Employment law changes in the Netherlands in 2021: what’s new
The maximum transition payment (the lump sum paid by employers to employees on termination of employment) has been increased from EUR 83,000 to EUR 84,000 (or a maximum of the salary over a year, if that is more).
Compensation for the transitional payment is now also possible in the event of company closure due to retirement or the death of the director-owner. This applies to companies with fewer than 25 employees (click here for the application form in Dutch). This does not (yet) apply to the termination of a business due to the employer’s disability, but this arrangement is being worked on.
The second period of the NOW 3 job retention scheme is starting (fourth UWV, employee insurance agency, application period), which means that employers facing at least 20% expected loss of turnover between 1 January and 1 April 2021 can apply for a concession for these three months amounting to a maximum of 80% of the wage bill, related to the loss of turnover. It is possible to apply for NOW 3.2 from 15 February 2021. For more information on NOW 3 please see our previous articles (in Dutch):
- This article contains general information about NOW3.
- This article looks at the extension of the support and recovery package in response to the second wave of infections.
- This article looks at the additional expansion of the support and recovery package following the imposition of the lockdown and curfew.
From now on, on-call workers must indicate within one month whether they accept an offer of permanent employment. Previously, the period for acceptance was at least one month. From 1 July onwards, if the offer is accepted, the offered fixed scope of work must start no later than on the first day of the fifteenth month that the employee is employed.
On the basis of the Balanced Labour Market Act (WAB), payroll workers (that is, those employed through payroll agencies) will be entitled to a so-called ‘adequate’ pension scheme.
The minimum wage increases by EUR 4.80 to EUR 1,684.80 per month for full-time employment from a minimum age of 21. This amount is adjusted twice a year. In July the second adjustment of 2021 will take place.
The tax-free margin under the Work-related Costs Regulation (WKR) has been temporarily increased in connection with the COVID-19 crisis, as part of the government’s support and recovery package. For 2020 and 2021, the margin is increased from 1.7% to 3% of the first EUR 400,000 of taxable salary. Over EUR 400,000, the margin remains 1.2% in 2020 and 1.18% in 2021.
Training and retraining can now also be compensated (or provided) untaxed (as a targeted exemption) to employees after the end of their employment; until 2020 this applied only during the period of employment. For example, as part of a social plan. This is intended to make retraining easier during the COVID-19 crisis and to strengthen the labour market position of former employees. Please note that this only concerns reimbursements and provisions relating to following a training course or studying with a view to acquiring income. Nothing changes for the reimbursement of outplacement and lawyer’s fees in the context of a social plan.
The temporary exception due to the COVID-19 crisis for the untaxed fixed travel allowance for home workers was to end on 1 January 2021, but this has been postponed until at least 1 April 2021. Depending on the further course of the pandemic, this may be postponed even further.
The temporary exception that allows an increase of low unemployment social security (WW) premium in the event of more than 30% overtime is still in force.
As of 1 January, the low WW premium rate has been set at 2.7%. The high WW premium has been set at 7.70%.
The additional tax rate for company electric cars or cars that otherwise do not emit CO2 goes up to 12%.
The Act on the Simplification of Protected Earnings Rate came into force on 1 January 2021. This implies that the calculation method of the protected earnings rate will be simplified. This adjustment should make it easier for the party levying the attachment to obtain the correct data for the calculation. This is an attempt to avoid the situation in which the attachment free rate is set too low due to the failure to provide information required for the calculation completely or on time. This also helps employees with debts.
For some employees the ‘30% facility’, under which employees hired abroad to work in the Netherlands can receive 30% of their salary as a tax-free allowance subject to conditions, ends earlier than the date mentioned on the decision issued by the Tax Authority. This is due to the new law regarding the 30% facility that came into effect on 1 January 2019 under which the maximum duration of the 30% facility has been shortened from eight to five years. For 30% decisions issued under the eight-year rule, the 30% facility may stop already on 1 January 2021, even if the original maximum term has not yet expired. Employers will have to decide whether the 30% facility should be discontinued for allowances issued before 1 January 2019.
As of 11 January, the test phase of the Online ‘Webmodule Assessment of Employment Relationships’ (WBA) has gone online. By completing a questionnaire, employers or clients are given an indication of whether a worker can be hired as a self employed individual for work activities or whether an employment contract must be entered into. The assessment can be completed anonymously, is voluntary and is possible until 11 July 2021. After that, the online assessment tool will be evaluated and it will be decided whether it will be useful in any future enforcement against false self-employment. Please note that no rights can be derived from the outcome of online assessment; it only gives an indication. Click hereto access it in Dutch.
From 1 September, the medical advice of the company doctor will be decisive in the Employee Insurance Agency’s assessment of an employee reintegration report (the ‘RIV-test’).
The announced amendment to the Act on Working after the state pension age, which was to enter into force on 1 April 2021, has been postponed by the Minister of Social Affairs and Employment. This amendment would, among other things, reduce the period of continued payment of wages during illness from 13 to six weeks for those entitled to General Old Age Pension (AOW). The Minister has announced that this reduction will not happen in any event before 1 January 2022, due to the preparation time needed to implement this change by the Employee Insurance Agency (‘UWV’, an autonomous administrative authority commissioned by the Ministry of Social Affairs and Employment (SZW) to implement employee insurance and provide labour market and data services).
As of 1 January 2021, the general remuneration cap for top officials in the (semi-)public sector under the Standards for Remuneration Act (‘Wet normering topinkomens’) has been set at an annual salary of EUR 209,000, including taxed expense allowances and employer pension contributions. In 2020, this was still EUR 201,000.
The state pension age will remain 66 and four months in 2021. In 2022 this age will rise to 66 and seven months.
Brexit: on 1 January the United Kingdom left the EU. As an employer, what do you need to know about the Brexit? Read all about it in ‘Brexit and the Netherlands Guide‘.
The early retirement scheme (RVU) levy exemption will enter into force retroactively as of 1 January 2021. This allows employers to make arrangements with older employees for early retirement in the last three years before the state pension age, without having to pay RVU levy on this arrangement between 2021 and 2025. This is up to a net amount equal to the National Old Age Pension. In addition, the extension of the leave saving will take effect retroactively from 1 January. This doubles the number of weeks of tax-free leave savings, giving employees more opportunities to stop working earlier. These changes are part of the pension agreement.