Changes in employment law as of January 2015

In recent years Dutch labor law has undergone some changes to increase flexibility. The first part of the new law will come into force as of January 2015 and the second part of the new legislation will be enforced in July 2015.
In this article we highlight the changes in the employment law for the upcoming year.

Changes in the employment law as of January 2015

As of January 2015, a probation period is not allowed if the employment contract has a duration of less than 6 months. If the duration of the employment contract exceeds 6 months, a probation period of 1 month in the employment contract is allowed.

The employer needs to notify the employee at least 1 month in advance if the contract will be renewed or terminated. If the employer fails to do so, he is obliged to pay 1 month salary to the employee as compensation.

It is not allowed to have a non competition clause in a fixed term unless it is specifically motivated in the employment contract why this non competition clause is inserted in the contract.

Transitorily law

Please be informed that the new legislation is only applicable on employment contracts that come into force as of January 2015. A current employment contract is not subject to this regulation. However, if there is a temporary employment contract concluded and the employer and employee decide to renew this contract, new legislation will be applicable on the employment contract.

Changes in the employment law as of July 2015

Under the current law an employer is obliged to offer a permanent contract after 3 temporary contracts or if the employment contract exceeds a duration of 3 years.
However, it is possible to employ the employee again after a period of 3 months and then avoid the obligation of having to offer the employee a permanent contract.

Under the new legislation this period will be stretched to 6 months. Furthermore, the employer is obliged to offer a permanent contract after 2 years.

Dismissal

Currently there are two options to terminate an employment contract.
1. The employment contract will be terminated through a court procedure. In general, the employer is obliged to pay a compensation to the employee for the loss of income based on the age of the employee and the duration of the employment contract;
2. Permission from the Labor Office (UWV). In these cases the employer is not obliged to pay a compensation.

Under the new law, there will be one procedure to terminate the employment contract and to establish the compensations.

If the employer wishes to terminate the employment contract based on economic reasons or disability to work, the employer has to address his case to the UWV in order to get permission to terminate the contract. If the employee is of the opinion that the termination is unjustified, he has to start a court procedure.

In the case the employer want to terminate the employment contract due to disfunctioning of the employee, disturbed work relations or negligence of the employee, the case will be assessed by the judge from the lower court.

If the employee intends to end the employment contract, he has to take the notice period into account. In case it has not been taken into account, the employer can request for indemnification.

In the case both employee and employer agree on the termination of the employment contract, the mentioned steps are not required.

Remuneration and compensation for employment

If the employer wishes to terminate the employment contract, compensation is owed if the employment contract exceeds more than two year. The compensation is 1/6 of the monthly salary for every year the employee is employed. The remuneration is capped at €75.000.

The compensation for employees of 50 years and older who have had an employment contract for more than 10 years will be 1 month for each year of employment. The higher compensation for older employees is not applicable if the employer is a relatively small business (25 or less employees).

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Robert Bosma
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