Labor Market Balance Act

With the presentation of the coalition agreement "Confidence in the Future" (in October '17) it was already announced; there are (again) quite a few labor law changes in the pipeline. The newly appointed Minister Koolmees of Social Affairs and Employment has not been idle. On April 9, 2018, he presented the new "Labor Market in Balance Act," which is intended to be a correction to the Work and Security Act (WWZ) that came into effect in July 2015. One of the goals of the WWZ was to close the gap between 'permanent' and 'flex'. An evaluation study conducted in 2016 immediately showed that this objective was not realized. There was even talk of counterproductive effects with employers only seeking refuge in flexible labor and payroll constructions. The Balanced Labor Market Act is a new attempt to reform the labor market.

The way labor law is currently regulated leads employers to make their choice of employment relationship (self-employed, flexible, permanent) too much based on cost and risk rather than on the needs and nature of the work, according to the government. So the aim of the law is to correct that and give workers more prospects of security. The gap between permanent contracts and flexible work must be narrowed (again).

The proposal

In a nutshell, the following proposals were made:

• Dismissal will also become possible if there is a sum of circumstances, the so-called cumulation ground. Now the employer must fully comply with 1 of the 8 grounds for dismissal. This new ninth ground allows the judge to combine circumstances. The employee may receive an additional half of the transitional compensation (on top of the transitional compensation) when the cumulation ground is used for the dismissal.
• Employees will be entitled to transition compensation (severance pay) from day one, including during the probationary period.
• The accrual of transition compensation is reduced for long service.
• There will be a scheme for small employers to compensate the transition fee if they have to terminate their business due to retirement or illness. This will be further developed in additional regulations.
• Extension of the probationary period for permanent contracts from 2 months to 5 months.
• The succession of temporary contracts (the chain clause) will be widened. Now it is possible to enter into 3 consecutive contracts in 2 years. This will become 3 years.
• It will also be possible to shorten the break between a chain of temporary contracts by collective bargaining agreement from 6 to 3 months if there is recurring temporary work that can be done for up to 9 months per year.
• In addition, there will be an exception to the chain rule for substitute teachers in primary education who fill in due to illness.
• Employees working on a payroll basis will receive the same terms and conditions of employment as those employed by the client, with the exception of pension, which is subject to its own scheme. The definition of the temporary employment contract will not be changed.
• Measures are being taken to prevent mandatory permanent availability of on-call workers. For example, an employee must be called by the employer at least 4 days in advance. On-call workers also retain the right to wages if work is cancelled. The 4-day period can be shortened to 1 day byy. collective bargaining agreement.
• The ww premium will become more advantageous for employers if they offer an employee a permanent job instead of a temporary contract. Now the level of the ww premium depends on the sector in which a company operates.

The first reactions

The question is whether the minister's well-intentioned plans will have the desired effect. Employer organizations last week were critical of the plans. Making flexible work more expensive, by granting payroll employees the same working conditions, allowing the transition compensation to accrue from the first working day and increasing the ww premiums for flexible employees, will only lead to employers turning to using self-employed workers or foreign constructions, they argue.

Incidentally, the unions cannot charm the minister with his plans either; they are particularly dissatisfied with the relaxation of dismissal law and the five-month probationary period, during which the employee is "outlawed.

And now?

Employer and employee organizations and all other interested parties can now respond to the content of the bill, which is up for consultation until May 7. The reactions may lead to further adjustments to the bill. The final bill will first be discussed in the Council of Ministers, then submitted to the Council of State for its opinion, then passed by the House of Representatives and then by the Senate.

So there are quite a few hurdles to overcome before the new Labor Market in Balance Act actually arrives, but that things will change again in the labor law landscape is almost certain.

We will, of course, keep you informed of developments!