Letter Outline Labour Market
This summer, the Minister of Social Affairs and Employment announced the long-term plans for the labour market. The Hoofdlijnenbrief Arbeidsmarkt (“Letter Outline Labour Market”) sets out the most important reforms to the labour market that the government has in mind. In this article we discuss the most important themes.
Theme 1: Sustainable employment relations, agile companies and better regulation of flexible contracts
With regard to theme 1, the Cabinet adopts the SER’s (‘Social Economic Council’) starting point that structural work should, in principle, take place on the basis of an employment contract for an indefinite period of time. At the same time, the Cabinet recognises that flexible employment also plays a useful role in the labour market and that a certain manoeuvrability is necessary. This manoeuvrability must be sought internally. In this context, the Cabinet is thinking, for instance, of reintroducing the part-time WW (unemployment-benefit), so that employers do not have to bear all the wage costs themselves when there temporarily is less work.
The starting point, that structural work must take place on the basis of an employment contract for an indefinite period of time, implies that reforms are needed for on-call contracts, temporary employment contracts (‘uitzendcontracten’) and the so called ‘chain provision’ (‘ketenbepaling’):
- According to the Cabinet, on-call contracts offer employees certain uncertainties, which can be broken down into income uncertainty and scheduling uncertainty. On-call contracts, such as min-max contracts and zero-hours contracts, will therefore be abolished in their current form and replaced by a ‘basic contract’, which has yet to be worked out. An exception is being considered for students;
- In the case of temporary agency workers, the reform mainly concerns equivalent working conditions to those of workers employed by the user company. Currently, this already applies to a number of employment conditions, such as salary and other allowances, but the intention is to extend this equality principle. In addition, certain terms will be adjusted, as a result of which the provisions on succession of fixed-term employment contracts (the chain provision) will be sooner applicable. The Cabinet is also considering how to ensure that temporary agency workers are only temporarily assigned to a user company. This is in response to a ruling by the European Court of Justice of 17 March 2022. Finally, the Cabinet is looking at a certification system for temporary employment agencies;
- With regard to the chain provision, the Cabinet wants to abolish the interruption period of 6 months, so there will no longer be a start of a new chain after an interruption of 6 months. An exception is intended for students, so that they are not restricted in their participation in the labour market.
Furthermore, with the introduction of the Labour Commission, the Cabinet wants to create a low-threshold form of conflict resolution for vulnerable employees. A working method similar to that of the Rent Control Committee is being considered. Here, parties can obtain independent information and mediation takes place. If this does not lead to a solution, a decision can be made which both parties must abide by.
Theme 2: Level playing field between employee and self-employed
In order to create a level playing field between employees and the self-employed, the Cabinet is considering, among other things, a compulsory occupational disability insurance for the self-employed. In addition, the self-employed tax deduction will be further and more quickly phased out. There will also be experiments with the possibility of opening up pension schemes through voluntary membership by the self-employed. Furthermore, the possibility of collective bargaining by self-employed persons and platform workers will be investigated. The European Committee has already drawn up draft guidelines for this. The final versions of these will be included in the Guidance Note of the ACM on this subject.
The Cabinet is once again paying attention to the assessment of an employment relationship. When is someone considered to be self-employed, and when is someone considered an employee? In some cases it is obvious, but there are grey areas. The Cabinet has previously addressed this by proposing a minimum rate for self-employed persons and the creation of a web module for the assessment of employment relationships. The Cabinet is committed to clarifying the criterion of ‘authority’ and sees merit in the further development of this web module. In addition, the Cabinet focuses on a legal presumption in the assessment of employment relationships. Although the minimum rate for self-employed workers failed earlier, the Cabinet wants to link this presumption to an hourly rate below EUR 30 – 35. If a worker earns less than this hourly rate, the burden of proof will reverse and the employer will have to prove that there is no employment agreement. The Cabinet also wants to reduce the fiscal differences between employees and the self-employed, thus making the qualification of the employment relationship less important.
Theme 3: Always a prospect of new work
In this theme, the aim of the Cabinet is to make people more permanently employable on the labour market, to provide security for work and income, and to provide employers with staff. To this end, the Cabinet introduces the Life Long Development (LLD) action plan. Moreover, the measure ‘extension of the labour market infrastructure’ is included, to achieve a better transition from work to work and from benefit to work. This measure pays attention to retraining and additional training instruments that must support the transition to professions that are currently experiencing a labour shortage.
Theme 4: Adjustments in the disability legislation
In the coalition agreement it has been agreed that there will be compulsory insurance for the self-employed. Further elaboration on this theme and reforms in the WIA legislation (Work and Income according to Labour Capacity Act) is still required and a letter on this subject is expected later this year.
Theme 5: Participating at the basis of the labour market
This mainly revolves around guiding people with a distance to the labour market towards work. The Cabinet has in mind, among other things, to more actively support and stimulate people on long-term social welfare towards work and to stimulate the use of sheltered work.
The Cabinet has a number of plans in mind to reform the labour market. The emphasis is mainly on offering security to employees, clarifying the assessment of employment relationships and making the labour market more sustainable. Many of these plans still require further elaboration, which is expected later this year. We will therefore follow the developments in this area with interest and will, of course, keep you informed.