The Balanced Labour Market Act (Wet arbeidsmarkt in balans / WAB)

12 Sep The Balanced Labour Market Act (Wet arbeidsmarkt in balans / WAB)

The government wishes to narrow the gap between flexible employees and employees with a permanent contract. To make the permanent contract more attractive to employers, the government has introduced The Balanced Labour Market Act (hereinafter the WAB). Starting from 1 January 2020, there will be amendments regarding dismissal of employees, on-call employees and the transition payment. In this article we give a short introduction to these amendments.

Dismissal of employees
Currently, if an employer wishes to terminate a contract with an employee, the employer must choose one of the eight dismissal grounds (e.g. due to economic reasons, frequent absence with unacceptable consequences and culpable act or omission of the employee) and substantiate it in detail. This is only possible if one of the dismissal grounds is entirely applicable to the situation. Meaning, the culpable act or the relationship has reached to a point where the employer cannot reasonably be required to continue the employment contract. However, in practice, it is not always possible to substantiate the dismissal ground entirely since often a combination of multiple dismissal grounds occurs. For example, the employee might have only committed a small culpable act, but at the same time also a disrupted employment relationship exists. At the moment, these dismissal grounds, would not be sufficient to terminate the contract. The WAB introduces a possibility to combine several dismissal grounds, which if assessed individually would not be sufficient for contract termination. At the same time, the court is entitled to award the employee half of the transition compensation extra if the appeal is successful.

Transition compensation
Currently, an employee receives a compensation if the employee has worked for more than two years at the company and the employer chooses to terminate or not to extend the contract. This is a compensation for the employee for the expected costs with regards to finding new employment. Under the new WAB, employees will be entitled to transition payment starting from the first day of employment. The transition payment of one sixth of the monthly salary per half year will be applied equally for all employees. This means that this also applies for employees exceeding ten working years at the same company. The current special scheme for employees of 50 years and older will be abolished.

On-call employees
The WAB introduces measures to prevent mandatory availability of on-call employees:

• An employer must give an employee at least four days notice regarding the working day. Late requests by the employer may be refused by the employee.
• If the employer withdraws the request within four days prior to the working day, the employee is entitled to receive the wage of the scheduled working time.

Furthermore, according the new WAB, the employer is obligated to offer a fixed hours contract to the employee after the first working year. Such a contract will be based on the average monthly working hours in the past twelve months.

Employment contract and lower unemployment act premium
At the moment an employer must provide a permanent contract after two years of employment. Under the WAB it is possible to extend this by one additional year. Thus, a permanent contract after three years of employment is mandatory. Other agreements can be reached via a collective labor agreement.

Starting 1 January 2020 the percentage of the unemployment act premium (ww-premie) is linked to the employment type contract. The applicable percentage will be lower for an employee with a permanent contract than for an employee with a fixed term contract.

If you would like to receive more information and/ or professional advice regarding the above mentioned amendments, please do not hesitate to contact us.