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Tighter Dutch Laws on the Employment of Foreign Nationals in the Netherlands: Much Heavier Fines

Submitted By Firm: Boekel De Nerée

Contact(s): Eugenie Nunes, Sascha C. Kuit

Author(s):

Sascha C. Kuit and Eugenie Nunes

Date Published: 2/21/2013

Article Type: Legal Update

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Since 1 January 2013 much heavier penalties have been in force for violations of the Dutch Foreign Nationals Employment Act [1] The fine for employing illegal workers in the Netherlands has been raised by 50%, from €8,000 to €12,000 per employee. Businesses that commit repeated violations face closure for up to three months. The Dutch Cabinet also wants to tighten the conditions under which non-EU nationals can work legally in the Netherlands and submitted an amendment proposal for the Wav to the House of Representatives for this purpose last year.

Which employers may be fined?

Under the Wav employers are prohibited from engaging persons from outside the European Economic Area (EEA[2]) and Switzerland or, until 1 January 2014, from Romania and Bulgaria without being in possession of a work permit. The Wav understands the term ‘employer’ in the broadest sense. Also any person who engages personnel on a temporary basis is an employer within the provisions of the Wav, regardless of whether those personnel has been acquired through an intermediary, such as an employment agency, a payroll company or a sub-contractor. The fact that work is being carried out by a non-EEA or foreign national upon the instructions or in the service of an employer constitutes in itself sufficient evidence. Any employer who engages a non-EEA or foreign national must be in possession of a work permit for him or her, unless the intermediary has one already. If there is no work permit, both the employer and the intermediary will be fined. 

Tighter sanctions policy

Since 1 January 2013 every employer who violates the Wav is liable for a fine of €12,000 (was €8,000) for each illegal worker. For a repeat violation within five years the fine will be raised to €24,000 per worker. And for a third violation within the same period the fine will be €36,000 per worker. The Minister of Social Affairs and Employment has been empowered since 1 January 2013 to deal with repeated violations by closing the business in question for a maximum of three months. After the second violation, before this drastic measure is implemented, the business will be warned that if it violates the Wav for a third time, it will face closure. In addition, the fines for (not) checking out the identity of workers and (not) keeping copies of the identity documents have been raised by 50% to €2,250 per foreign national. 

Tighter permit conditions

The new Cabinet is not only committed to preventing illegal labour but also to tightening the conditions under which non-EU nationals can work in the Netherlands. Given the mounting unemployment figures, the Cabinet aims to limit the issue of work permits for low-skilled and unskilled workers as much as possible. On the other hand, it wants to promote the inflow of knowledge migrants. It is for this reason that, on 9 November 2012, the House of Representatives started discussing a list of proposed amendments to the Wav. The main proposals: 

  • Work permits that are issued on the basis of a labour market test[3] will be valid for a maximum of one year and may not be renewed without another labour market test. Employers are required to re-apply for a work permit every year, but they must recruit first and more vigorously on the Dutch and European labour market.
  • The UWV (Employee Insurance Agency) will perform more abstract tests on the ‘prioritised’ supply. Henceforth it will be sufficient for the UWV to ascertain that enough job-seekers who fulfill the requirements are present on the labour market, instead of available. If so, the UWV may reject the application. 
  •  A limit (quota) will be set for the number of work permits that may be issued for certain sectors. 
  • Foreign nationals will be allowed free access to the labour market after 5 years (3 years at present). 
  • A work permit may be refused or withdrawn if the company in question has been fined for an employment-related offence (such as a violation of the Wav) within the five years preceding the application.
  • Non-payment of a market-compliant salary will constitute urgent grounds for rejection. At present work permits must be rejected for non-payment of the legal minimum wage and may be rejected for non-payment. 

Conclusion

To quote a well-known adage: ‘prevention is better than cure’. It is therefore even more important for employers to check out whether foreign nationals – including workers engaged via third parties – are allowed to work in the Netherlands, to perform scrupulous checks on their identity, and to keep copies of their identity documents. If a fine is still imposed, it is always useful to find out whether action can be taken against it. Instituting legal proceedings against the Labour Inspectorate is the only way to get a Wav fine reduced or rescinded. Also, legal proceedings are important with a view to any offences in the future as, in the event of a second violation, the company may even face closure. Finally, an imposed fine can lead to the denial or withdrawal of a work permit.

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[1] Act on Enforcement of Labour and Social Security Law.

[2] EU Member States, Norway, Iceland and Liechtenstein. 

[3] The Wav is based on the principle that the demand for labour must be met first by the prioritised supply, i.e. the reserve labour resources that currently exist in the Netherlands and other EU Member  States. The UWV therefore ascertains first if the labour supply in the Netherlands is sufficient to fill the vacancy which is the subject of the application for the work permit and whether the employer has shown that he has actively sought candidates among the available resources.

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