1 January 2020 – just under six months from now – the Balanced Labour Market Act (WAB) will enter into force. This means significant changes within employment law and makes it important for employers to review their permanent and temporary employment contracts with their staff in good time. Think of: the number of temporary staff needed, employees who are underperforming, financial obligations regarding transition payments, etc. Taking the right measures in time is therefore essential. Sometimes this is before 1 January, sometimes after 1 January 2020. Here we give concrete tips and examples so you can anticipate these changes in good time. It is important to already take this upcoming legislation into account now, and to adapt your personnel documentation to this legislation at an early stage.

What does the legislator want?

The general aim of the WAB is to reduce the cost and risk differences between the various types of employment contracts (flexible and permanent). This is so that flexible labour is only used if the nature of the work truly requires it, and not merely because it is cheaper. In addition, the chain and dismissal rules for permanent contracts are eased slightly again, lowering the threshold for working with permanent staff again.

Change #1: The number of temporary employment contracts that may be offered before a permanent employment contract arises

With the introduction of the WAB, the maximum duration of the chain provision is brought back from 2 years to 3 years. The maximum number of temporary employment contracts remains, as it is now, 3. This brings us back to where we started, since before 2015 a maximum term of 3 years also applied. The ‘chain provision’ is the maximum number of permitted temporary employment contracts that an employer can offer an employee before a permanent employment contract arises.
N.B.: a general exception to the chain provision will be introduced for substitute teachers in primary education who fill in due to an employee’s illness.

Action for 2020: It is wise to already clearly map out now which contracts can still be extended after 2020 and which contracts will automatically become permanent contracts in 2020. This way, an employer can still decide this year which contracts they do or do not want to continue.

Example I: 1^st contract from 1-1-2018 to 1-1-2019, 2^nd contract from 1-1-2019 to 1-1-2020
Because of the WAB, this contract can still be extended once more in 2020, before a permanent contract arises.

Example II: 1^st contract from 1-12-2017 to 1-12-2018, 2^nd contract from 1-12-2018 to 1-12-2019
If this contract does not end in December 2019, it will automatically become a permanent contract in 2020.

Change #2: Interruption of temporary contracts

The maximum interval at which the chain is not broken is currently 3 months. This will soon (again) become the default of 6 months, as was also the case before the introduction of the WWZ.
N.B.: the possibility is being introduced to shorten the interval between (temporary) employment contracts per CLA from 6 to 3 months. This is only possible if there is recurring temporary work that can be done for a maximum of 9 months per year (e.g. in the case of genuine seasonal work or due to school closures, etc.).

Change #3: Higher unemployment insurance (WW) premium for temporary contracts

Next year, two different WW rates will apply.

Currently, the level of the WW premium that an entrepreneur must pay as an employer is determined by the sector in which the employee works and the outflow that takes place within that sector. With the introduction of the WAB, the level of the WW premium will be determined by whether it concerns a fixed-term (high premium) or permanent (low premium) contract, or whether the scope of work is not clearly established.

An on-call agreement (zero-hours contract, min-max contract) for an indefinite period therefore also does not qualify, and you will pay the high premium.
The purpose of the WAB on this point is that an employer sooner proceeds to offering a contract with a fixed, clearly defined scope of work for an indefinite period. This is because it becomes financially more attractive (read: cheaper) to do so.

Fixed-term employment contracts or on-call agreements will therefore become considerably more expensive. The difference between the high and low premium percentage will soon amount to five percentage points. If the low premium is 1%, the high premium is 6%.

Actions for 2020

1. Copy of the written employment contract in the records:
   To enable inspection by the competent authority/authorities, employers must include a copy of the relevant employment contract in their payroll records for employees for whom they pay a low premium. Many older employees are sometimes missing a written employment contract. It is wise for an employer to prepare for this now and look up the employment contracts. If there is no written employment contract, this must be recorded in writing. This way you prevent losing entitlement to the lower WW premium, from the start of 2020, for employees with a permanent contract but without a written agreement.
2. Make sure from now on that the nature of the contract is stated on every payslip: i.e. fixed-term or indefinite, on-call agreement, etc.
3. Converting flexible contracts to permanent contracts. Employers would be wise to critically review the facts, costs and benefits surrounding flexible contracts for employees once more. Have the flexible contracts actually already been converted into permanent contracts? For example, because someone has already been working 20 hours a week for years. In such a case, the benefits of converting to a permanent contract may outweigh the costs involved. Also take a good look at the long-term risks for the organisation.

Help from TLC: We can think along with you and come up with pragmatic legal solutions. For example, by converting your on-call contracts, where possible, into indefinite-term contracts, but with an annual hours norm so that the work is nevertheless clearly established, while you remain flexible in the deployment of hours during busier and quieter periods.

For questions and support with the above-mentioned actions, please contact us via 020-3450152 or email your question directly to our employment law lawyers hvercammen@thelegalcompany.nl and ahardy@thelegalcompany.nl.

Legal expenses cover on a subscription basis

Would you like an employment lawyer by your side, for an affordable fixed monthly fee, who guides you safely through the jungle of these new rules on a daily basis? Then consider a subscription to The Legal Safe. The alternative to legal expenses insurance or an expensive lawyer. Contact us via 020 – 345 01 52 or send your request directly to our lawyers via info@thelegalcompany.nl.