Insights
2025 Budget Statement: Employment law highlights and postponed decisions
Although this year’s Budget Statement is described as ‘largely lacking in new policy initiatives’, it does announce plans that are relevant to employment law practice. Both employers and employees will need to take these proposed measures into account in the coming years.
- Limiting compensation for transition payments
The government intends to limit the compensation scheme for transition payments to small employers (fewer than 25 employees) as of 1 July 2026. For larger employers, the possibility to apply for reimbursement of transition payments through the UWV will cease to apply. According to the Budget Statement, this measure will save the government approximately €380 million annually.
- Unemployment benefits duration: postponement of reduction
The planned reduction of the maximum unemployment benefit duration from 24 to 18 months has been postponed from 1 January 2027 to 1 January 2028. This means that employees will retain their entitlement to unemployment benefit for a longer period than previously planned.
- Scaling back of expat schemes
Several changes have been announced that will affect the position of international employees and their employers:
- From 2026, the government wants to limit the extraterritorial cost scheme (ETK): certain reimbursements, such as for living expenses and travel to the home country, will no longer be included.
- From 2027, the intention is to scale back the 30% ruling to 27%, with higher salary standards.
These changes could diminish the appeal of the Netherlands for highly skilled migrants and increase costs for employers hiring international talent. Employers will need to review and adjust employment terms and compensation structures in a timely manner to remain competitive for the global labour market.
- Company car
A notable fiscal measure with implications for employment terms concerns company cars. From 2027, the government wants to introduce an additional payroll tax levy for employers who provide a fossil fuel car. The government’s aim is to encourage greener mobility. This measure affects employment relationships in which a lease car is a fixed part of the compensation package.
Looking ahead
A defining feature of this government is that major labour market issues, including the Vbar Act, Meer zekerheid voor flexwerkers (More security for flex workers) and WOVOF, have once again been postponed. How these initiatives will progress will depend to a large extent on the outcome of the elections on 29 October. Until then, the future of flexible work and employment contracts remains uncertain.
Conclusion
Although the 2025 Budget Statement does not include any major reforms, the announced plans are relevant for both employers and employees. Bronsgeest Deur Advocaten is closely monitoring these developments and is happy to advise on the employment law implications.
