The Netherlands: Major Changes in Dutch Labour Law

The Netherlands

Major Changes in Dutch Labour Law

On June 10th 2014, the Dutch Senate accepted the "Wet Werk en Zekerheid". This law will change important aspects of current Dutch Labour law.

Routes for dismissal
The first change concerns the revision of rights regarding dismissal. Based on current law, employers may choose between one of two routes for dismissal: (1) termination proceedings at the subdistrict court or (2) dismissal with consent of the Employee Insurance Agency. Both procedures do not provide for a right of appeal.

After July 1st 2015, all dismissals based on commercial reasons and dismissals after a period of illness of two years, will be handled by the Employee Insurance Agency (UWV). Dismissals based on personal reasons (i.e. dysfunction) will be handled by the subdistrict court. In both cases there will be a right of appeal.

Redundancy pay
Currently the amount of redundancy pay can vary depending on the route chosen. After July 1st 2015, there will only be one way to calculate redundancy pay. The amount of redundancy pay will depend on the duration of the employment. For every year of service, the employee will receive one third of his monthly salary and half his monthly salary for every year after the duration of ten years, with a maximum of € 75.000 (or a year's salary, if that amount is higher).

Chain of contracts
The so called "chain of contracts" will also be subject to change. Now it is possible to enter into three consecutive fixed term contracts with a maximum term of 36 months, before the contract is considered a contract for an indefinite period by operation of law. If there are periods of time between the contracts of three months or more, the chain will be broken. Starting July 1st 2015, the aforementioned maximum term will be changed from 36 to 24 months. Also, when there are periods of time between the contracts of six months (instead of three) or more, the chain will be broken. This will limit employers in their liberty to enter into consecutive fixed term contracts.

Trial period
Another change concerns the possibility to include a trial period in contracts. Starting January 1st 2015 it is no longer possible to include a trial period in contracts with a term of six months or less. If you are determined to include a trial period, it is advisable to enter into a contract with a term of at least seven months or more.

Noncompete clause
Starting January 1st 2015 it will no longer be possible to include a non-compete clause in fixed term contracts, unless the employer has a substantial interest to include a non-compete clause and he explains this interest in the contract. If this obligation is neglected, one cannot enforce the non-compete clause.

This article sums up a few of the major changes of Dutch Labour Law. There are more changes involved in the new legislation. If you want more information about these changes, please feel free to contact our office.