On Tuesday 18 February, the Lower House of the Dutch Parliament passed the legislative proposal for the Work and Security Act by a significant majority. However, a number of amendments were made which will have profound implications for the legislative proposal. In light of the aforementioned developments, AKD has drawn up a summary of the eleven main changes and the consequences they will have for employers. Update after adoption of legislative proposal by the Dutch Parliament 1. Modification of dual system 2. Terminating an employment contract for a definite period of time 3. Transition fee 4. Settlement Agreement 5. Professional development obligation 6. Chain Regulation (Ketenregeling) 7. Trial period under a temporary contract 8. Non-competition Clause 9. Successive term of employment 10. Risk rules 11. Unemployment Act

1. New Dismissal Law
Eleven major proposed changes and consequences for
the employer
** Update after adoption of legislative proposal by the Dutch Parliament **
27 February 2014
A PUBLICATION OF AKD LAWYERS AND NOTARIES

2. TABLE OF CONTENTS
1. Modification of dual system
2. Terminating an employment contract
for a definite period of time
3. Transition fee
4. Settlement Agreement
5. Professional development obligation
6. Chain Regulation (Ketenregeling)
7. Trial period under a temporary contract
8. Non-competition Clause
9. Successive term of employment
10. Risk rules
11. Unemployment Act
THE ABOVE TABLE OF CONTENTS CAN BE CLICKED ON

3. Modification of dual system
What is the current situation?
The employer can - regardless of the reason for
dismissal - choose between two “dismissal
routes”: through the Employee Insurance
agency (UWV) or through the district court.
Appeal and cassation against the district court’s
ruling is not possible.
What will change?
The UWV route should be followed in the case of
dismissal for economic reasons or dismissal after
two years of illness. The procedure at the district
Consequences for the employer
• More clarity about the way ahead.
• Chance of more and lengthy
procedures about the validity of a
dismissal/termination.
• It may take a long time before the
parties know where they stand.
Effective date
1 July 2015
court is intended exclusively for a termination
for "personal" reasons.
The UWV’s decision can be put before the
district court. The length of the dismissal
procedure can be deducted from the notice
period. Appeal and cassation against the district
court’s ruling is possible.
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4. Terminating an employment contract for a definite
period of time
What is the current situation?
The main rule is that a temporary contract
automatically expires.
What will change?
Introduction of a notification period: in the case
of temporary contracts with a term of six
months or longer, the employer should make it
clear at least one month before the expiry date
whether or not the contract will be renewed.
In the event of non-compliance, compensation
is payable by the employer to the employee
equal to one month’s salary, and in the event
of late compliance, a pro rata amount is
payable.
Consequences for the employer
• The employer must, in fact, decide a
month earlier about whether or not to
renew.
• The employer will in any case want to
avoid the fee becoming payable and in
the event of doubt about non-renewal,
err on the safe side and communicate
the end of the employee’s contract in
time.
• The employer incurs increased costs.
Effective date
1 July 2014
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5. Transition fee
What is the current situation?
On termination by the district court, compensation can be
awarded based on the district court formula. On
termination following a UWV procedure, damages can be
claimed in the event of manifestly unreasonable
dismissal. This (damage) compensation is not subject to a
maximum. On the non-renewal of a temporary contract,
no compensation is payable.
What will change?
The employee who has worked for at least two years will
be entitled to a transition fee on the termination or nonrenewal of his employment contract. This payment is one
third of the monthly salary earned in the first ten years of
service and half of the monthly salary in the years
thereafter subject to a gross maximum of € 75,000. In
respect of income in excess of € 75,000, the payment is
subject to a gross maximum equal to one year’s salary.
The transition fee is not payable in the case of gross
culpability on the part of the employee. In the case of
gross culpability on the part of the employer, the
employee can claim supplementary compensation. This
supplementary compensation is not subject to a
maximum.
Consequences for the employer
• Dismissal will probably become
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less costly for the employer.
More clarity on the outcome, and
thus a greater chance of
settlement with the employee.
Complex system of compensation
On the non-renewal of a
temporary contract, a transition
fee is also payable.
Until 1 January 2020 there is an
intermediate arrangement for
small businesses and elderly
employees.
Effective date
1 July 2015
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6. Settlement Agreement
What is the current situation?
A settlement agreement can be agreed legally at
any time. There is no statutory period of reflection
for the employee.
What will change?
A settlement agreement can only be agreed on in
writing. For the employee, there will be a
statutory period of reflection of fourteen
days. During this period the employee can annul
the settlement agreement by means of a written
statement. The employer must inform the
employee about this period of reflection in writing
in the settlement agreement, or within two working
days after signing the settlement agreement.
Should the employer fail to do so, the statutory
period will be extended to three weeks. Should
the employee return from a settlement agreement
and if there will be agreed on a new settlement
agreement within six months, there is no statutory
period of reflection anymore.
Consequences for the employer
• On entering into a settlement
agreement, the employer has no
certainty for fourteen days as to
whether or not the agreements will be
confirmed.
• The employee can use an annulment
to negotiate higher compensation.
Effective date
1 July 2015
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7. Professional development
obligation
What is the current situation?
Employment law currently does not require employers
to contribute to the professional development of its
employees.
What will change?
The law stipulates that the employer must allow the
employee to take part in professional development that
is necessary for the performance of his/her duties. As
far as can reasonably be expected of the employer, it
must also enable the employee to take part in
professional development needed for the continuation
of the employment contract, if the position held by the
employee ceases to exist or he/she is no longer able to
perform this position.
An employee cannot be dismissed for unsatisfactory
performance if this is the result of non-compliance with
Consequences for the
employer
• Whether or not the employer
complied with the legal
professional development
obligation is an important factor
in answering the question of
whether an employee can be
dismissed.
• This will raise a lot of discussion
about whether the employer
complied with its professional
development obligation.
Effective date
1 July 2015
the professional development obligation.
The possibility of professional development should also
be investigated for any reassignment.
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8. Chain Regulation
What is the current situation?
In the case of temporary contracts following each other
consecutively within a period of three months on the
conclusion of a fourth contract or after three years a
contract for an indefinite period of time will be created.
There is an unlimited opportunity to deviate in a CLA.
What will change?
In the case of temporary contracts following each other
consecutively within a period of six months on the
conclusion of a fourth contract or after two years a
contract for an indefinite period of time will be created.
Deviations from the chain regulation’s CLA are only
Consequences for the employer
• Entering into a temporary contract
will make the employer less flexible.
• Now, under specific circumstances,
the employer will decide after two
years to let an employee go: the
three years ‘job (in)security’ is
reduced to two years.
Effective date
1 July 2015
possible (1) if business operations require this (2) if a
managing director is involved (3) in a sector in which
the chain regulation would have unacceptable
consequences (4) for students following a dual study
programme. It is no longer possible to deviate in a CLA
from the interim period of six months. The chain
regulation does not apply to employees younger than
18 who work no longer than 12 hours a week.
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9. Trial period under a temporary
contract
What is the current situation?
If a temporary contract is concluded for a period
of less than two years, a trial period can be
agreed of one month, and for a temporary
contract of two years or longer a trial period of
two months.
What will change?
In a temporary contract with a term of six
months or less, no trial period can be agreed.
Consequences for the employer
It will be more difficult for the employer
to use short term contracts: a choice has
to be made between a temporary
contract for longer than six months with
a trial period, or a temporary contract for
six months or less with no trial period.
Effective date
1 July 2014
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10. Non-competition Clause
What is the current situation?
A non-competition clause can be agreed in both
a temporary and a fixed term employment
contract.
What will change?
The main rule will be that a non-competition
clause is not valid in a fixed term employment
contract. A non-competition clause is only valid
in a temporary employment contract if it
emerges from the written substantiation that the
clause is necessary due to urgent business
interests.
Consequences for the employer
• It will become much more difficult for
an employer to agree a valid noncompetition clause in an employment
contract for a definite period of time.
• There will probably be a lot of litigation
about when there is a matter of urgent
business interests.
Effective date
1 July 2014
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11. Successive term of employment
What is the current situation?
There is a successive term of employment if (i) the
skills and responsibilities set out in the new contract
are substantially the same as required under the
previous contract and (ii) the links between the new
employer and the previous employer are such that the
latter, on the basis of its experience with the
employee, has insight into the qualities and suitability
that in fairness should be allocated to the new
employer.
What will change?
The second criterion is repealed. Therefore, even if the
successive employer has no insight into the qualities
and suitability of the employee, a successive term of
employment may exist. It is no longer necessary that
there is a such a link between the successive
employers, that this knowledge about the employee is
Consequences for the
employer
• Employment contracts are more
often deemed to be successive
terms of employment.
• For the application of provisions
of the chain regulation, this
means that a permanent
contract could exist earlier.
• This may also cause the
transition fee to be higher.
Effective date
1 July 2015
available. However, there must still be a reason why
the employee moves from the previous to the new
employer.
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12. Risk rules
What is the current situation?
The main rule of the current risk rules is: ‘no work, no
pay’. The exception to this main rule is that the
employee retains his/her right to wages if he/she has
not performed the agreed work due to a cause that
should reasonably be for the account of the employer.
What will change?
The main rule ‘no work, no pay’ is repealed. The basic
principle is that the employer is obliged to pay wages if
the employee has not performed the work, fully or in
part, unless this should reasonably be for the account
of the employee. There is therefore a reversal of the
burden of proof.
Consequences for the
employer
• The employer must establish
and, if necessary, make
plausible that the employee
lacked the willingness to
perform the contracted work.
• This means that the employer is
more likely to be obliged to
continue to pay wages if an
employee has not worked.
Effective date
1 April 2016
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13. Unemployment Act
What is the current situation?
Consequences for the employer
One month unemployment benefit is accrued
with each year of employment. The maximal
duration of unemployment benefit is 38 months.
After twelve months all work is declared
suitable.
Employees will more often claim higher
dismissal compensation in view of the fact
that the duration of the unemployment
benefits is being significantly limited.
What will change?
Effective date
One month unemployment benefit is accrued per
year with the first ten years of employment. Half
a month unemployment benefit is accrued with
each following year of employment. The
1 January 2016
maximum duration of unemployment benefit will
be 24 months. Social partners can introduce a
supplement of 14 months unemployment benefit
at CLA level. After six months all work will be
declared suitable.
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