Netherlands: State Budget 2019 - Social Affairs And Employment

Last Updated: 27 September 2018
Article by Eugenie Nunes and Epke Spijkerman

True to tradition, the Minister of Finance presented the September Budget Memorandum on September 18 (the third Tuesday in September). What changes in the field of employment law are in store? In this Newsletter we address the government's main plans for the labor market, incapacity for work, sickness and pregnancy, and old-age pension.

Labor market

  • The wage cost benefit (the annual contribution for employers who hire one or more employees from target groups that often have difficulty finding work) for occupationally and educationally disabled persons is no longer limited to three years, but will be structural as from 2020. The aim is to increase permanently the job market prospects of persons with an occupational disability.
  • The proposed date of commencement of the Wet arbeidsmarkt in balans (Balanced Labor Market Act) is January 1, 2020. The objective of that Act is to bring about a number of significant changes:

    • The grounds for dismissal will be expanded to include the "cumulation ground."
    • The possibilities for entering into flexible employment contracts will be expanded.
    • It will be possible to agree on a longer probationary period.
    • An employee is entitled to the transition payment as from the first date of employment.
    • Rules will be introduced to prevent permanent availability of employees working under on call contracts and competition based on employment conditions in payroll schemes.
    • Finally, the amount of the unemployment insurance contribution will be made dependent on the type of contract, and sectoral contributions will be abolished.
  • The government will also aim to combat pseudo self-employment. In 2019, the government will implement measures to replace the Wet deregulering beoordeling arbeidsrelaties (Assessment of Employment Relationships (Deregulation) Act), by means of which, in particular at the lower end of the job market, pseudo self-employment and competition based on employment conditions will be prevented. The measures also serve to give self-employed persons and their principals legal certainty that no employment relationship is involved.
  • Employees over the age of 21 will be entitled to the full minimum wage as from 1 July 2019. The minimum wage for 18, 19 and 20-year-olds will be increased.
  • The Posting of Workers Directive will be revised. The implementation of the new Directive must be completed by July 30, 2020 at the latest. One of the changes is that posted employees will be entitled after twelve months of posting to the employment conditions of the host country, except for the rules regarding dismissals and supplemental pension.
  • The access of citizens of the UK to the Dutch labor market must be regulated via national legislation if no withdrawal agreement is reached between the UK and the European Union before March 2019. An amendment to the Besluit uitvoering Wet arbeid vreemdelingen (Foreign Nationals Employment Implementation Decree) is being prepared for that reason.
  • A notification requirement for service providers from the EU will be introduced in 2019. That requirement will apply to service providers from other member states that put their employees to work in the Netherlands.
  • More attention will be paid to the prevention of industrial accidents and diseases. This will be apparent from the entry into force of the amendment to the Arbeidsomstandighedenwet (Working Conditions Act) on July 1, 2018.

Incapacity for work

  • The benefit costs under the WIA (Work and Income (Capacity for Work) Act) (the IVA (Fully Disabled Persons Income Scheme) and the WGA (Return to Work (Partially Disabled Persons) Regulations)), including the costs for self-insurers, will increase by approximately €450 million in 2018. This is due to the fact that the WIA is a relatively new scheme that has not yet reached the structural level.

Sickness and pregnancy

  • As from April 1, 2020, employees will receive compensation under the Wet transitievergoeding (Transitional Payments Act) in the event of dismissal on the grounds of long-term incapacity for work for the transition payments that they make to employees on the termination of their employment after long-term incapacity for work. That compensation has retroactive effect until July 1, 2015. After that time funds will be set aside for the compensation of transition payments made by small employers on dismissal due to cessation of business on the grounds of retirement or sickness.
  • The Wet arbeid en zorg (Work and Care Act) will be amended on a number of points:

    • Employees may take a longer period of foster care leave or adoption leave. That period will be extended from two to six weeks as from January 1, 2019.
    • Paternity leave will be extended as birth leave and will amount to once the number of weekly working hours, on full pay. The mother's spouse or registered partner, the person who cohabits with her without being married, or the person who acknowledges the child may also take birth leave. As from July 1, 2020, birth leave may be extended by a maximum of five times the weekly number of hours of birth leave. The employee is entitled to 70% of his or her (maximum) daily wage during that period.  

Old-age pension

  • As from January 1, 2019, the automatic transfer payment of small pensions will commence. It will then be impossible to surrender small pensions; such small amounts will then also be used for their ultimate purpose: to purchase a pension. To limit the administrative and other costs of pension providers, the smallest pensions (€2 or less gross per year) will lapse.
  • The state pension age will be 66 years and 4 months in 2019. After 2019, the state pension age will gradually increase to 67 years by 2021. After that time, the state pension age will be linked to life expectancy.

Final note

We hope to have provided you with a useful summary of the (possible) changes in the law and regulations in store for us in the near future. We will keep you informed of recent developments in our newsletters.

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