On 7 November 2018, the legislative proposal 'Labour Market in Balance Act' ('Act') was submitted to the House of Representatives by Minister Koolmees. The legislative proposal is intended to reduce the differences between flexible and permanent employment. We will discuss the most important changes below.

Cumulation ground

Dismissal will also be possible in case there is a sum of circumstances, the so-called ground for cumulation. Currently, the employer must fully comply with one of the eight reasonable grounds for dismissal. This new ninth ground allows a judge to combine circumstances. In the event of granting dissolvement on the basis of the cumulation ground, a judge can grant an extra allowance of a maximum of half the transition payment in addition to the applicable transition payment. The cumulation ground cannot be used in the event of dismissal for business economic reasons or in the event of long-term incapacity for work.

Transition payment

As from day one, employees will be entitled to a transition payment. Currently, the transition payment is only due when the employment contract has lasted at least two years. As a result, employees with short, often temporary employment contracts will also receive the transition payment. This right also exists if the employment contract is terminated during the probationary period. Moreover, the accrual of the transition payment will be reduced. At this moment, the accrual from 10 years of employment is 1/2 gross monthly salary per year. This distinction will no longer apply. Each employee will accrue 1/3 gross monthly salary per year of service over the entire employment contract. In addition, as from 1 January 2020, the temporary regulation for employees aged 50 and over will lapse.

Provisions on succession of fixed-term employment contracts

Currently, in case of more than three successive employment contracts or (with a smaller number) if the duration of the successive contracts exceeds a period of two years, the latest employment contract becomes an employment contract for an indefinite period of time. Temporary employment contracts are regarded as successive if they succeed each other at a so-called interval of six months or less. The period of two years will be extended to three years.

Probationary period

Under current law, an employment contract for an indefinite period of time or a fixed-term employment contract for a period of two years or longer, may include a probationary period of a maximum of two months. The Act makes it possible to agree on a probationary period of a maximum of five months in an employment contract for an indefinite period and a probationary period of a maximum of three months in a fixed-term employment contract of two years or longer.

Unemployment Act

If an employee is offered an employment contract for an indefinite period of time instead of a fixed-term employment contract, the WW-premiums (in Dutch: werkloosheidspremie) for the employer will be lower. The WW premium is determined on the basis of the type of employment contract offered instead of determined per sector.

The legislative proposal is currently still handled by the House of Representatives. The intention is that the Act will enter into force on 1 January 2020.

We will keep you informed of the following developments.

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