Changes in Dutch labour law as of 1 January 2020

The regulations for consecutive temporary contracts (the chain regulation) has been expanded. Before 2020 you could offer an employee a maximum of 3 contracts over a maximum period of 2 years. This has been extended to 3 contracts in 3 years.
This means the chain regulation is virtually the same as in the period prior to the introduction of the Work and Security Act. The mandatory break between 2 consecutive contracts will in principle remain 6 months. Only after 6 months of not working in the company, the chain is broken and the employee is cleared for a new chain of 3 temporary contracts. However, this period may be shorter to a minimum of 3 months if negotiated in a CLA. This is permitted only if it concerns seasonal work that can be performed for a maximum of 9 months per year.

The WAB Act (Balanced labour market Act) sets out that a stand-by employee with a zero-hour contract or a min/max contract is required to come to work only if called at least 4 days in advance.
If you fail to do so, the employee is entitled to refuse the work. And if the call to work to the employee is cancelled less than 4 days in advance, you still need to pay the stand-by employee for the hours called.
After each 12-month contract period, the employer must also offer the stand-by employee a contract for the average number of hours worked during this 12-month term.
For example, if a stand-by employee was hired for 20 hours per week, but worked an average of 28 hours per week, the employer must offer the employee a contract for 28 hours after that year. If this is not offered, the stand-by employee is entitled to claim salary on the higher number of hours. However, it is not mandatory for the employee to accept this offer.
This obligation to offer a contract does not seem to apply if the zero-hour contract or min/max contract is of a temporary nature and ends on the agreed end date.

Payrolling is a popular contract type for employers to avoid permanent employment contracts, but this construction has been under discussion for many years. In practice, misunderstandings abound. Click here for more information about the difference between payroll and payrolling.

Payrolling in this sense (as opposed to the situation as performed by Interfisc, where Interfisc is not the employer, but the payroll administration provider for employees with an employment contract with the employer outsourcing its payrolling process to Interfisc) relates to employees on the payroll of an employer aiming to have the employees work in another organisation. Another company is involved (a payrolling company) that formally employs the employees, whereas in practice, they are working in the operations of the employer’s company. Such employees are referred to as payrollers.

Before 2020, the payrolling company was subject to the same, less strict labour law rules that applied to temporary agency workers. This has changed. Payrolling companies are not permitted to apply an agency clause and the different chain provision for temporary agency workers is not applicable to payrollers.

In brief, under the WAB Act, payrollers have virtually the same rights as the permanent employees. This implies that the employer now has to pay more for payroller labour. This may make this contract type less appealing.

The equality between payrollers and permanent employees concerns both the primary and secondary employment conditions. This includes salary and holiday allowance, and also the performance bonus, year-end bonus and number of days off, etc.

A different scheme may apply concerning pensions. Payrolling companies will not be subject to mandatory ‘adequate pension provisions’ until 1 January 2021. The pension benefits of the payrolling company must be in line with the employer’s permanent employees or with employees in the same sector from this date onwards.