Unions and employers agreement on labor market reform
On June 1st, 2021 the social partners have reached an agreement in principle on labor market reform and work regulation. The agreement is part of an advice from the Social and Economic Council (SER). The agreement is an attempt to influence the formation talks about a new Dutch government. In this blog you can read about the main points, including the limitation of flexible work by prohibiting zero-hours contracts, temporary employment contracts of a maximum of three years and the position of self-employed persons.
The SER states that employment contracts for an indefinite period should be the basis for employment. The advice specifically states how other forms of contract (temporary work, on-call contracts, temporary contracts, self-employed persons) should be better regulated. These flexible contract forms should have a place in the labor market during ‘peak and ill’, but should no longer be used to prevent competition on employment conditions.
Zero hour contracts
On-call (including zero-hours) contracts will be abolished and replaced by basic contracts with at least a quarterly hour standard. This makes the periodic wage of an employee predictable. An exception is made for pupils and students (whose main activity is their education or study): they will receive a contract that is comparable to the current system.
Temporary workers
- Phase A (the so-called agency clause: the unlimited use of temporary contracts and exclusion from the obligation to continue to pay wages) is legally set at one year (currently one and a half years). The current possibility to extend this term by collective agreement will be taken out.
- In phase B, a maximum of six temporary contracts can be concluded for 2 years (currently six contracts in 4 years).
- To prevent agency work from being used to reduce labor costs, the total employment conditions of the temporary agency worker from the first working day must be at least equivalent to the total employment conditions of own employees in equivalent positions.
- There will be a mandatory certification of employment agencies and other parties that mediate in employment.
Temporary contracts
Just like now, three temporary contracts may be entered into for a maximum of 3 years. The interruption period of six months however will be taken out, so that permanent temporary work with the same employer is no longer possible (except for schoolchildren and students for seasonal work).
Self-employed
- Under an hourly rate of approximately EUR 30 to EUR 35, the starting point is an employment contract and wage tax must therefore be paid. It is up to the client to prove to the court that this assumption is incorrect in a specific case.
- In principle, nothing changes at higher rates. Disagreements about the nature of the employment relationship are settled under civil law between contracting parties. The web module that is now in the pilot phase (see our blog of December 18, 2020) can help to gain clarity in advance.
- Self-employed persons are obliged to insure themselves against incapacity for work and the agreements from the pension agreement ('Pensioenakkoord') for self-employed persons are followed.
Flexibility for employers
In business economic circumstances, employers can send their employees home up to 20% of the time. In consultation with decentral social parties, employers can be compensated for 75% of the wages for less work that day from the government. In this way, the employee retains the full salary and without his unemployment benefits being affected.
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The Social Agreement (“Draft Advice Social-Economic Policy 2021-2025”) can be found via this link on the SER website.
The Social Agreement has yet to be presented to the supporters of the employers' and employees' associations. If approved, we will host a webinar to further explain the plans.
If you have any questions about the agreement, please contact us.
