Anticipate now for the legislative changes by 2020

26 maart 2019 | Door:  Niels Woudstra

With a view to announced legislative changes by 2020, it is important for employers to anticipate already in 2019. There is no transitional legislation in most of these cases, as a result all applicable situations on January 1, 2020 and later, this new legislation must be executed. If employers are still able to draw up employment contracts, it is advisable to construct the situation in a certain way. It will probably save a serious amount of wage costs.

In this item, we will address three notable points  to consider with respect to the announced legislative changes.

1. Transition fee

The current obligation for paying  a transition fee to an employee when its contract ends due to employers choice, starts after an employment of 24 months. As from 2020, the payment of a transition fee to an employee is mandatory from day 1, even if the duration of contracts is less than a duration of 24 months of employment and if the contract ends by employers choice from January 1, 2020 or later.

2. Obligation to offer a contract with a guarantee on labour hours

In the Netherlands it is possible to agree upon a employment contract for a certain period without being clear about the hours of labour (the so called zero hours contract). The employee can be called by the employer for labour in a certain short time when its necessary. However, no labour means no wage. This was possible up to six months if this was mentioned in the employment agreement.

The obligation of paying three hours of wage, even if the call for labour was just for less hours, will still stand in 2020. But all agreements that ends on January 1, 2020 or later – and the employment lasted for 12 months or more -, without a fixed amount of labour hours during a certain period of time, the employer must offer a contract with fixed hours per timeframe. These fixed hours cannot be less then the average of the last 12 months of labour.

Also, within the contracts in the first 12 months – without the fixed amount of labour hours -  the employer is obligated to  call to the employee four days or more in advance.

Furthermore, an employee can terminate the contract within the same period of four days. Employers must anticipate more regarding the employee leaving earlier than expected.

3. Large contributions for social security on contracts without fixed amount of labour hours

Per 2020, the contribution scheme will change based on unemployment figures. The ‘basic unemployment fund’ will have two options: If a contract has no fixed termination date (contract for life, until pension), it has fixed labour hours and the contract is in writing, the employer pays the lower percentage of contribution. This kind of contract will not lead to high unemployment figures. But if the contract has a fixed termination date, is not clear about the labour hours in a period or is not written down,  an employer will pay the high percentage. It is still not certain what the percentages will be exactly, but the government has estimated a differentiation of at least 5 percent. So, if the lower percentage will be 1.5%, the high percentage will be approx. 7.5%.

With respect to these changes as from 2020, it is possible for the employer to anticipate. A fixed-term contract will cost extra  because of a possible higher contribution to the social security scheme and the possible payment of a transition fee. Perhaps  it is possible to agree upon the fixed date for termination of the contract  at December 31st, 2019? And start the long-term contract as from 2020, if appropriate? With fixed labour hours and administrated in the correct way.

And all contracts that meet the terms for the lower percentage as from 2020, but is not written down, it is very advisable to put down these agreements on paper before January 1st, 2020.