Category: Weblog

The Netherlands is renowned for its progressive labor laws, which offer strong protections for employees. Dutch employment law strikes a balance between protecting workers’ rights and fostering a flexible, productive economy. In part 5 of this blog series, we cover the key aspects of employee rights, being safe working conditions, leave arrangements, benefits, and work-life balance.

1. Safe Working Environment

The Dutch Working Conditions Act (Arbowet) ensures that all employees have the right to a safe and healthy working environment. Employers are obligated to take measures that guarantee the well-being of their staff. Key responsibilities include:

• Risk Assessment: Employers must conduct regular risk assessments to identify and minimize potential hazards in the workplace.
• Health and Safety Training: Companies are required to provide training for employees to handle work-related risks and emergencies.
• Occupational Health Services: Employers must have access to an occupational health service (arbodienst) or a certified health and safety expert. These services help manage work-related illnesses, stress, and absenteeism.
• Stress and Burnout Prevention: Stress is a growing concern in modern workplaces, and Dutch labor laws mandate that companies take proactive steps to prevent work-related stress and burnout by offering flexibility and adequate breaks.

If a company fails to provide a safe environment, employees can file complaints with the Labor Inspectorate, which has the authority to enforce regulations and impose penalties. For employees working remotely, a easier regime applies to the employers to make sure the employees’ working environment is safe.

2. Leave Arrangements

The Netherlands offers several statutory leave arrangements for employees to use depending on the specific situation. These arrangements should contribute to a healthy work-life balance. Examples are:

• Paid Annual Leave: Full-time employees are entitled to at least four times the weekly working hours in paid vacation per year (e.g., 20 days for a 5-day workweek). Employers are required to pay employees their wage during their vacation time.

• Sick Leave: Employees are entitled to sick leave and can receive up to 70% of their wages (capped at the statutory maximized daily rate) for a period of up to two years. Employers must facilitate a return-to-work plan in collaboration with the employee and occupational health services.
• Parental Leave: Both parents are entitled to unpaid parental leave (26 weeks) until the child turns 8. Additionally, new parents can benefit from paid parental leave since 2022, which covers up to 9 weeks at 70% of the employee’s salary, maximized at the statutory daily rate.
• Maternity Leave: Pregnant employees are entitled to a minimum of 16 weeks of maternity leave, with full salary compensation. Women can start this leave 4 to 6 weeks before their due date.
• Paternity Leave: Fathers or partners are entitled to 5 days of paid paternity leave after the birth of a child, plus an additional 5 weeks of partially paid leave at 70% of their salary.

3. Employee Benefits

The Dutch welfare state provides a wide range of employee benefits, ensuring that workers have access to healthcare, social security, and pension schemes.

• Social Security: Employees contribute to social security, which covers unemployment benefits, disability insurance, and sick leave compensation. If an employee becomes unemployed through no fault of their own and if they worked sufficient days in a year and year in conjunction, they can claim unemployment benefits for a period of time based on their employment history.
• Healthcare: Every Dutch resident, including employees, is required to have health insurance. Employers can, but are not required to provide supplementary health insurance schemes and may cover part of the cost.
• Pension Plans: Dutch employees automatically participate in the national pension scheme (AOW), which is complemented by mandatory or company-based pension plans. Many companies also offer additional pension contributions as part of the employment package. This is either mandatory through CLA applications or voluntary through enrolment via a pension insurer.

4. Work-Life Balance

The Netherlands is famous for its emphasis on work-life balance. According to the OECD, Dutch workers have one of the shortest average workweeks in Europe.

• Flexible Working Hours: The Working Hours Act regulates the number of hours employees can work each day and week, including rules for overtime and night shifts. It limits workdays to a maximum of 12 hours and workweeks to a maximum of 60 hours.
• Part-Time Work: Part-time work is very common in the Netherlands, particularly among women. Employees have the right to request part-time hours under the Flexible Working Act, which employers are required to consider unless substantial business interests require otherwise.
• Remote Work: Remote and hybrid working models are increasingly common. While the law doesn’t yet guarantee the right to work from home, the COVID-19 pandemic has made it more mainstream, and many companies now offer remote work options to promote work-life balance. Although we now do see a trend of employees returning to the office more often as well.
• Work and Care: Employees with caregiving responsibilities for sick family members or children can request care leave. Short-term care leave allows workers to take up to twice the number of weekly working hours within a 12-month period, while long-term care leave provides for 6 weeks of unpaid leave.

5. Protection Against Unfair Dismissal

Dutch labor law protects employees from unfair dismissal. Employers must have valid reasons to terminate a contract, such as poor performance, misconduct, or financial necessity. If dismissed without just cause, employees can challenge the dismissal through the courts. Severance pay, known as transition compensation, is provided in most cases of involuntary termination.

• Notice Period: Employers are required to provide notice before terminating an employee. The length of this notice period depends on the employee’s tenure.
• Termination by Mutual Agreement: Many terminations in the Netherlands occur by mutual agreement, and it is common for employees and employers to negotiate severance packages.

We explain more about termination procedures and protections in part 4 of our series.

Conclusion

The main views are that Employee rights and protections in the Netherlands are among the most advanced in Europe, reflecting a commitment to both the well-being of workers and the needs of businesses. From safe working environments to extensive leave arrangements and robust social security benefits, Dutch labor laws prioritize work-life balance and fairness in the workplace. These regulations not only protect employees but also foster a more engaged and productive workforce. Despite these positive notes, there are still challenges as well, such as the equality in pay between men and woman, flexible working arrangements and payment during illness (which is seen by employers as far too long).  

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The legal status of the statutory director is unique. When a statutory director is employed by a company, this director is in fact not only a formal director of the company, but also an employee of the company. The statutory director therefore has a dual legal relation – one under company law and one under employment law. In this serie of blogs, we will discuss various aspects of this dual legal relation of the statutory director.

This blog series consists of the following four blogs:

1. Statutory or titular director?
2. The dismissal protection of the statutory director.
3. A step-by-step guide to the dismissal procedure of the statutory director
4. Post-dismissal of the statutory director: what comes next?

Blog 1: statutory or formal director?

Before we discuss the legal position of the statutory director and the rules regarding his of her dismissal in more detail, we will first clarify the distinction between a statutory director and a formal director. This distinction is crucial, although not always clear in practice. In this first blog, we will discuss the characteristics of and differences between the two positions.

Blog 2: the dismissal protection of the statutory director

The second blog focusses on the dismissal protection of the statutory director. We will examine what the dual legal relation – one under company law and one under employment law – means in the context of dismissal and highlight the key considerations.

Blog 3: a step-by-step guide to the dismissal procedure of the statutory director

In the third blog, we will provide a detailed, step-by-step guide to the dismissal procedure for a statutory director. As understanding and correctly following the required formalities is essential, we will outline these formalities and explain how to navigate them. Additionally, we will address the key points to consider after the dismissal of a statutory director.

Blog 4: post-dismissal of the statutory director: what comes next?

The fourth and final blog will explore the situation following the dismissal of a statutory director. We will discuss the important considerations and options available to a statutory director after (invalid) dismissal.

In recent years, there has been much to do about platform labour. Deliveroo, Helping, Uber: there has been regular litigation about how the legal relationship between these companies and the people working there should be qualified. Is it an employment contract, a flexible employment contract or should we speak of freelancing? Last month, the Amsterdam District Court made another dig at the proverbial issue by ruling that people who perform labour through Temper are freelancers. It is a remarkable ruling that seems to deviate from previous platform jurisprudence.

Temper is an online platform, on which users can take on (in many cases) one-off jobs. Examples include work as a barista, warehouse worker or cook. These jobs are offered on a digital noticeboard. About 100,000 people in the Netherlands have worked at least once via Temper.

When someone takes on a job, a model assignment contract is automatically concluded. However, according to trade unions FNV and CNV, this is a sham construction: there would be no freelancing, but a flexible employment contract. This is a relevant distinction, because in the first scenario Temper does not have to pay social security contributions. In the case of a flexible employment contract, employees are insured and also build up pension.

How does it work?

A worker creates an account on Temper. The first job takes the form of a trial. If workers subsequently want to take on more jobs, they must have a VAT number. Sometimes Temper also requires a worker to register in the trade register of the Chamber of Commerce. Furthermore, Temper offers workers the option of insurance. The party that placed the job on Temper receives an overview of the applications and may decide which worker(s) to invite. Via an external agency, invoices are prepared after the job is completed.

The criteria of Deliveroo

The subdistrict court assessed this construction using the Deliveroo criteria set by the Supreme Court: ECLI:NL:HR:2023:443, Supreme Court, 21/02090. On this basis, the court ruled that the bar of a flexible employment contract was not met.

Thereby, the authority relationship is an important issue in this case. This component is generally regarded as the most distinguishing criterion in qualifying an employment contract. According to the subdistrict court, in the construction made by Temper, there is no question of authority on the part of Temper, which plays no role in the work instructions in the actual work. In fact, that role lies with the contractor, who also determines the working hours. Temper applies some preconditions, but they are too thin for an authority relationship. The lack of authority is an important counter-indication that there could be a temporary employment contract.

Regarding the remuneration of employees, the court reached a similar verdict. In a temporary employment contract, wages are paid by the employment agency. In contrast, workers at Temper invoice clients, who then pay the workers directly. It is therefore completely outside Temper.

Nor is the nature and duration of work a strong distinguishing criterion in the case of Temper. For that, the work is too different in nature. These range from working in the warehouse to cooking in a restaurant. Moreover, it is rare for a worker to do more than two jobs at the same job. Importantly, workers at Temper are also not obliged to perform the work in person. Without Temper’s permission, they can be replaced by someone else.

Matter of weighing

The ruling is striking, but fits the picture of judges ruling differently on this type of platform work. For example, there was (the now bankrupt) Helping. This was an online platform on which cleaners could offer themselves available for work. Households could then select who they wanted to have cleaned their homes. According to the subdistrict court, this was an employment contract; however, the Court of Appeal saw this as a flexible employment agency. In addition, A-G De Bock concluded again earlier this year that Helpling cannot be qualified as a flexible employment agency and therefore, by definition, there cannot be a flexible employment contract.

It is striking that the subdistrict court in the Temper ruling – unlike in Helpling – mainly zooms in on the construction set up by Temper and not on how the construction works out in practice. After all, Temper could be said to be doing exactly what defines a flexible employment contract: bringing together demand and labour, which is performed under the hirer’s authority.

The fact that FNV and CNV are appealing is therefore no surprise. That, combined with the fact that the Dutch Tax Authority will start enforcing false self-employment again from 1 January 2025, means that there is an interesting future ahead in the field of platform labour. To be continued.

Dutch employment law is designed to offer a balanced approach to the rights and obligations of employers and employees. This equilibrium is particularly evident in the procedures and laws surrounding the termination of employment contracts. Understanding these procedures is crucial for both employers and employees to ensure that dismissals are handled legally and ethically.

Grounds for termination

Employers can terminate an employment contract on several grounds, such as:

1. Economic reasons: This includes financial difficulties, reorganization, or redundancy.
2. Performance-related reasons: Inadequate performance or persistent incompetence.
3. Behavioural reasons: Misconduct, such as theft or harassment.
4. Long-term illness or disability: If the employee is unable to perform their job after a reasonable period of illness (usually two years).
5. Mutual agreement: Both parties agree to end the employment relationship.
6. Personal circumstances: Such as relocation or imprisonment of the employee.

Termination procedures

1. Mutual Consent: The simplest and most amicable method is termination by mutual consent. This involves both parties agreeing to end the employment contract, often documented through a settlement agreement (vaststellingsovereenkomst).
2. UWV Procedure: For economic reasons or long-term illness, employers must obtain a dismissal permit from the Employee Insurance Agency (UWV). This process involves submitting a request for dismissal with supporting documentation. The UWV reviews the request and makes a decision, which can be appealed by either party.
3. Subdistrict Court Procedure: For reasons such as underperformance, misconduct, or a disrupted working relationship, employers must file a petition with the subdistrict court (kantonrechter). The court evaluates the evidence, holds a hearing, and then makes a decision.
4. Summary dismissal: in the event of urgent cause, the employment agreement can be terminated immediately. It is essential that the employer acts fast when being made aware of any conduct which might justify such a dismissal.

Notice periods

Dutch law mandates specific notice periods, which vary based on the length of employment:

• Less than 5 years: 1 month’s notice
• 5 to 10 years: 2 months’ notice
• 10 to 15 years: 3 months’ notice
• More than 15 years: 4 months’ notice

However, collective bargaining agreements (CAOs) or individual contracts may stipulate different notice periods.

Severance Pay

In cases of dismissal initiated by the employer, employees are typically entitled to a transition payment (transitievergoeding). This payment calculated as follows: 1/3 of the monthly wage (including holiday allowance, average bonusses and/or commissions earned), times the time in service.

Protective measures

Dutch employment law strongly protects employees against dismissal, e.g. through the following:

1. Preventative review: Employers must obtain permission from either the UWV or the subdistrict court before proceeding with a unilateral termination.
2. Prohibition on dismissal during certain conditions: Employees cannot be dismissed during pregnancy, illness (up to two years), or membership in a works council (due to such membership).
3. Right to appeal: Both employers and employees have the right to appeal against the decision of the UWV or the subdistrict court.

Employee rights and remedies

Employees who believe they have been unfairly dismissed can challenge the termination in court. If the court finds the dismissal to be unjustified, it can order reinstatement or award additional compensation to the employee.

Conclusion

Termination procedures and dismissal law in the Netherlands are designed to protect the rights of both employers and employees. These laws ensure that dismissals are carried out in a fair and transparent manner, providing a structured framework for resolving disputes. For employers, adhering to these procedures helps avoid legal complications, while for employees, it ensures their rights are safeguarded during the termination process. Whether you are an employer navigating the complexities of dismissal procedures or an employee facing termination, understanding these legal frameworks is essential. Seeking legal advice or consulting with a labor law specialist can provide further guidance tailored to specific

Within international concerns, employee participation can be complex. Because decision-making is often more layered, the influence of a Dutch director on the decision of the foreign manamgent is sometimes limited. However, that doesn’t mean that the Dutch Works Council has no role at all.

For the most part, the Dutch Works Councils Act (WCA) assumes a singular situation, whereby the entrepreneur who maintains an enterprise must consult the Works Council in the case of important decisions. Besides the possibility of setting up a COR, GOR or GemOR, the WCA offers companies the option of setting up an employee participation structure that benefits employee participation within the company. Within international concerns, however, in many cases this will not suffice to give the (Dutch) Works Council an important role.

Territoriality

The WCA has territorial effect, which means that the WCA must only be applied by companies established within the Dutch national borders. Therefore, when an enterprise in the Netherlands is maintained by an entrepreneur abroad, the WCA applies. This means that the WCA must also be complied with when a concern is partly established in the Netherlands. This will be difficult to apply in many cases, especially when a decision is taken by a foreign concern management. The reverse does not fall under the scope of the WCA: when a Dutch entrepreneur maintains a company abroad, that entrepreneur does not have to take into account the provisions of the Dutch WCA.

Although the WCA has so far not been adapted to international concern situations, case law has developed a number of principles that ensure that the Dutch Works Council still has to be consulted when the decision is taken at a higher, foreign level.

Attribution

With the principle of attribution, the decision of the concern management is attributed to the company where the Works Council is established. This may imply that the Dutch company must ask its Works Council for an opinion in order to implement a decision of the foreign concern management. This is the case when the higher-level decision (1) directly affects the company for which the Works Council was established and (2) the WCA-director is involved in the decision-making.

Direct intervention means that the decision would be subject to consultation if the WCA-director himself had taken the decision. The foreigen company’s decision to reorganise and what leads to social consequences at the Dutch subsidiary is a good example. There is involvement with the WCA-director when the director of the subsidiary also has a position within the foreign parent, which makes him actually involved in the decision-making.

Co-entrepreneurship

However, based on the attribution principle, the Dutch Works Council cannot stop or hold back the decision of the higher manament. As mentioned, the consultation right extends only to the cooperation of the Dutch lower management with the decision of the concern management.

To complement this, case law has developed the principle of co-entrepreneurship as well. Based on this principle, the management of the concern should be seen as WCA management, which gives the Works Council a direct consultation right and could possibly also litigate against (decisions of) the concern management.

Co-entrepreneurship exists when (1) the decision directly affects the undertaking where the Works Council is established and (2) the concern management exercises such systematic influence that it is considered to co-maintain the undertaking.

The second requirement is particularly important and is also the essential difference compared to the principle of attribution. The parent must co-determine decisions. This is the case when the concern management owns a substantial part of the shares, for example, or when the concern management actually takes all important key decisions. If the scope for the WCA-director to take decisions independently is limited, then this is a strong indication to argue for co-entrepreneurship.

In practice

Although these two principles have been developed in case law, the same case law shows that these two principles are applied with restraint. Moreover, there is a chance that when a foreign concern management realises to be in a situation where co-entrepreneurship or attribution can be important, this will often be too late.The role of the Dutch Works Council will then still remain limited. For the Dutch WCA director, however, there is a responsibility to properly organise co-determination within the company. It is therefore important for the Dutch entrepreneur to bring the WCA to the attention of the foreign concern management.