November 21, 2019

New Dutch labour law: the Labour Market in Balance Act

By Priscilla C.X. de Leede, employment lawyer at Russell Advocaten. 

In general, Embassies and Consulates with local employees fall under Dutch law and are treated like any other employer in the Netherlands. This means that the new Labour Market in Balance Act, that will be effective as per 1 January 2020, will also apply to Embassies and Consulates. What are the fourmost important changes?

I. Contracts

1. Extension of provisions for consecutive fixed-term employment contracts (chain provision)

As per 1 January 2020, employers can conclude three fixed-term employment contracts in three years instead of two years, without an employee being entitled to a permanent contract. This means that Embassies and Consulates can employ an employee for a longer period than at present, without concluding a permanent contract. 

2. On-call workers

An Embassy or Consulate may employ on-call workers. On-call workers will receive more rights as per 1 January 2020. The Embassy or Consulate must call up the on-call workers at least four days in advance. If a call for work is cancelled less than four days in advance, the on-call worker will still be entitled to payment of wages. 

In addition, after 12 months of employment, the Embassy or Consulate must offer the on-call worker a contract for the average number of hours he or she has worked during those 12 months. If this contract is not offered, the on-call worker is still entitled to wages for the number of hours.

II. Dismissal

3. Cumulative grounds

At present, an employer can only dismiss an employee if one of the eight grounds (grounds a to h) for dismissal applies. The employer must fully satisfy the requirements for one of the eight grounds for dismissal. The employer cannot base the dismissal on combined grounds. 

As per 1 January 2020, various grounds for dismissal that have only partially materialized can be combined (for example underperformance of an employee plus a disturbed relationship). This is referred to as cumulative grounds or “i-ground”. This will make it easier for an Embassy or Consulate to dismiss an employee. However, in the event of a dismissal on the basis of cumulative grounds, the Embassy or Consulate might be obliged to pay the employee a maximum of 1.5 times the transition compensation.
 
 4. Transition compensation

At present, each employee who has been employed for at least two years and whose employment is being terminated on the initiative of the employer is entitled to transition compensation. As per 1 January 2020, employees will be entitled to transition compensation from the first working day instead of after two years, thus including during the probationary period.

The amount of the transition compensation depends on the length of the employment:

  • 1/3 of the monthly salary per year of service over the first ten years of service; and
  • half a month’s salary over the subsequent years; and 
  • one month’s salary for employees 50 years or older over the subsequent years, if the employer has more than 25 employees.

As per 1 January 2020, the accrual of the transition compensation for every employee, irrespective of the duration of the employment, is one third of the monthly salary per year of service. This means employees do no longer receive a higher transition compensation after the first ten years of service. 

Further, as per 1 January 2020 not justperiods of 6 months are taken into account for the calculation of the transition compensation anymore.This means incomplete years of service are settled pro rata. 

More information:

Do you want to know what the consequences are of the Labour Market in Balance Act for your Embassy or Consulate? Or do you have any other questions concerning employment law? Pleasecontact Priscilla C.X. de Leede, LL.M. (priscilla.deleede@russell.nl)

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