Key Updates to Dutch Employment Law

As we enter a new year, several pending laws have come into force that will impact employment in the Netherlands. Here, we highlight notable modifications to employment law effective from January 1, 2024 and discuss anticipated legislative developments.

Introduction of Minimum Hourly Wage 

A groundbreaking change awaits as a uniform minimum hourly wage replaces the existing daily, weekly, and monthly wage structures. This shift aims to eliminate disparities, ensuring fairness by preventing situations where a 40-hour workweek yields a lower hourly wage than a 36-hour standard workweek. From 1 January 2024, the statutory gross minimum hourly wage for employees aged 21 and over will be €13.27 per hour. 

Increase in Tax-Free Travel Allowance 

For employees on the move, the tax-free travel allowance sees an increase from EUR 0.21 per kilometer to EUR 0.23 per kilometer, offering a boost to compensation for travel-related expenses. This brings the allowance closer in line with other European countries. Employers are not obliged to match this threshold and may pay both over and under this limit. 

Increase in Tax-Free Work From Home Allowance 

As of 1 January 2024, The tax-free home working allowance has increased from EUR 2.15 to a maximum of EUR 2.35 per day. 

Maximum Transition Payment Adjustments 

Transition payments will undergo adjustments, rising from EUR 89,000 to EUR 94,000. Beyond this threshold, the transition payment will be capped at one gross annual salary, marking a crucial shift in financial considerations for employers and employees. 

Bonus read: Employment Costs & Benefits in the Benelux Countries Explained

Pension Accrual from Age 18 

In a move towards enhanced financial planning, employees will commence pension accrual from the age of 18, three years earlier than the previous age threshold of 21. 

On a related note, the state pension age AOW  will increase to age 67 in 2024 and will further increase to age 67 and 3 months in 2028. This is because life expectancy has risen enormously. After all, we live longer on average. This means today’s elderly people are retired for a much longer period than initially anticipated, and this leads to pension funds having to pay more for a longer period than calculated in advance. 

Registration of Carbon Emissions 

Starting July 1, 2024, a significant environmental-oriented change mandates employers with 100 or more employees to record and report employees' carbon emissions annually by June 30. This reporting includes business travel and commuting, excluding air travel and vessel journeys. 

Whistleblower protection act 

The Whistleblower Protection Act, initially enforced for 'large' employers with a workforce of at least 250 employees on 18 February 2023, was extended to medium-sized employers (those employing between 50-249 individuals) on 17 December 2023. This legislation mandates that employers establish a structured procedure for reporting instances of suspected abuse within the organization. The primary goal is to encourage transparency and protect whistleblowers who come forward with information about misconduct. 

Upcoming Legislative Amendments on the Horizon 

Bill Requiring Confidential Advisers 

In response to fostering a safer work environment, a bill requiring companies with ten or more employees to appoint a confidential adviser is on the legislative horizon. Small companies with fewer than ten staff are currently exempt from this obligation. 

Non-Compete Clause Reform 

An impending reform in non-compete clauses aims to enhance employee mobility. The proposed changes include statutory geographical and time restrictions, increased obligations for employers to explain substantial business interests served by the clause, and a compensation requirement for employees affected by the clause. 

Countering Pseudo Self-Employment 

The Assessment of Employment Relationships and Legal Presumption (Clarification) Act is set to provide clarity on self-employment criteria, distinguishing workers from employees. A bill is expected in the second quarter of 2024, with proposed effective measures slated for July 1, 2025. 

Draft Bill Amending Rehabilitation Obligations 

Small and medium-sized employers may soon have the option to jointly decide, from the second year of sickness, to end the first-track rehabilitation process. This introduces clarity earlier in the rehabilitation process, benefiting both employers and employees. 

The effectiveness and implementation timeline of these legislative changes hinges on cabinet formation and the approach of the new House of Representatives following the November elections. As the landscape evolves, we'll keep you updated on these dynamic shifts in employment law. 

Find out more about European employment law on our HR Outsourcing page, or visit our Netherlands EOR & PEO services page for more information.