The legislative proposal regarding the Wet werk en zekerheid (Work and Security Act) was adopted by the Upper House of the Dutch parliament on 10 June 2014. That major and much-discussed review of dismissal law has thereby been enacted. The new dismissal law rules will enter into force on 1 July 2015. The amendments to the Wet flexibiliteit en zekerheid (Flexibility and Security Act) will enter into force on 1 January 2015, rather than on the previously announced date of 1 July 2014. A summary of the main changes is presented below.
As from 1 January 2015 it will no longer be permitted to agree on a probationary period in an employment contract for six months or less. A probationary period in a fixed-term employment contract concluded before 1 January will remain valid. In new fixed-term employment contracts concluded on or after 1 January 2015 it is possible to circumvent the ban on a probationary period by entering into a contract for a period of two of three months. The disadvantage of doing so, however, is that the maximum succession of fixed-term employment contracts is then reached sooner (see below). Another option is to enter into a fixed-term employment contract for a period of seven months or longer, since such contracts may still include a probationary period.
As from 1 January 2015 it will no longer be permitted to include a non-compete clause in a fixed-term employment contract. An exception to this prohibition is that a non-compete clause is permitted if it is substantiated in writing that there are compelling business or department reasons related to the position or work in question that require the inclusion of the non-compete clause. In it is important that those compelling interests exist not only on the conclusion of the fixed-term contract, but also after its termination. Current law will continue to apply to a non-compete clause in a fixed-term contract concluded before 1 January 2015.
As from January 2015 an employee must be notified in writing no later than one month beforehand whether his or her employment contract for six months or longer will be continued and, if so, on what conditions. If that notification period has not been observed, the employee is entitled to a fee equal to one month’s salary. If the notification is given too late, that fee amounts to the salary over the term of the late notification. An adequate warning system in the staff records can therefore save significant costs. The one-month notification period does not apply to a fixed-term employment contract of six months or longer that ends in January 2015. The notification duty also applies to the succeeding contracts.
Provisions on the succession of fixed-term employment contracts
The new provisions on the succession of fixed-term employment contracts (ketenregeling) mean that a maximum of three fixed-term employment contracts may be entered into in a period of two years (which period is currently three years) and that the employment contracts are added up if there is a maximum interval of six months between them (currently a maximum of three months). The succession of contracts can be extended to four years under a collective employment agreement, in which case a maximum of six contracts may be concluded. It is no longer permitted to depart from the maximum interval in a collective agreement. As from 1 July 2015 the new law applies to new links in the chain, unless the provisions on the succession of the contracts forms part of a collective agreement; current law will continue to apply to such employment contracts until 1 July 2016. Current law will also continue to apply to contracts in the chain that were entered into before 1 July 2015, also if the date of commencement of the new contract is after 1 July 2015. It is therefore advisable to investigate well before 1 July 2015 with regard to fixed-term contracts in place at that time whether it is wise to agree on an extension before the date of commencement of the new law.
As from 1 July 2015 it will no longer be possible to terminate an employment contract at the employer’s option via either the Employee Insurance Administration Agency (UWV) or the subdistrict court judge. In the event of dismissal on economic grounds or dismissal after two years’ sickness, the procedure via the UWV must be followed in the first instance. If the employee is to blame for the termination, e.g. in the case of poor performance or an impaired working relationship, the employer will always have to apply to the subdistrict court judge after 1 July 2015. Detailed conditions that a termination ground must meet will be recorded in the law and the related regulations. For instance, an employment contract can be dissolved on the grounds of poor performance only if that poor performance has been demonstrably documented. It must be proven that the employee has been called to account regarding his or her poor performance and that it has been explained what improvements will have to be made. Also, an action plan must have been drawn up and the poor performance may not be due to inadequate training or to the working conditions. Finally, it must be proven that reassignment within a reasonable period to a different position, possibly by providing training, is not possible. Timely documentation and records of the communication with the employer regarding the performance will therefore become increasingly important.
If the employment relationship is not continued after a period of two years or longer, the employee is entitled to a transition payment. The amount is 1/3 of a month’s gross salary per year of service for the first ten years and half a month’s salary as from ten years of service, subject to a maximum of €75,000 gross or a year’s salary, if that salary is higher than €75,000. A transitional arrangement applies until 2020 to persons over the age of 50 with an employment record of at least ten years. They are entitled to one month’s gross salary per year of employment as from the age of 50 (with the exception of employers with fewer than 25 employees). Until 2020 in the case of small businesses (fewer than ten employees) the months until 1 May 2013 will not be counted for the purposes of the transition payment in the event of dismissal on economic grounds or on the grounds of a poor financial position.
The team of L&A advocaten is pleased to advise you if you have any questions regarding the new Work and Security Act.