The Balanced Labour Market Act (WAB)

    Last updated: 14 November 2023
     
    Since 1 January 2020, companies have to comply with the Dutch Balanced Labour Market Act (WAB). The WAB has changed the rules regarding employment contracts and dismissal. These changes affect both employers and employees. Why is this important? As an employer of Dutch staff, the altered law applies to current and/or future employees. In this blog, we have outlined the most important changes in WAB and what this means for employers.
     

    1. Severance pay

     

    As a result of the WAB, the rules concerning transition fees have changed. As of 1 January 2020, an employee can receive a transition allowance as of the first working day. This applies if the employer takes the initiative for dismissal, or if a temporary employment contract ends on the specified date. Previously, an employee could only receive a transition allowance if they had been employed for a minimum of two years. If other agreements are laid down in the collective agreement (CAO), the employee is not entitled to transition compensation. 

     

    2. New ground for dismissal

     

    Because of the WAB it is now possible for sub-district courts to dissolve an employment contract by making use of the Cumulation Ground. This means that different grounds for dismissal can be combined. It may be that a single ground for dismissal does not justify actual dismissal, but in combination with another ground for dismissal it does. If Cumulation Grounds have been used, the sub-district courts may award additional compensation to the employee.

     

    3. Chain agreement

     

    It is now possible for employers to offer three temporary contracts over a time period of 36 months. The fourth contract then automatically becomes a permanent contract. Before 1 January 2020, it was only possible to offer three temporary contracts over a maximum of 24 months. Here, too, other agreements have been made in certain collective agreement (CAO) regarding temporary contracts.

     

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    4. On-call employees 

     

    An employee with an on-call contract must be called for work at least four days in advance. Does the employer cancel within those four days? Then the employer must pay the employee the hours for which he was scheduled. In a CAO, this period of four days can be shortened to one day. The on-call worker can also resign with a notice period of four days.
    After 12 months, the employer must offer the employee a new contract with a fixed number of hours. The number of hours is based on the average number of hours worked per month in the previous year. If the on-call employee had already been working for the organization for more than 12 months on 1 January 2020, the employer must offer them an employment contract with a fixed number of hours before 1 February.
     

    5. Unemployment benefits (WW)

     
    Until 1 January 2020, the amount of the WW was calculated based on the industry of the employer. Since 1 January 2020 however, the WW is based on both the maximum day wage and the previous wage of the employee.  
            

    The employer pays a lower WW (unemployment law) premium for employees with a permanent employment contract. The employment contract must be in writing, for an indefinite period of time and it cannot be an on-call contract.

    Employers pay the high WW premium for employees with a flexible employment contract. This includes:

    • Employees working on the basis of a fixed-term contract.
    • Temporary workers who have a contract with a temporary employment clause.
    • Employees with fictitious employment contracts.
    • Employees with on-call contracts.

     

    6. Legal status and sickness notification

     

    Since the WAB, Payroll employees have at least the same terms of employment and legal status as employees employed directly by a company. This has implications for the amount of holiday leave and the year-end bonus for example.

     

    More information

     

    In case you would like to have more information, do not hesitate to connect with Monique Ramondt-Sanders - VP of Human Resource Outsourcing at EuroDev. Interested in more information concerning our HR Outsourcing services? Please have a look at our HR Outsourcing page. 

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