On 1 January 2020, the Balanced Labour Market Act (Wet Arbeidsmarkt in Balans, “WAB”) entered into force. This Act introduced a package of measures in the fields of flexible labour, dismissal law and the Unemployment Insurance Act (Werkloosheidswet, “WW”), with the goal of improving the balance between flexible and permanent employment agreements. This has major implications for the deployment and costs of staff in the hospitality sector. The main changes are summarized below.
Sequence System
Under the WAB, the sequence system for offering subsequent fixed-term employment agreements has been broadened.
This means the WAB allows the concluding of fixed-term employment agreements for a longer time. The rule of interrupting the sequence after a period of more than six months has remained unchanged. With regard to seasonal work, this interim period has been limited to three months in the CAO (collective labour agreement) of the hospitality sector. This is only permitted where it concerns recurrent temporary work that can be done for a maximum of nine months per year.
On-Call Contracts
Under an on-call contract, the employer has to call the on-call worker at least four days in advance. If he does not do this on time, the on-call worker is not obliged to obey the call. If the employer does call the worker on time, but withdraws its call again within those four days, the on-call worker remains entitled to the wages over the period for which he had been called. In a collective labour agreement, this term of four days can be shortened to one day. In the current hospitality CAO, the term was reduced to 24 hours and the obligation to continue paying wages if a call is not cancelled on time does not apply to “climate and nature” seasonal workers.
The employer is obliged to offer a fixed scope of work after 12 months for the number of hours the on-call worker has worked on average in the preceding year. According to the current hospitality CAO, this obligation does not apply to “climate and nature” seasonal workers.
Payroll
Payroll employees must get at least equal treatment in terms of employment conditions as employees employed by the client.
The WAB includes a definition of the payroll agreement. The definition of the temporary employment contract is not changed. However, if there is a payroll construction, the temporary work regime will be declared inapplicable.
Payroll employees are entitled to an adequate pension scheme. This measure entered into force in 2021.
Transition Fee
Under the WAB, employees are entitled to a transition fee from their first day of employment (including the probationary period). The transition fee is calculated on the basis of the actual duration of the employment. Before 1 January 2020, an employee was only entitled to a transition fee if he had been employed for at least two years, and the calculation was rounded off to half years of service.
The accrual of the transition fee was reduced for employees who have been employed for a long time. Each employee accrues 1/3 monthly salary per year of service. Before the WAB, this accrual was 1/2 monthly salary per year, starting from 10 years of service.
At the same time, the temporary regime from the Work and Security Act (Wet Werk en Zekerheid, “WWZ”) lapsed on 1 January 2020, under which an employee aged over 50 with more than 10 years of service was entitled to 1 monthly salary per year of service worked.
The transition fee (in terms of money) has therefore become lower, especially for older employees.
Differentiated WW contribution
As per 1 January 2020 the WAB introduced a WW contribution differentiated according to the nature of the contract. The new contribution differentiation is a problem for many employers. In the case of an employment agreement for an indefinite period of time, the employer pays a low unemployment insurance contribution (“WW contribution”). However, in order to be eligible for this low contribution, it is necessary that the written employment agreement for an indefinite period of time has been signed by the employer and the employee. A written addendum signed by both parties also suffices. Minister Koolmees announced on 9 December 2019 that employers would still have time until 1 April 2020 to include a written employment agreement or an addendum signed by both parties in the payroll records. In the meantime, employers are allowed to pay the low contribution. This leniency applies only to employment agreements of employees who joined the company before 1 January 2020.
Cumulation Ground
In addition to the existing grounds for dismissal, a new ground was introduced known as the cumulation ground. Prior to 1 January 2020, dismissal was only possible if one of the eight grounds for dismissal had been fully met. The cumulation ground gives courts the option to combine several reasons for dismissal. The cumulation ground cannot be used for or combined with a dismissal for commercial reasons or in the case of long-term occupational disability.
If the employment agreement is terminated on the basis of the cumulation ground, the court may award the employee an extra fee (on top of the transition fee and possibly the fair compensation) up to a maximum of 50% of the transition fee.
More information
Would you like to learn more about the WAB or a specific situation, please contact Ester Damen.
