   4. Mandatory confidant
   5. Equal pay m/f
   6. Directive on platform work adopted by European Parliament
   7. Coalition Agreement

I. Changes effective July 1, 2024.

1. Indexation of statutory minimum wage

As of July 1, 2024, the legal minimum wage will be indexed by 3.09%. The minimum hourly wage for employees aged 21 and older will then be €13.68 gross (as of January 1, 2024, it was €13.27 gross).

These are the new minimum wages by age as of July 1, 2024:

The Senate voted against the additional increase in the legal minimum wage. Therefore, the additional 1.2% increase, previously passed by the House of Representatives by amendment, will not pass.

2. Employee mobility reporting requirement.

If your organization has more than 100 employees, as of July 1, 2024, you are required to record your employees' commuting as well as business travel. This is the so-called reporting obligation work-related passenger mobility (WPM). Its purpose is to gain insight into the CO2 emissions associated with employee mobility. The data for the second half of 2024 must be submitted to the National Office for Entrepreneurial Personnel (RVO) by June 30, 2025. See: website of RVO. 

3. Determination of disability percentage WIA:

The disability percentage for the WIA is determined based on an employee's loss of income. The UWV applied a practical and/or a theoretical assessment for this purpose. The practical assessment is done based on the employee's actual income. In the theoretical assessment, a number of functions are indicated that the employee should theoretically still be able to perform.

As of July 1, 2024, the degree of incapacity for work will be determined solely by practical assessment. This should help reduce the backlog of WIA examinations.

II. Status of zzp legislation.

1. Lifting of enforcement moratorium

As of Jan. 1, 2025, the tax authorities will once again enforce the Deregulation of Assessment of Employment Relations Act (DBA Act). This means that as of that date, actual checks will be made for false self-employment: should a contract of assignment not qualify as an employment agreement? If the answer is "yes," the Tax Office may impose additional tax assessments or correction obligations.

The difference between an employee and a self-employed worker lies mainly in the question of the extent to which there is authority from the principal. This question must -for now- be answered using the criteria of the Deliveroo judgment of March 24, 2023. Those criteria must be weighed and lead to qualification. We previously published a vlog on this topic. The viewpoints still leave much room for discussion.

Nevertheless, starting next year, the Tax Administration will enforce. Earlier this year, the Tax and Customs Administration published the Enforcement Plan for Labor Relations 2024 to this end. The Tax Authority will specifically target sectors and industries where there is a greater risk of false self-employment. A nationwide detection module has also been developed that automatically searches for indications of incorrect qualification of employment relationships.

The Inland Revenue has provided 80 FTE for the enforcement file. At first glance, that does not seem like much to us.

Nevertheless, it is important to critically review your commissioning agreements in the run-up to January 1, 2025 and - if there is reason to do so - to terminate them in time. Make sure that in any case a model agreement has been approved by the Tax Authorities and that the agreement and the actual situation indicate actual self-employment (e.g. multiple clients, business risk, VAT entrepreneurship, entering into the agreement from a private limited company, not too long agreement, etc.).

We can imagine that you have questions about the foregoing and/or the labor law consequences of a recharacterization of the contract. We would therefore be happy to assist you in this regard.

2. Status of bill Clarifying assessment of labor relations and legal presumption

Initially, the intention was to lift the enforcement moratorium immediately with the entry into force of the new law Verduidelijking beoordeling arbeidsrelaties (VBAR). That intention did not succeed because of the volume of responses to the first bill that followed from the Internet consultation (from October 2023).

The new proposal is a modification of the earlier proposal, about which Emanuella de Moor wrote a blog earlier. The assessment framework has changed in this new proposal. For example, the criteria 'work-related instructions' and 'organizational embedding' have been adjusted. There will be specific criteria that point to 'employment'. On the other hand, there are (counter)criteria that indicate 'self-employment'.

The new bill Verduidelijking beoordeling arbeidsrelaties (VBAR) was sent to the Council of State for its opinion on June 21, 2024.

After obtaining the advice of the Council of State, it is up to the (new) minister to submit a bill - possibly amended - to the House of Representatives.

3. Bill on Basic Disability Insurance for the Self-Employed under consultation

On June 11, 2024, the bill Basic Disability Insurance for the Self-Employed was put into Internet consultation. This measure is part of the labor market package. Under the proposal, self-employed persons who have been ill for one year (the so-called waiting period) can qualify for disability benefits. The benefit is granted only if a self-employed person is no longer able to earn the minimum wage due to illness and amounts to 70% of the earnings before the disability, up to a maximum of the minimum wage.

The premium is about 6.5% of the company's profits up to a maximum of about €195 (2024).

After the concluded Internet consultation, the proposal (possibly modified) will go to the House of Representatives.

III. Upcoming changes and the coalition agreement

1. Competition clause

On March 4, 2024, the bill Modernization of the Competition Clause was put into Internet consultation. The bill - if passed - will significantly tighten the rules governing the use of a non-competition clause.

Broadly speaking, the Cabinet proposes to amend the non-compete clause as follows:

• The clause may only be agreed upon for a maximum of 12 months ;
• The employer must clearly define the geographic scope ;
• The employer is obliged to motivate why a non-competition clause is necessary (based on important business or service interests), also in employment contracts for an indefinite period of time. Currently, this obligation to state reasons only applies to fixed-term employment contracts;
• The employer informs the employee no later than one month before the end of the employment contract whether it wants to keep the employee bound by the non-competition clause, and for how long;
• The employer must pay the employee compensation for the time it wants to hold the employee to the non-competition clause. The compensation is 50% of the monthly wage for each month the employer invokes the clause. If the clause is invoked for 6 months, the employer owes 3 months' wages;
• Employer and employee may deviate from the above rules in a settlement agreement, except for the maximum duration and duty to state reasons.

If the non-competition clause does not meet the aforementioned requirements, then it is not validly agreed upon and the employer cannot hold the employee to it.

The Internet consultation has now closed. The ambition of the (outgoing) minister is to submit the proposal to the Lower House after the summer and to have it enter into force on January 1, 2025 (already!). We will of course keep you informed of developments.

2. Security for flex workers

Earlier (in August 2023), the bill More Security for Flex Workers Act was submitted for consultation. This bill is (also) part of the labor market package, with measures for more security for workers and more agility for business owners.

The bill contains several measures to give flexible workers more certainty about their income and schedule and prevent unfair competition on working conditions. The basic principle is: structural work requires a permanent contract. The bill especially has a major impact on the temporary employment sector.

The proposal includes three concrete measures:

1. Abolish zero-hours contracts: these will be replaced by (permanent and temporary) basic contracts with a minimum number of hours for which workers are scheduled and paid. However, schoolchildren and students with a part-time job will still be allowed to work on the basis of a zero-hours or min-max contract.
2. Restriction of temporary employment term: the maximum term of Phase A will be shortened from 78 weeks to 52 weeks, with no more deviations possible per CLA (already stipulated in the Temporary Employment Agreement). The maximum term of Phase B goes from 6 contracts in 4 years to 6 contracts in 2 years. After this period, the temporary worker must obtain a permanent contract with the temporary employment agency. There will no longer be a possibility to deviate from this via collective bargaining agreement. The temporary employment period (Phase A and B) will thus become a maximum of 3 years.
3. Adjustment of chain arrangement: the interruption period after which an employer may employ someone again on a temporary basis will be increased to 5 years (is now 6 months). This period of 5 years will also apply to phases A and B (temporary employment). An exception will continue to apply to seasonal work; an interruption period of 3 months may be agreed per collective bargaining agreement for jobs that can be performed for a maximum of 9 months per year.

The bill went to the Council of State in March 2024. After that, the bill - with any amendments - will go to the House of Representatives.

For more information, read the blog Sander Poelman recently wrote on this topic here (specifically aimed at employers in the retail industry, but also of general interest).

3. Reintegration obligations second year of illness

At the end of 2023, the bill amending the reintegration obligations in the second year of illness was put into internet consultation. This bill is also part of the labor market package.

The bill should ease the reintegration obligations for small and medium-sized employers. The proposal is for these employers to focus only on second-track reintegration from the start of the second year of illness.

If the employee agrees, the reintegration within the own organization is completed after the first year of illness (if all conditions are otherwise met). The employee can then continue reintegration in the second track. The obligation to continue paying wages, the reintegration obligations and the ban on notice during illness remain in place, but the employer may have the employee's position filled by someone else.

If the employee fully recovers in the second year of illness and the employer still has the position vacant, the employee has the right to return to that position. If the position is now filled by a new employee, the employer may terminate the employment contract (after receiving permission from the UWV), based on the newly proposed "j-ground.  

In January of this year, the Council for the Judiciary advised the government on this bill and showed itself critical: the Council states that the proposal does not solve problems surrounding long-term disability, expects increasing labor disputes, denounces the additional regulatory burden and considers the already vulnerable sick employee insufficiently protected.

The bill - due to the change of guard in the cabinet - is currently on hold. So the proposal still has to pass the Council of State and then to the House of Representatives. We will keep you informed of developments.

4. Mandatory confidant

In May 2023, the House of Representatives passed a bill requiring employers with more than 10 employees to appoint an internal or external confidential advisor.

From the bill follows: 

• The role of the confidant is to receive, guide and advise the employee and, if necessary, refer them to a professional counseling agency or social worker.
• The confidential advisor will be charged with identifying bottlenecks in the implementation of the policy (particularly in the area of social safety) and giving solicited and unsolicited advice on this to the employer, the works council or employee representation. This advice is no longer without obligation.
• Following the advice given, the employer must inform the confidential adviser what it will do with the advice and, if necessary, explain why the advice is being deviated from.
• The confidential advisor must report his or her findings annually to the employer, works council or employee representation.
• Under the bill, the works council or employee representative is given an explicit right of consent regarding the appointment of the person of the confidential advisor.

The law was originally supposed to take effect as early as January 1, 2024, but - probably due to the cabinet reshuffle - it has been on hold for a while and has yet to be passed by the Senate. As soon as that has happened and the effective date is known, we will of course inform you.

5. Equal pay m/f

A new EU directive aimed at preventing pay discrimination between men and women came into force on June 6, 2023. The directive gives job seekers more rights to information around pay (e.g., the right to know how much other workers are paid doing the same job). In addition, employers are no longer allowed to inquire about an applicant's previous pay.

Employers will also be required to report on the wage gap between female and male employees. How often must be reported depends on the number of employees:

• employers with 250 employees or more: by June 7, 2027, and every year thereafter;
• employers with 150 to 249 employees: no later than June 7, 2027, and every three years thereafter;
• Employers with 100 to 149 employees: no later than June 7, 2031, and every three years thereafter;
• employers with fewer than 100 employees: they can report voluntarily, unless EU member states require these employers to report.

Member states must comply with the directive no later than June 7, 2026. The bill to implement this directive into Dutch law is currently in the works.

Thus, the date on which this bill will take effect is not yet known. But in anticipation of that, it is advisable to already identify pay differences within the organization.

6. Guideline platform work adopted

On April 24, 2024, the European Parliament adopted - after all - the EU Platform Work Directive. Earlier, member states had voted against the proposal. After adjustments, the member states have now agreed after all.

The Directive should protect platform workers by giving them the appropriate employment status (employee or self-employed?). In particular, it follows from the Directive:

• Member states must establish in their legal systems a legal presumption of an employment relationship, which must be activated when facts are established that indicate control and direction (i.e., a relationship of authority);
• Workers working for digital platforms, their representatives or national authorities can invoke the legal presumption and argue that they are wrongly qualified. It is then up to the digital platform to prove that there is no employment relationship (reversal of the burden of proof).

The EU Council has yet to formally adopt the text of the proposal. After the Directive subsequently enters into force, the Netherlands has two years to implement the proposal in national legislation. For more information, including what this means for the Netherlands, read the blog that Emanuella de Moor and Ruud Olde previously wrote on this topic here.

7. Coalition Agreement

As indicated here and there above, the timing and final passage of various bills depends on the plans of the new administration. The latter presented the Outline Agreement for 2024-2028 on May 16.

What stands out in it is that the new government is going to focus particularly on reducing labor migration. The transition compensation for companies with more than 25 employees will no longer be compensated after a dismissal after two years of illness. In any case, the legislative path already initiated around the ZZP issue will be continued (see elsewhere in this newsletter). WW is also being reformed.