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Boekel News Flash Employment Law November 2012

Submitted By Firm: Boekel

Contact(s): Epke Spijkerman


Eugenie Nunes and Karin van Zijtveld

Date Published: 11/9/2012

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VVD – PvdA coalition agreement: what measures should you expect?

The new government policy was announced in the coalition agreement of 29 October 2012. The plans include a number of drastic changes in the field of employment law and social security. The emphasis is on a short interval between jobs, with the shortest possible dependency on benefits. A brief summary of the most notable changes is presented below.

Dismissal law

Whereas employers can currently follow either the Subdistrict Court procedure or the procedure via the UWV WERKbedrijf (Employee Insurance Agency) in order to terminate an employment contract, the Subdistrict Court procedure will be abolished. The Subdistrict Court Judge will therefore no longer assess the dismissal beforehand, but only in arrears. Employers will only be able to apply to the Subdistrict Court in case of termination of an employment contract with an employee to whom a prohibition of termination applies (e.g. in the event of illness) or with an employee who has a temporary employment contract that does not provide for an early termination.

Employers will in future have to apply for dismissal advice (rather than a dismissal permit) from the UWV before terminating an employment contract. The intention is to handle “the majority” of the applications within four weeks (currently six to eight weeks). If a collective employment agreement provides for a procedure that is similar in terms of content and speed, the employer is not required to request such advice. If the UWV’s advice is positive, the employer can terminate the employment contract while observing the notice period. It is apparent from the coalition agreement that an employment contract can also be terminated if the advice is negative, but that involves risks in light of possible proceedings after termination (see below). The criteria for lawful dismissal will be accurately described. The criteria for termination on economic grounds (such as the proportionality principle) will remain the same, but it is permitted to depart from the proportionality principle in collective employment agreements.

In the event of dismissal at the employer’s initiative, or if a temporary contract of at least one year is not extended, the employer will owe a transition budget for training purposes equal to a quarter of a month’s salary per year of service, subject to a maximum of four months’ salary. Employees with a temporary contract will therefore be better protected than under current law. If the dismissal is based on the employer’s poor financial situation and the employer would become insolvent if it were forced to comply with that obligation, no transition budget is due.

Dismissed employees can apply to the court. The court will then apply the same criteria as the UWV, whose advice will weigh heavily. If the employer has followed the UWV’s advice but the court nevertheless considers the dismissal unjustified or believes the employer is primarily to blame, severance pay can be awarded. The severance pay will be limited compared with the current situation, in which the subdistrict court formula applies. The severance pay will amount to a maximum of half a month’s salary per year of service, subject to a maximum of €75,000. If the employer has departed from the UWV’s advice, the court can also revoke the dismissal, in stead of awarding severance pay. The judgment is not subject to appeal.

The coalition agreement does not mention the possibility frequently used in practice of terminating an employment contract by mutual consent. That possibility will most likely continue to exist.

Social Security

Both the duration and the amount of unemployment benefits will be limited. The duration of unemployment benefits will be reduced from 38 months to a maximum of 24 months. In the new regime employees will accrue one month of entitlement to unemployment benefits per year worked during the first ten years of employment history and half a month per year worked after that period. Existing rights will be respected with regard to the accrual of unemployment benefits, although the new maximum period of 24 months will also apply to existing cases. During the first 12 months the amount of the benefits will be based on the most recent salary; in the last 12 months the benefits will be based on the statutory minimum wage. After that period an unemployed person will be dependent on welfare. It will furthermore be included in the Unemployment Act that all work is considered suitable work after six months (rather than 12 months). The recovering of the first six months of unemployment benefits from employers that was recorded in the Spring Agreement will not go ahead. However, the financial benefit that employers would have as a result of the reforms in dismissal law is offset by an increase in the unemployment insurance contributions.

The state pension age will be gradually increased to 66 in 2018 and to 67 in 2021. The increase will then be linked to the increase in life expectancy. A transitional arrangement will be drawn up for people who take part in an early retirement or pre-pension scheme on 1 January 2013 and who have not been able to prepare for the increase in the state pension age. A “bonus” will furthermore be introduced for employees aged 61 to 65 with a low income. Employees who continue working to the age of 65.5 can retire 1.5 years earlier on average, without any financial loss.

With regard to supplementary pensions the coalition agreement provides that as from an income level of €100,000 there will no longer be any tax facilities for supplementary pensions. The maximum annual accrual rate for new pension accrual will be reduced by 0.4%. For the customary average salary pension, this means that there will be tax facilities for a maximum accrual of 1.75% a year of the pensionable salary.


It is also notable that the coalition agreement provides that the amount of the maximum variable remuneration in the financial sector will be set by law at 20% of the fixed remuneration. The aim is also to improve the statutory protection of different types of flexible work, and initiatives will be taken to improve the balance between flexible and fixed work. Finally, as from 1 January 2015 a 5% quota will gradually be introduced for hiring disabled persons, with a penalty on non-compliance. An exception to the quota arrangement will apply to companies with fewer than 25 employees.


It will take a great deal of time before the proposed measures enter into force. The proposed introduction date of the reforms in dismissal law and the unemployment system is 1 July 2014. The increase in the unemployment insurance contributions has been scheduled for 1 January 2014. The coalition agreement provides that the aim is to reach agreement with the social partners on a social agenda in which these plans are included. This means that the government will negotiate with the employers’ organisations and trade unions. The measures will then have to be recorded in legislative proposals which, after obtaining the advice of the Council of State, will be debated in the Lower House and the Upper House. In sum, the question is to what extent these measures will be embodied unamended in legislation and in what manner the announced measures will be worked out in detail. We will of course keep you informed.

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Altra Industrial Motion Inc.

Altra Industrial Motion Inc. has multiple locations in the U.S., as well as Central America, Europe, and Asia. The Employment Law Alliance has proved to be a great asset in assisting us in dealing with employment issues and matters in such diverse venues as Mexico, Australia, and Spain. We have obtained excellent results using the ELA network for matters ranging from a multi-state review of employment policies to assisting with individual employment issues in a variety of foreign jurisdictions.

In one instance, we were faced with an employment dispute with a former associate in Mexico that had the potential for substantial economic exposure. The matter had been pending for over a year, and we were not confident in the employment advice we had been receiving. I obtained a referral to the ELA counsel in Mexico, who was able to obtain a favorable resolution of the dispute in only a few days. Based on our experiences with the ELA, we would not hesitate to use its many resources for future employment law needs.

American University in Bulgaria

In my career I have been a practicing attorney, counsel to the Governor of Maine, and CEO of a major public utility. I have worked with many lawyers in many settings. When the American University in Bulgaria needed help with employment litigation in federal court in Syracuse, New York, we turned to Pierce Atwood, the ELA member we knew and trusted in Maine, for a referral. We were extremely pleased with the responsiveness and high quality of service we received from Bond Schoeneck & King, the ELA's firm in upstate New York. I would not hesitate to recommend the ELA to any employer.

David T. Flanagan
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Arcata Associates

I really enjoyed the Conducting an Effective Internal Investigation in the United States webinar.  We are in the midst of a rather delicate employee relations issue in California right now and the discussion helped me tremendously.  It also reinforced things that you tend to forget if you don't do these investigations frequently.  So, many, many thanks to the Employment Law Alliance for putting that webinar together.  It was extremely beneficial.

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I recently participated in the ELA-sponsored webinar on the Employee Free Choice Act.  I was most impressed with that presentation.  It was extremely helpful and very worthwhile.  I have also been utilizing the ELA's online Global Employer Handbook.  This compliance tool is absolutely terrific. 

I am familiar with several other products that purport to provide up-to- date employment law information and I believe that this resource is superior to other similar compliance manuals.  I am delighted that the ELA provides this free to its members' clients.

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Employment Law Alliance (ELA) has provided Boyd Coffee Company with a highly valued connection to resources, important information and learning. With complex operations and employees working in approximately 20 states, we are continually striving to keep abreast of specific state laws, many of which vary from state to state. We have participated in the ELA web seminars and have found the content very useful. We appreciate the ease, cost effectiveness and quality of the content and presenters offered by these web seminars.  The Global Employer Handbook has provided our company with a very helpful overview of legal issues in the various states in which we operate, and the network of attorneys has helped us manage issues that have arisen in states other than where our Roastery and corporate headquarters are located in Portland, Oregon.

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