On January 1, 2020, the Labor Market in Balance Act (WAB) will enter into force for employers. The WAB is partly a repair of the Work and Security Act (WWZ) introduced in 2015. The most striking changes of the WAB are summarized below.
Whereas under the WWZ there were specific grounds for dismissal in the event of a dismissal procedure before the subdistrict court, each of which had to be able to bear the dismissal independently, dismissal will soon also be possible if there is a sum of the currently known (not fully borne) grounds for dismissal, the so-called cumulative ground. The judge will determine whether the circumstances put forward by the employer from two or more grounds for dismissal, in combination, constitute reasonable grounds for dismissal. The new ground for dismissal thus allows the court to combine circumstances. The employee may, however, receive an additional half transitional compensation if the cumulative ground is used for dismissal (on top of the regular transitional compensation).
It seems as if the legislator has somewhat gone back to the situation before the WWZ, when there was a more generally formulated ground for dismissal that implied that the employer could not reasonably be required to continue the employment contract. In that situation, all kinds of circumstances could therefore be ‘swept together’, which, as a complex of factors, could nevertheless lead to the employment contract having to be terminated in the short term for reasons of equity. Incidentally, even in that situation, the old subdistrict court formula could still be used by the subdistrict court to give a financial valuation of the dismissal as such.
Entitlement to transitional compensation.
Employees are now only entitled to transitional compensation when the employment contract has lasted 24 months, but as of 1 January they will be entitled to transitional compensation (severance pay) from day one, including during the trial period. Firing employees with a shorter employment contract will therefore become more expensive. On the other hand, the structure of the transitional compensation will be 1/3 monthly salary per year worked and a proportional part thereof for a period that the employment contract lasted shorter or longer than a calendar year. Now it is 1/6 monthly salary for every six months that the employment contract has lasted. The increased transitional compensation for employment longer than ten years will lapse, as well as the temporary scheme higher transitional compensation when the employee in that situation was older than 50 years.
Compensation for small employers.
In addition, as of January 1, 2020, the small employer (less than 25 employees) will be compensated for the transition fee, which must be paid upon dismissal as a result of company closure due to reaching the state pension age, illness or death. These last changes are in line with the compensation for the transition fee in case of dismissal after long-term disability. Thus, the compensation for the transition fee paid in the event of business cessation will only be provided if the transition fee is paid on or after January 1, 2020.
In case of dismissal in connection with a poor financial situation of the small employer (less than 25 employees), it now applies that the years of service prior to May 1, 2013 may be disregarded. The condition for the grounds for dismissal is the loss of jobs as a result of the cessation of the company’s activities or the necessary loss of jobs, viewed over a future period of at least 26 weeks, as a result of the adoption of measures to ensure the efficient running of the company due to economic circumstances. This exception will expire on January 1, 2020. After that date, the years of service prior to 1 May 2013 will also count when determining the amount of the transitional allowance, regardless of the reason for the dismissal.
Probationary period and non-competition clause.
If the employer terminates the employment contract during the probationary period, the employee can only be held to a non-competition clause if there are substantial business or service interests. Two important changes for those entrepreneurs who make use of temporary labor contracts and/or on-call workers.
Amendments to the chain-of-contracts rules.
The chain rule determines when a series of fixed-term employment contracts is converted by operation of law into an employment contract for an indefinite period. Currently, for employees who are not entitled to state pension, an employment contract for an indefinite period of time arises when more than three employment contracts for a fixed period are concluded or the series of employment contracts for a fixed period has exceeded a period of 24 months. Incidentally, it is possible to deviate from this statutory regulation on fixed-term employment contracts by means of a collective agreement. The new regulation extends that period to 36 months. The maximum interval at which the chain is not broken remains six months as standard, but may be shortened by collective agreement to three months in the case of recurring temporary work that cannot be performed for more than nine months per year. This new provision is broader than the current exception for seasonal work, which refers to jobs that can be performed for a maximum of nine months per year due to climatic or natural conditions. The rules have immediate effect. This means that an employment contract ending on or after January 1, 2020, will be subject to a three-year chain provision, even if the employment contract was entered into before January 1, 2020. So take into account a possible extension already now!
There will be measures to prevent the mandatory permanent availability of standby workers. On-call contracts will remain permitted, but the position of the on-call worker will be strengthened: In the situation where the scope of the work is not exactly fixed, because the scope of the work is not defined (zero-hours contract) or not unambiguously (min-max contract), on-call workers may refuse a call if they are not called at least four days in advance. If the work is cancelled or the time is changed within four days before the work starts, the on-call worker retains the right to wages. The four-day period can be shortened to a minimum of 24 hours by collective agreement. The call must be made in writing or electronically (i.e. by email, text message, or WhatsApp). If these conditions are not met, the employee does not have to respond to the call. Of course, the employer may/can, within the four-day period, request the employee to come to work. For example, due to illness of another employee or weather conditions. If the employee feels like coming to work and has the time, he is of course allowed to respond to the call. However, he cannot be obliged to do so.
For the employee, as of January 1, the same notice period applies as the call period, which the employer must observe in case of a call. This means that for the standby employee a notice period of four days applies. Furthermore, for on-call workers it applies that they may cancel at any day and therefore do not have to cancel at the end of the month. The notice period may again be changed by collective agreement. If the employment contract is continued after twelve months, the employer must make the on-call worker an offer for at least the average number of hours in the previous twelve months. If he fails to do so, the employee may still claim wages for that average number of hours. The employee does not have to accept the offer. The freedom to continue working on the basis of variable hours therefore remains if the employee so wishes.
No mandatory offer.
For the record, the above measures do not intend to oblige the employer to make an offer to continue the on-call contract or to enter into a new fixed-term or indefinite-term employment contract. The aim is to standardize the scope of work within that existing contract. If this on-call contract was entered into for a period of twelve months, it can therefore be terminated by operation of law. Please note! For the calculation of the twelve month period, employment contracts that have succeeded each other with an interval of less than six months are counted together. The earlier offer that the employer made or should have made to the employee after twelve months, also applies to employment contracts, which follow each other with intervals not exceeding six months. Furthermore, it also applies to successive employers.
The measures will only apply to so-called min-max contracts and employment contracts with a deferred performance obligation, such as zero-hours contracts, and not also to preliminary contracts. The measures do not apply to preliminary contracts. After all, in the case of preliminary contracts, the employee does not have to respond to a call at all and an employment contract only arises if the employee responds to the call. Furthermore, the above measures do not apply if the working hours have been agreed, but the times when the work must be performed have not been fixed. Incidentally, a collective agreement may provide that the above measures do not apply to certain jobs which, due to climatic or natural conditions, can be performed for a maximum period of nine months per year and cannot be performed consecutively by the same employee for a period of more than nine months per year.
As of January 1, 202, the lighter employment law regime applicable to the temporary employment contract, the so-called agency regime, will be declared inapplicable to payrolling. Furthermore, payrolled employees will be entitled to the same primary and secondary employment conditions as employees of the client. Payroll employees will also be entitled to an adequate pension plan.
From 1 January 2020, the salary slip must indicate whether the employment contract is a written contract for an indefinite period or whether it is an on-call contract, whereby on-call contract means a zero-hours contract or a min-max contract. In addition, premium differentiation will take place with respect to permanent employees compared to temporary contracts. The employer will pay a lower WW-premium for permanent contracts. There are even more specific wage technical provisions included, which an administration office will undoubtedly inform you about. In short, enough changes to critically review the personnel policy, especially for the choice of on-call or temporary contracts. Also, when an employer is faced with the choice of parting with employees, it is advisable to consider whether the procedure should be started this year or after January 1, 2020.
DORMANT EMPLOYMENT CONTRACTS AWAKENED.
An issue that began to play a role since the entry into force of the WWZ in 2015 was that of the so-called dormant employment relationship. On November 8, the Supreme Court issued the long-awaited ruling in the preliminary ruling procedure on the employee’s right to termination of the dormant employment contract because of the right to transitional compensation: an employer may, in principle, not keep an employee in service ‘dormant’ against his will, in order to avoid payment of the transitional compensation. This situation arises when an employee has completed the two-year period of incapacity for work, after which the employer’s obligation to continue to pay wages comes to an end. The law then did allow for the possibility of terminating the employment contract (after all, the prohibition on giving notice due to illness had ended) but with the introduction of the WWZ, this also meant that the employer (who, after all, took the initiative to terminate the employment contract) had to pay the statutory transitional compensation to that employee.
In practice, in many cases the employer did not take the initiative to terminate the employment contract, so that it continued and the employer, without having to continue paying wages, could also avoid paying the transitional allowance. The employment contract thus became “dormant. In September 2019, the Supreme Court received an opinion from the Advocate General on dormant employment, after an employee started proceedings on this issue. This already provided the prelude to the November 8 ruling. The essence of the ruling is that an employer does not meet “the requirement of good employment practices” to keep a long-term disabled employee in dormant employment, when this employee requests the termination of his employment contract, with payment of compensation equal to the transition payment.
The Supreme Court bases the fact that an employer should terminate a dormant employment contract if he has no reasonable interest in continuing the employment contract and that, in principle, he must pay compensation for this on the Transition Compensation Act. This act regulates as of 1 April 2020 a compensation of the payments employers have made since 1 July 2015 in case of dismissal due to long-term disability. With this law, the government wants to put an end to dormant employment contracts. In concrete terms, this law means that the employer does not have to pay more than the amount of transition pay that the employee would receive at the time of dismissal after two years of illness. The ruling is expected to result in many employees reapplying to their employer to terminate employment and pay compensation in the process. If there is no exceptional situation justifying dormant employment, the employer will have to comply with his employee’s request. It requires little imagination that this decision is going to be quite costly for employers with multiple dormant employment contracts.