From 1 July 2023, employers must take into account that various points in employment and HR practice will change. Below you will find the most important changes.
Twice a year, on 1 January and 1 July, the statutory minimum wage (Wettelijk Minimumloon) is set by the Minister of Social Affairs and Employment following the general wage development in the Netherlands.
The statutory minimum wage is increased from 1 July to €1,995 per month for full-time employment.
Only six weeks to pay wages for sick state pensioners
From 1 July 2023, employers will only have to continue paying wages for six weeks if an employee of AOW age (state pensioner) drops out due to illness.
Future Pensions Act definitively launched
After more than 10 years of discussion about a new pension system, the Future Pensions Act is now a fact.
The law will take effect on 1 July 2023, but there is a one-year delay to realise the transition, until 2028 at the latest. Please contact us for a more detailed overview of the changes.
Statutory holidays expire
The statutory holidays that the employee has not taken expire six months after the calendar year in which they were accrued. Please note that a longer expiry period may have been agreed in the collective labour agreement or in the individual agreement with the employee.
Moreover employers must warn their employees in advance that their accrued holiday hours are about to expire. In a court ruling, it was determined that employees otherwise have the right to take their remaining holiday days/hours up to five years later (just as is the case for vacation days in excess of the statutory obligation).
In addition to the above changes, we would like to briefly highlight two topics of current interest.
i. Gig-workers and employment rights
The main question these days for the gig-economy is: whether or not a hired freelancer is in fact just that, a freelancer, or an employee.
The European Council (EC) is determined to bring this uncertainty to an end and announced on 12 June 2023 that it is ready to start negotiations with the European Parliament (EP) to draft a new law that will help gig-workers gain access to employment rights.
This is great news for millions of gig-workers who, according to the EC’s information, make up 93% of the EU’s workforce. That is 26.3 million individuals who deliver various services and are – up to now – classified as self-employed. ‘Up to now’ as EC is bound to set strict criteria on determining which platform workers are actually self-employed and which are in fact in an employment relationship with the platform.
Correct determination of the employment status
The EC’s aim is to address the misclassification of platform workers as self-employed by introducing a new mindset.
Under the EC’s general approach a platform worker will be legally presumed to be employed by the digital platform if their relationship with the platform fulfils three of the seven, pre-set criteria as set out in the directive.
The determination of the existence of an employment relationship shall be primarily guided by the facts relating to the actual performance of work. The use of automated monitoring/decision-making systems (algorithms) within the organisation of platform work will – of course – be taken into account.
Deliveroo – delivered
The quasi-self-employment was already addressed by the Dutch Supreme Court (Hoge Raad der Nederlanden) in the judgment in the Deliveroo case.
The Supreme Court ruled that the existence of an employment contract depends on all the circumstances of the case. The Supreme Court also assessed those circumstances and ruled that the Deliveroo’s deliverymen were employees, not self-employed.
Regarding the freedom of the delivery drivers to work when they wanted, and to be replaced, the court considered that the facts in appeal pointed in the direction that no employment contracts existed.
However, the court was entitled to rule, based on the other circumstances of the case, that these were nevertheless employment contracts. The practical importance of the substitution option for the deliverymen was minor.
According to the Supreme Court, the question whether there is reason for further general rules or principles to determine whether an agreement is an employment contract, partly to demarcate working as an independent entrepreneur (self-employed), has the legislator’s attention. This could include starting points such as the embedding of the work in the organisation of the person for whom the work is performed, or the amount of consideration for the work. As the legislator is working on this issue, the Supreme Court saw no reason for legal development at the moment.
Of course, in principle, each ruling only applies to a specific case and depends on all the circumstances of the case, but this was and is an important ruling by the highest Dutch court that also affects all other platform workers.
ii. The Dutch employment law – the dismissal
The importance of clarity whether when it comes to an individual being a freelancer or an employee is also very important when an employment agreement ends in (summary) dismissal.
Even though the Dutch employment law is very clear on the grounds for dismissal – next to the eight reasonable grounds for dismissal (article 7:669 paragraph 3 of the Dutch Civil Code ( Burgerlijk Wetboek)) – the Dutch Civil Code is also very clear on the grounds for summary dismissal.
Summary dismissals were created to allow the employer to dismiss an employee at the shortest possible notice in case of transgression. The employer still faces an obligation to make the summary dismissal plausible. However, among other things, there must be an urgent reason for anyone to be ‘fired instantly’ – proving such is not an easy requirement for the employer to meet.
Article 7:677(1) of the Dutch Civil Code (Burgerlijk Wetboek) states that, in order to terminate an employment contract with immediate effect, employers and employees alike must provide urgent reasons and notify the other party of such reason without delay. An employer is expected to conduct the instant dismissal with due diligence and, as per good employment practice, to exercise due care towards an employee.
What makes a dismissal immediate?
Case law has established guidelines on what to take into account when considering whether a summary dismissal was immediate. Relevant factors include:
- the nature and extent of any necessary investigation;
- the caution that may be required when conducting such an investigation;
- the gathering of evidence;
- the prevention of unrest in the company;
- the potential need to seek legal advice; and
- the care that an employer must take to avoid harming an employee’s interests in the event of an unfounded suspicion.
Nevertheless, it is often only possible to determine whether immediate action has been taken based on the circumstances of the case. The relationship between the requirement for promptness and the duty of care taken must be considered in cases of summary dismissal.
The need for speed: a conflict of interest?
Where an urgent reason (ie, grounds for summary dismissal) is suspected, an employer can launch an investigation that allows the veracity of this suspicion to be tested. The investigation ensures that an employee is not unfairly and improperly dismissed with immediate effect on the basis of an incorrect presumption. To this end, the employer must observe a duty of care but also initiate and complete the investigation expeditiously. In other words, the investigation should not take longer than necessary.
The employer should not wait too long before conducting an investigation or they will fail to meet the promptness requirement and the summary dismissal will be invalid as a result.
When assessing the promptness of the dismissal, it all comes down to an employer’s ability to explain:
- why a summary dismissal was not possible earlier; and
- why an instituted request took a certain amount of time.
Ultimately, in order to defend the summary dismissal, the employer must strike a balance by managing to uphold the diligence of the investigation without unduly compromising the requirement for promptness.
Latest Supreme Court case law on dismissal
An employee was summarily dismissed on 7 October 2015 for stealing three books.
At first instance, the subdistrict court annulled this summary dismissal because the urgent reason (underlying the summary dismissal) could not be proven.
Even though the employer did not allow the employee to return to work, wages had to continue to be paid.
The employer appealed the judgement of the subdistrict court.
In appeal, the Arnhem-Leeuwarden Court of Appeal ruled that the subdistrict court had wrongly annulled the summary dismissal.
It is important to note here, however, that under the Work and Security Act introduced in the Netherlands in 2015, this does not mean that wages from the original summary dismissal date must be repaid by operation of law – even if the summary dismissal was found to be justified on appeal. The employee retains the right to the salary until the date that the court had to determine in the future (under the Act, determination of the end of the employment contract as of an earlier date is not possible), which in this case became
31 May 2017.
However, the employer came up with a good argument and successfully argued, that the fact that the employee had not worked from 7 October 2015 was a circumstance for its account and the employee was not entitled to wages for that period. The employee must repay all the wages paid – the employer believed.
The Arnhem-Leeuwarden Court of Appeal went along with this argument.
This resulted in a new twist in case-law on the obligation to continue to pay wages in the event of a summary dismissal if its annulment was wrongly claimed – or in other words, if the summary dismissal was justified.
The employee went to the Supreme Court
The Supreme Court rejected the employee’s cassation request.
In its judgment, the Supreme Court explained the various situations that can arise when the Court of Appeal rules that the instant dismissal was justified. The basic principle, however, remains that after a justified summary dismissal, the cause of the non-performance of work should not reasonably be borne by the employer. The Supreme Court therefore upheld the Court of Appeal’s judgment.
Unlike in other countries, summary dismissal is a delicate matter in Dutch law – caution is still required and the help of a specialised employment lawyer is by no means a luxury. It can – and almost often does – become a very costly affair for employers when they try to sort it out themselves without consulting a specialist.
About the author
Edith N. Nordmann is managing partner and attorney at law at ACG International.
She is an experienced corporate and commercial litigator, has an expert qualification in employment law and is an international ADR-certified mediator. Nordmann is specialised in cross-border business transactions taking into consideration not only the different legal systems but also being acquainted with the various cultural differences that can make or break a deal. As a public speaker she has shared this knowledge on various international conferences. As managing partner of Attorney Consulting Group International (ACG International), Nordmann can combine all these skills and expertise for the benefit of her international clients. By using deep-seated local knowledge and proven (international) networks across practice areas and borders, she assists her clients in getting deals done and finding solutions that achieve the best results for their actual needs. Being fluent in German (as a native speaker), English, Dutch, French and Italian and understanding difference in mentality, culture and legal systems across many different cultures and countries, she is able to help her clients in a unique way. Aside from her professional career, Nordmann engages in many charitable and social organisations using her professional expertise, not only helping others but also empowering them in their endeavours.
In addition, as of 2023, Nordmann has been appointed as member of the Task Force Future of Work, Skilling and Mobility under the Business 20 (B20 (of the G20 2023)) – meeting with approximately 100 esteemed professionals from around the world specialised in the field of employment. The B20 is the official G20 dialogue forum representing the global business community. Established in 2010, the B20 is among the most prominent engagement groups in G20, with companies and business organisations as participants. The B20 leads the process of galvanising global business leaders for their views on issues of global economic and trade governance and speaks in a single voice for the entire G20 business community.