On 18 February 2014 the Dutch House of Representatives adopted the legislative proposal for the Work & Security Act by a large majority. The Dutch Senate will review the bill in the coming months. Assuming that the Senate also lends its approval, part of the new act will take effect as of 1 July of this year. In this newsflash we will discuss the changes that you need to be alert to from now on.
This act alters the rules that apply to flexible employment, law of dismissal and to the Unemployment Benefits Act. The legislature intended to introduce the changes to these three areas at different times: 1 July 2014 (flexible employment), 1 July 2015 (dismissal law) and 1 January 2016 (unemployment benefits). An important change has been made to this schedule: the House of Representatives decided that adjustments to the provisions on successive fixed-term employment contracts (which stipulate when the last temporary contract in a succession of contracts will be converted into a permanent contract) will not take effect from 1 July 2014, but one year later: 1 July 2015. The other adjustments in relation to flexible employment will take effect from 1 July 2014. It is important to bear in mind whether the amended rules will immediately affect existing employment contracts, or whether they will only apply to contracts concluded after 1 July 2014.
Obligation to notify intention to terminate / continue a temporary employment contract
The act will place a new obligation on employers: if an employer has concluded a temporary contract with an employee with a term of six months or more, then at least one month before the contract ends, the employer must notify the employee in writing of (i) whether or not the contract will be continued and if so, (ii) on what conditions. The obligation also applies to successive temporary contracts with terms of six months or more. Please note: this obligation will apply to temporary employment contracts that terminate one month or later after this part of the new act takes effect, i.e. from 1 August 2014. This means that the obligation to notify temporary staff will apply to almost all temporary employment contracts concluded before 1 July 2014.
There are sanctions for employers if they do not comply, do not comply on time or do not completely comply with the obligation to notify temporary employees:
if an employer has failed in any way to inform an employee as to whether it intends to continue the contract (see (i) above), then it must pay the employee one month’s salary;
if an employer is late in informing the employee, i.e. less than one month before the contract ends (see (i) above), then for every day that the employer fails to inform the employee, it must pay the employee one day’s salary;
if the contract is continued but the employer has not fully complied with the obligation to notify (in cases (i) or (ii) above), then the contract will be continued for another period of the same length (however, no more than one year) on the same terms. If an employer wishes to continue an employment contract on different terms, it must therefore be sure to inform the employee in good time.
The obligation to notify does not apply to temporary employment contracts that do not include a fixed end date of employment (e.g. temporary replacement in the event of illness).
Trial period clause
From 1 July 2014, a trial period clause in employment contracts with a term of six months or less is null and void. This applies to contracts concluded on 1 July 2014 or later, but not to contracts that were already in effect before 1 July 2014. Please note: this rule also applies to successive contracts for the same job and to successive employment relationships – for example, if an employer itself goes on to employ an employee who initially did the same work but who had been seconded by a temporary staffing agency.
Temporary employment contracts concluded on or after 1 July 2014 may no longer include a non-competition clause, unless it is necessary on account of compelling business interests. Non-competition clauses in temporary contracts that are already in force on 1 July 2014 will therefore continue to apply.
If an employer wishes to include a non-competition clause in a temporary contract after 1 July 2014, it must cite the interests involved in writing and explain why they make a non-competition clause necessary. According to the Explanatory Memorandum to the bill, the interests must relate to temporary and specific duties or specific positions in which the benefits to the employer of including the non-competition clause outweigh the drawbacks for the employee. However, the government has not given any specific examples of such compelling interests.
The non-competition clause will have to comply with these conditions both when it is agreed and when the employer wishes to invoke it.
According to the new regulation, a non-competition clause in a temporary contract can be void or voidable in three situations:
if no reasons are stated, the clause is void;
if, according to the court, the clause is not necessary in view of the interests stated by the employer, the court will annul the clause in full;
if, according to the court, the non-competition clause is too detrimental to the employee compared to the interest of the employer in retaining it, the court will annul the clause in full or in part.
In the debate on the bill, the business relations clause has thus far not come up. Because courts view a business relations clause as a form of non-competition clause, it seems advisable to state your reasons for it in the same way as for the non-competition clause.
Obligation to continue to pay salary
Employees are entitled to payment of salary, even if they have not done their work in full or in part. This is not the case if, in reasonableness, not having done the work is the responsibility of the employee, for example, because he or she participated in a strike, came to work late or was imprisoned. Under the present law, there is no limit to the departures that may be made from this obligation by collective agreement, for example in the case of on-call contracts. Collective agreements that take effect after 1 July 2014 may depart from this obligation, without restrictions, only for specific jobs designated in the collective agreement that are non-recurrent and do not have a fixed scope, such as jobs for which use is made of stand-in workers. Arrangements in collective agreements that are already in force on 1 July 2014 will continue to apply on this aspect for the remaining term, but only up to a maximum of 18 months.
Temporary employment relationships
The new act contains specific rules for temporary employment agencies. The obligation to notify as described above will not apply if a temporary employment clause is in effect between the temporary worker and the agency. Restrictions will come to apply to the periods for which agencies can apply a temporary employment clause, exclude the applicability of provisions on successive fixed-term contracts or depart from the obligation to continue to pay salary. If a collective agreement takes effect after 1 July 2014, the statutory term for such deviations can be extended from 26 weeks to a maximum of 78 weeks. Under the new legislation, departing from the obligation to continue to pay salary is not limited to non-recurrent jobs without a fixed scope. Arrangements in collective agreements that are already in force on 1 July 2014 will continue to apply on these aspects for the remaining term, but only up to a maximum of 18 months.
In calculating the period in which the temporary employment clause applies or in which the provisions for successive fixed-term employment contracts can be excluded, after 1 July 2014 the weeks during which temporary staff work will be added together if the weeks of work are interrupted by a maximum of six months. Up to now, they were added together when interrupted by periods of up to one year.
It is wise to give some thought now to the new rules, which in all probability will apply from 1 July 2014. It is a good idea to mark down the date by which you need to notify temporary employees of whether their contract will be continued and to check whether new contracts comply with the trial period clause and the non-competition clause. Employers subject to a collective agreement that has made departures from the obligation to continue to pay salary will have to check the new collective agreement.