New Dutch cabinet's reform agenda likely to bring major changes for employers and employees
Published on 20th Jun 2024
Expected policies are positive for many employees but employers will need to adapt to new regulations and cost increases
The newly formed Dutch cabinet, – a coalition of the Party for Freedom (PVV), the People's Party for Freedom and Democracy (VVD), the New Social Contract (NSC) party and the Farmer Citizen Movement (BBB) – that will be presented on 2 July now faces the challenge of further developing and implementing an outline agreement that will likely include a range of employment and labour-related reforms.
The potential changes and policies that the PVV, VVD, NSC and BBB governing coalition, which is led by the Netherlands' new prime minister, Dick Schoof, is likely to pursue are set to have a significant impact on both employers and employees in the Netherlands.
Livelihood security and purchasing power
One of the core goals of the new cabinet is improving the livelihood security and purchasing power of citizens. This will be achieved through measures such as reducing labour taxes and lowering the marginal tax rate. For example, by introducing an additional bracket in the income tax, workers can retain more of their income. For employees, this means a direct improvement in their purchasing power, potentially leading to increased spending capacity and financial security.
Job market security
The cabinet aims for more security in the job market, especially for self-employed individuals, known as ZZP'ers, and temporary workers. The continuation of the Assessment of Employment Relationships and Legal Presumption (Clarification) Act (VBAR) and the Provision of Personnel (Accreditation) Act (WTTA) could result in more permanent contracts for employees and clear regulations for ZZP’ers.
For employees, this means more stability and security in their employment relationships. However, employers may face stricter regulations regarding flexible contracts and hiring self-employed workers, which could lead to higher costs and a need to adjust staffing strategies.
Childcare and social security
The reform of the childcare system will continue, making childcare almost free for working parents and shifting responsibility to institutions. This could significantly ease the financial burden on working parents, giving them more freedom to work. Additionally, steps are being taken to improve social security, tax schemes, and benefits to make work more rewarding. This could lead to a revision of the benefits and tax system, with both positive and negative financial implications for different households.
Unemployment Insurance reform
An important measure in the outline agreement is the reform of the Unemployment Insurance (WW). The exact implementation is part of the outline agreement's development. It could involve an extended notice period for employment contracts combined with a gatekeeper assessment for WW at the Employee Insurance Agency and a reduction of the WW duration to 18 months. This could encourage employees to seek new jobs faster but may also bring financial uncertainty for those who are long-term unemployed.
Transition compensation and AWF premium
Compensation for transition fees upon dismissal due to long-term disability (after the two-year salary payment obligation) will be limited to small employers (fewer than 25 employees). Employers with 25 or more employees will no longer be compensated.
The premium for the General Unemployment Fund (AWF) for both permanent and flexible contracts will be increased by 0.1 percentage points from 2026. This rise in the AWF premium will result in higher costs for employers.
Control of asylum and migration
The new cabinet aims to limit labour migration, implementing recommendations from the Taskforce for Protecting Labor Migrants and regulating the temporary employment sector through the WTTA admission system. Additional checks will be placed on labour migrants from outside the EU.
For long-term stays, employers will also be responsible for these workers learning the Dutch language. The qualification requirements for the highly skilled migrants scheme will be tightened and raised, and the 30% ruling will be further scrutinized.
Employers reliant on labour migrants will need to consider stricter regulations and higher costs for integrating these workers, potentially creating challenges in attracting and retaining labour migrants.
Whistleblower protection
Whistleblower protection will be strengthened, which is a positive step for transparency and integrity within organisations. However, this may also mean that employers need to review and enhance their internal procedures and reporting systems to comply with new requirements.
Osborne Clarke comment
The new cabinet intends to implement a series of measures that could have both positive and negative consequences for employers and employees in the Netherlands. Stimulating purchasing power, job market security, and social security reform are steps in the right direction for many employees. At the same time, employers will need to adapt to new regulations and increased costs.
It remains to be seen what specific measures will be taken and how these will be implemented. We will keep you informed of further developments to be prepared for the upcoming changes.
