Dutch Work and Security Act
Explanation
Contents
Dutch Work and Security Act
The law applicable to contractual obligations – The Rome I
Regulation
Freedom of choice
Applicable law in the absence of choice
Rules applicable to specific contracts
Scope of the law applicable
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7
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10
Changes effective 1 January 2015
13
Changes effective 1 July 2015
17
Changes effective 1 January 2016
26
1. Probation
2. Non-compete clauses
3. Duty of notification
4. No work, no pay
5. Temporary workers
6. Successive contracts rules
7. Ragetlie rule
8. Dismissal: fair grounds
9. Two alternatives for dismissal
10. Transitional compensation
11. Termination with the employee’s consent
12. Unemployment Insurance Act: suitable employment
13. Obligation to provide education
14. Labor Relations Decree (BBA)
15. Income offset
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16. Unemployment Insurance Act: composition and duration of benefits
26
17. Modernization of regulations governing leave and working hours
26
18. Formalities surrounding instant dismissal of key importance
28
19. Amendments to the Dismissals Decree
29
20. The Conditions of Hiring-Out of Workers, in particular the Supply of Workers by
Temporary Employment Undertakings [Article 3(1)(d) of the Directive] 30
21. Don’t forget! 31
22. General information Non-competition clauses
34
23. Disclaimer
39
Preface
AAme Accountants and Tax Advisers provides services and advice in the fields of
accounting, administration, payroll and national and international tax. AAme
Accountants and International Tax Advisers is located in Delft, The Netherlands, and
provides services for individuals, SMEs and large (inter) national companies. Your
accountant or consultant is mainly focused on service and will provide “the personal
touch”.
The core of our business consists of national and international accountancy and tax
advice. We also have an (international) salary department and we are specialists in
the field of cross-border work and everything that goes with it.
The purpose of this information brochure is to give you a better understandig of the
Dutch rules and regulations, not to make you an expert! Like Einstein said:
“Everybody is a genius. But if you judge a fish by its ability to climb a tree it will live
its whole life believing that it is stupid.”
At AAme, we share knowlegde, but we believe that fish should swim in the ocean...
If all fish would be able to climb trees, what would our oceans look like?
Why?
At AAme we passionate believe that all legislation and regulations should be
more accessible and understandable for all people and companies.
We believe that doing business in whatever country should be the same as doing business in your own back-yard.
How?
We create simple cost-effective solutions for the long-term and at a fair remuneration.
Like Einstein said, if you can’t explain it simple, you don’t understand it well
enough.
What?
Can we please help you to further improve your business?
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Dutch Work and Security Act
This legislation aims to restrict ‘flexible employment’ insofar as possible, so that employees can work towards obtaining a permanent contract quicker and more often in
order to create greater job security. The following changes are intended to
contribute to this.
If you are a Company who is not based in the Netherlands and you have chosen the
governing law of your home country for the contracts of employment with respect to
your employees working in the Netherlands, then the regulations of Rome 1 will apply. An employer can, according to Rome 1 opt for example for UK Employment Law,
however he/she must respect the Dutch Imperative Law (mandatory articles).
Some of the new changes in Dutch law are mandatory and therefore applicable for all
contract of employments, despite the choice of law.
The law applicable to contractual obligations – The Rome I
Regulation
Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17
June 2008 on the law applicable to contractual obligations (Rome I).
The Rome I Regulation (Regulation (EC) No 593/2008 of the European Parliament
and of the Council of 17 June 2008 on the law applicable to contractual obligations)
is a regulation which governs the choice of law in the European Union. It is based
upon and replaces the Convention on the Law Applicable to Contractual Obligations
1980. The Rome I Regulation can be distinguished from the Brussels Regime which
determines which court can hear a given dispute, as opposed to which law it should
apply. The regulation applies to all EU Member States except Denmark, which has an
opt-out by implementing their regulations under the area of freedom, security and
justice. While the United Kingdom originally opted-out of the regulation, they later
decided to opt-in.
This Regulation applies to all contractual obligations in civil and commercial matters
in the event of a conflict of laws. It does not apply to revenue, customs or administrative matters, or to evidence and procedure.
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Nor does the Rome I Regulation apply to the obligations relating to the
following:
•
•
•
•
•
•
•
•
•
•
a natural person’s status or legal capacity;
family relationships;
matrimonial property regimes;
negotiable instruments such as bills of exchange, cheques and promissory notes;
arbitration and choice of court;
law of companies and other corporate or unincorporated bodies;
the binding of a principal or a company to a third party;
trusts;
dealings that occur before a contract is concluded;
insurance contracts, except those defined in Article 2 of Directive 2002/83/EC
concerning life assurance.
Any law indicated in this Regulation can be applied, even if it is not that of a Member
State.
Freedom of choice
The parties involved in a contract are able to choose the governing law. It may be applied to only a part or the whole of the contract. Provided that all the parties agree,
the applicable law may be changed at any time. If the law chosen is that of a country
other than that relating most closely to the contract, the provisions of the latter law
need to be respected. If the contract relates to one or more Member States, the
applicable law chosen, other than that of a Member State, must not contradict the
provisions of Community Law.
Applicable law in the absence of choice
Where the parties have not chosen the applicable law for contracts for the sale of
goods, provision of services, franchises or distribution, it will be determined based on
the country of residence of the principal actor carrying out the contract. For contracts concerning immovable property, the law of the country where the property is
located is applied, except in the cases of temporary and private tenancy (maximum
six consecutive months). In such cases the applicable law is that of the landlord’s
country of residence. In the case of sale of goods by auction, the law of the country
of the auction will apply. With regard to certain financial instruments governed by a
single law, the applicable law will be that law.
If none, or more than one of the above rules apply to a contract, the applicable law
will be determined based on the country of residence of the principal actor carrying
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out the contract. If, however, the contract is related more closely to another country
than provided by these rules, the law of that country will be applied. The same applies when no applicable law can be determined.
Rules applicable to specific contracts
For the following types of contracts, the Regulation lays down options for the selection of applicable law and determines the law to be applied in the absence of choice:
•
•
•
•
•
contracts for the carriage of goods – in the absence of choice, the applicable law
will be that of the country of residence of the carrier, provided that this is also
the place of receipt or delivery, or the residence of the consignor. Otherwise, the
law of the country to which the delivery will be made will apply;
contracts for the carriage of passengers – the applicable law may be chosen from
either the country of residence of the passenger or carrier, the country where
the central administration of the carrier is located, or the country of departure
or destination. In the absence of choice, the law of the country of residence of
the passenger will apply, provided that it is also the place of departure or destination. Yet, if the contract is more closely related to another country, then the
law of that country will apply;
consumer contracts between consumers and professionals – the applicable law
is that of the country of residence of the consumer, provided that this is also the
country where the professional carries out his/her activities or to which his/her
activities are directed. The parties may also, based on freedom of choice, apply
another law, as long as it provides the same level of protection to the consumer
as that of his/her country of residence;
insurance contracts – in the absence of choice, the applicable law will be that of
the country of residence of the insurer. However, if the contract is more closely
related to another country, that country’s law will apply;
individual employment contracts – the applicable law may be determined on
the basis of the freedom of choice principle, provided that the level of protection granted to the employee remains the same as with the applicable law in the
absence of choice. In the latter case, the law governing the contract will be that
of the country where, or from where, the employee carries out his/her tasks. If
this cannot be determined, the applicable law will be that of the country where
the place of business is located. However, if the contract is more closely related
to another country, that country’s law will apply.
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Scope of the law applicable
The relevant law as applicable to a contract will regulate interpretation, performance,
penalties for breaching obligations, assessment of damages, termination of obligations, instructions for actions, and penalties for invalid contracts. The Community law
that establishes conflict-of-law rules for contractual obligations relating to particular
matters takes precedence over this Regulation, except in the case of insurance contracts.
The Commission has submitted a report on the application of this Regulation to the
European Parliament, the Council and the European Economic and Social Committee
on 17 June 2013.This Regulation applies to contracts that are concluded as from 17
December 2009.
Individual employment contracts, in the same way, permits a choice of law, subject
to safeguards in favor of the employee. Hence, by the choice of law, employees may
not be deprived of the protection afforded to them by provisions under the law that
would be otherwise applicable if no choice were made (which cannot be derogated
from by agreement).
If no choice were made by the parties, the employment contract would be deemed
to be governed by the law of the country from which the employee habitually carries
out his work in performance of the contract. If such a country could not be determined, the contract would be deemed governed by the law of the country where the
place of business through which the employee engaged is situated. If however it appears from the circumstances as a whole that the contract is more closely connected
with a different country, the law of that other country applies.
Usually, an employee and his employer have an employment contract that is governed by the law of their home country. If the employee is seconded to work in the
Netherlands, this contract can remain governed by the law of the employee’s home
country, but will be partly governed by Dutch law. Certain rules of Dutch law will immediately apply to the employment contract.
The employer can according to Rome 1 opt for the legislation of his/her home
country. For example, UK Employment Law can be chosen, however, it must respect
the Dutch Imperative Law. Dutch Imperative Articles are, but not limited to Articles
(Section 3 Holiday and Leave) 7: 634 BW, 7:635BW, 7:636BW, 7:637BW,7:638BW,7:6
39BW,7:640BW, 7:640BW,7:641BW, 7:642BW, 7:643BW, 7:645BW (Section 4 Equality Principle) 7:646 BW 7:647 BW, 7:648BW, (Section 6 Special Compulsory Rules
Employer) 7:658 BW , (Section 7 Special Compulsory Rules Employee) 7:659 BW,
Section 8 Employee Rights Transfer of Title of an Enterprise) 7:659 BW, (Section 9 Termination of the Contract of Employment) 7:670BW , 7:672BW, 7:681BW, 7:685BW.
As well as these Articles of Civil Law, there are other special imperative laws which
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include: Algemene wet gelijke behandeling (Equality Law) Arbeidstijdenwet (Act on
Working Hours) BBA (Termination Law), Wet AVV, Wet minimumloon en minimumvakantiebijslag (Minimum Wages and Minimum Holidays Act) and the WOR (Works
Council Act).
According to established jurisprudence, there are different opinions on the socalled semi-mandatory and three-quarters mandatory provisions and if they must be
treated as Imperative law. These provisions in Dutch law are provisions which you
can deviate by agreement.
If parties prefer that these semi and three-quarter mandatory provisions will not be
treated as Dutch Imperative Law, (although this will not exclude all circumstances) it
is advisable to include the following article within your contract of employment:
“Parties understand that so-called semi-mandatory and three-quarters mandatory
provisions, are provisions which may deviate by agreement and therefore would be
treated as Dutch Imperative law”
From the first day of secondment to the Netherlands, the Terms of Employment
(Cross Border Work) Act (“Wet Arbeidsvoorwaarden Grensoverschrijdende Arbeid,
WAGA”) applies to all foreign individuals. The WAGA is based on the EU Seconded
Worker Directive of 1996. The WAGA also applies to employees from non-EU
countries. Pursuant to the WAGA, the provisions of Dutch law relating to the topics
mentioned below apply to the employment agreement of each individual who works
in the Netherlands. The Dutch law provisions indicated in the WAGA are considered
minimum protection. Consequently, these Dutch provisions will be superseded by
provisions of the applicable law if the latter are more favorable for the employee.
The WAGA refers to provisions on the topics below contained in Dutch legislation and
in Collective Labor Agreements, which have been declared generally binding in the
Netherlands.
These topics are:
• maximum working hours and minimum resting hours;
• maximum number of vacation days during which the employer has the obligation to continue the payment of salary;
• minimum wage, including payments for overtime, excluding additional company
pension schemes;
• conditions for the hiring out of employees;
• health, safety and hygiene at work;
• protective measures regarding employment conditions and working conditions
for particular employees;
• equal treatment of men and women, as well as other subjects of nondiscrimination.
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Furthermore, the longer an employee works in the Netherlands, the more Dutch law
provisions there are that apply to the contract. These can be other provisions than
the ones mentioned above, as long as they are mandatory rules of Dutch law that
offer the employee better protection than similar provisions contained in the law of
the home country.
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Changes effective 1 January 2015
1. Probation
Probation in an employment contract for six months or less has no validity. A collective employment agreement cannot state otherwise. For employment contracts for
longer than six months, the present rules for probation remain in place:
Type of contract
Maximum probation
Alternative collective
employment
provisions possible?
Fixed term: longer than 6
months but shorter than 2 years
1 month
Yes
Fixed term: two years or longer
2 months
No
Fixed term: no calendar date set
for termination of contract
1 month
Yes
Open-ended
2 months
No
The current rules apply to employment contracts formed before 1 January 2015. The
new rules will apply to employment contracts formed on or after 1 January 2015.
If you wish to form a short-term employment contract, agreeing on a period of six
months plus a few days (or an additional month) will allow you to stipulate one
month’s probation.
We would strongly advise to add one month as a minimum.
2. Non-compete clauses
A non-compete clause in a fixed-term employment contract is invalid (regardless of
the contract’s duration), unless the clause includes written substantiation evidencing
that the non-compete clause is necessitated by pressing interests of the business or
service.
The duty to substantiate the non-compete clause does not apply to employment
contracts formed before 1 January 2015. It does apply, however, to employment contracts renewed on or after 1 January 2015. This means that employers should take
care when renewing fixed-term employment contracts commencing before 1 January
2015 where the renewal takes place after 1 January 2015.
The necessity to agree on a non-compete clause must be described as precisely and
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as convincingly as possible. It is important to avoid generalised phrases and to apply
the substantiation to the employee’s specific position. If no pressing interests of the
business or service apply, and you nevertheless wish optimum protection for your
business, it is advisable to include an extensive confidentiality clause in the employment contract.
Example necessity non-compete clause
The parties understand and the Employee acknowledges that the Employee’s position, with the related/required specific knowledge and duties, make the competition
clause and non-solicitation clause necessary due to the weighty business and service
interests of the Employer, the Client and the Recipient of Services. The small market
segment in which the Client provides its specific services, the specific expert assignment given by the Recipient of Services/the Client, the Employer’s unique service
formula and the fact that the Client/Recipient of Services have requested the Employer to include the competition clause, in combination with the extremely aggressive methods of acquisition, staff recruitment and collection of information applied
by the Client’s competitors, make it necessary for the Employer to protect both its
own interests and those of the Client and the Recipient of Services by means of the
competition clause and non-solicitation clause.
3. Duty of notification
The Dutch Work and Security Act (Wet werk en zekerheid) introduces a duty of notification for fixed term employment contracts with a duration of six months or more.
The employer is required to inform the employee no later than one month before
the employment contract is set to end by operation of law whether the contract will
be renewed, and if so, on what terms. Important: this duty of notification applies
similarly to renewals of fixed-term employment contracts.
The duty of notification does not apply:
• where the employment contract was formed for a period of less than six
months;
• where the fixed-term employment contract is not scheduled to end on a particular calendar date (e.g. in the case of projects);
• to the employee.
If the employer fails to notify the employee of its intentions, or fails to do so on
time, the employment contract will as yet end on the contractual end date, and the
employer will owe the employee compensation. If the employer fails to notify the
employee of its intentions, this compensation is one month’s wages. If the notification is late, the compensation will be proportionate (one week late: one week’s
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compensation).
The employee must file a claim with the sub district court for the non-observance or
late observance of the notification period within two months after the day on which
the employment contract ended by operation of law.
The duty of notification applies in respect of employment contracts formed on or
after 1 January 2015. This duty also applies to employment contracts formed before
1 January 2015 that end on or after 1 January 2015, except where these employment
contracts end before 1 February 2015.
Preferably, the HRM records system should generate an automatic notice, approximately six weeks before the employment contract is set to end, to allow sufficient
time to decide whether or not to continue the relationship and inform the employee
in writing of this decision.
4. No work, no pay
“No labour, no salary”: the current stipulation, that an employee is not entitled to
salary when not performing activities, will change to “no labour, still salary, unless
the non-performance must be seen as at the risk of the employee”. This change will
secure a deviation of the burden of proof in favor of the employee. It is still possible
to exclude applicability of this clause for the first 6 months of the contract, but the
exclusion can no longer be extended indefinitely by collective labor agreement.
The possibilities for excluding the continued wages obligation under collective
employment agreements will be restricted. In concrete terms, the employer will basically be required to continue paying the employee’s wages if he or she did not work
as a result of a cause that should, within reason, be imputed to the employer.
Deviation from this rule to the employee’s disadvantage is possible:
• during the first six months of the employment contract, based on a written
agreement to that effect;
• following that initial six-month period only in a collective employment agreement, provided that the work associated with the job is incidental and does
not represent a regular number of working hours (e.g. for on-call, stand-in and
temporary workers).
The new rules apply to employment contracts formed on or after 1 January 2015.
Existing deviations in collective employment agreements retain their validity for the
duration of the collective employment agreement, yet until 1 July 2016 at the latest.
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5. Temporary workers
Temporary employment contracts may include a stipulation that the contract will
end at the request of the recipient to whom the temporary worker is supplied. This is
possible during the first 26 weeks during which the temporary worker is working for
the recipient. Under the present rules, this 26-week period may be renewed indefinitely in collective employment agreements. The Work and Security Act limits this
possibility to a maximum of 78 weeks.
The successive contracts rules (see section 6) only come into play if and when the
employee has been working for the recipient for longer than 26 weeks. Collective
employment contracts may extend this 26-week period to a maximum of 78 weeks.
The new rules apply to employment contracts formed on or after 1 January 2015.
Existing deviations in collective employment agreements retain their validity for the
duration of the collective employment agreement, yet until 1 July 2016 at the latest.
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Changes effective 1 July 2015
6. Successive contracts rules
The current regulation (article 7:668a of the Dutch Civil Code) stipulates that an
organization can employ an employee on the basis of fixed term contracts for three
times and/or for a period of no more than 3 years and that the chain is cancelled
when there is period of at least 3 months and one day between following contracts.
As of July 1st 2015 this article will be changed in a way that an employment agreement for an indefinite period will occur when:
• a maximum of three contracts is exceeded;
• the maximum time frame of 2 years is exceeded;
• and in both of the abovementioned situations a period of no more than six
months and one day have been taken into account within following contracts.
To sum it up: the amount of temporary contracts remains the same, however the
period that those contracts comprise, cannot be more than 2 years. Furthermore, the
employer will need a “time-out” of at least 6 months and 1 day to cancel the chain.
An open-ended employment contract is formed by operation of law if:
• the two-year period is exceeded in the case of two or more employment contracts; or
• a fourth fixed-term employment contract is formed.
The Work and Security Act limits the possibilities for collective employment agreements to deviate indefinitely from the successive contracts rules. Employment contracts formed on or after 1 July 2015 will be governed by the new rules.
The new rules also apply to contracts renewed on or after 1 July 2015.
7. Ragetlie rule
Under the present Ragetlie rule, if an open-ended employment contract that ended
for any other reason besides cancellation or rescission is succeeded by one or more
fixed-term employment contracts separated by no more than three months, notice is
required to terminate that fixed-term employment contract.
The Work and Security Act extends the duration of the periods separating the renewed employment contracts from three to six months.
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The Ragetlie rule moreover no longer applies if the previous open-ended employment contract ended because the employee reached retirement age. However, this
termination must be arranged in the employment contract (or an applicable collective employment agreement). If the parties continue their relationship and form a
fixed-term employment contract, it will end by operation of law.
This change will become effective on 1 July 2015. As such, it is safe to assume that
the transitional arrangements for the successive contracts rules will apply here too,
i.e. the new rules will apply to employment contracts formed on or after 1 July 2015.
8. Dismissal: fair grounds
Pursuant to the Work and Security Act, the employer may cancel the employment
contract if fair grounds exist and if reassignment to a suitable position within a
reasonable space of time, where applicable with additional training, is impossible or
unreasonable. At the minimum, reassignment is unreasonable in cases of culpable
acts or omissions on the employee’s part.
The reassignment obligation applies both in cases where the employment contract
is cancelled and where it is rescinded by the court. This means that the dismissal file
must be up-to-date in this respect.
9. Two alternatives for dismissal
Currently employers may opt for dismissal through the UWV (application for dismissal permit) or termination through the cantonal court. This choice will expire. In
future, the route to be taken will be determined by law. For instance, dismissal on
the grounds of economic reasons and long-term incapacity for work will be dealt
with by the UWV. All other reasons related to the employee, such as poor functioning
or a damaged working relationship, and any other grounds must be submitted to the
cantonal court
If the UWV issues a negative decision on a dismissal on the grounds of economic
reasons, the employer will be entitled to submit a request for termination to the
cantonal court. An employee who has been dismissed through the UWV may still
request the court to reinstate the employment contract. There is an expiry date for 2
months for this. The court will assess the UWV procedure.
The two alternative paths for dismissal – permission to cancel the employment contract from the Public Employment Service of the Employee Insurance Agency (UWV
WERKbedrijf) and rescission by the sub district court – will remain available under
the new rules. However, only a single alternative will be available depending on the
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reason for the dismissal:
• for dismissal on grounds of (a) economic reasons or (b) long-term disability, the
only possibility is to request permission from the Public Employment Service to
cancel the employment contract; if and when that permission is granted, the
contract may be cancelled with due observance of the notice period;
•
for dismissal on grounds of personal reasons, the only possibility is to petition
the sub district court to rescind the employment contract. Personal reasons are:
(c) regular inability to work owing to sickness or invalidity, (d) unsuitability (following a development course), (e) culpable acts or omissions, (f) refusal to carry
out work on grounds of serious conscientious objections, (g) a disrupted employment relationship, (h) other circumstances under which the employment cannot,
within reason, be allowed to continue.
The grounds for dismissal are based on the present Policy Guidelines of the Public
Employment Service of the Employee Insurance Agency. In future, the sub district
courts and the Public Employment Service will use the same guidelines for their assessments.
Unlike the present rules, the new system will allow the possibility for appeal and
cassation for both dismissal alternatives. If the employer cancels the employment
contract, the time required for the Public Employment Service procedure may be
deducted from the notice period to be observed, though a notice period of at least
one month must remain. The time required for the procedure is calculated from the
date on which the Public Employment Service receives the full request for dismissal
until the date of its decision.
Under the new rules, if an employee reaches the state pension age or a higher or
lower contractual retirement age, his or her employment contract may be cancelled
for that reason on or after the retirement-age date, without prior assessment, unless
otherwise agreed in writing on an individual or collective basis. This is subject to the
condition that the employment contract was formed before the employee reached
retirement age.
There are five ways in which contracts of employment may, in appropriate cases, be
terminated under Netherlands law:
• At-will during the trial period;
• By notice;
• By mutual consent;
• By summary dismissal;
• By judicial rescission.
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10. Transitional compensation
Regardless of the dismissal route chosen, all employees will be entitled to a transitional remuneration upon the termination of an employment contract that has been
in effect for a minimum of two years. This remuneration may be applied for education and training, amongst other things.
The employee is entitled to a transitional remuneration if the contract of employment has been in effect for a minimum of 24 months and:
1.
The Contract of Employment
• is terminated by the Employer;
• is dissolved on the request of the Employer;
• is ended by law and on the initiative of the Employer, and has not been
extended ;
2.
The Contract of Employment as a result of serious imputability / blame of the
Employer
• is terminated by the Employee;
• is dissolved on the request of the Employee;
• is ended by law and on the initiative of the Employee and has not been
extended ;
When calculating the amount of transitional remuneration to be paid, the only two
factors that will be taken into consideration are the length of employment and the
age of the Employee:
•
•
•
Employment < 10 years: 1/3 month’s salary per year of service ( which results in
2.78% of annual salary);
Employment > 10 years: 1/2 month’s salary per year of service that the employee has been in service longer than 10 years.( which results in 4.17% of annual
salary);
Employment > 10 years and the Employee is 50 years or older; 1 month’s salary
per year of service that the employee has been in service longer than 10 years.
( which results in 8.33% of annual salary). This article is not applicable if the
Employer has less than 25 employees in the second half of the year previous to
the termination of the ending of the contract of employment of the (50 years old
+) Employee.
This remuneration will be capped at €75,000, or one year’s salary, if the employee
earns more than this amount.
An exception has been drafted into the bill for calculating the remuneration for employers who have on average fewer than 25 employees in service, and have initiated
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termination proceedings on economic grounds and are demonstrably in financial
difficulties. For these employers, the duration of the employment will be counted
as from 1 May 2013 when calculating the amount of transitional remuneration that
they owe. The years of service prior to this date will not be taken into account. This
scheme will continue until 1 January 2020. After this current date all the years will
count (also the years prior to 1 May 2013).
There are also grounds upon which the amount of the transitional remuneration may
be lowered. These would include situations in which the employee has engaged in
serious misconduct which is imputable to them. Vice versa, the cantonal court may
award a dismissal payment (with no maximum limit) in addition to the transitional
remuneration if there has been serious culpability on the part of the employer.
An exception has been drafted into the bill for calculating the remuneration for
employers in cases like debt restructuring (schuldsanering), bankruptcy and or situations such as moratorium on payment. In the situation that the remuneration causes
extreme financial difficulties for the Employer, the government may give permission
for a payment plan.
The transitional remuneration may be lowered with:
•
•
cost of measures in connection with the termination / non continuation of the
contract of employment aimed at preventing unemployment or the shortening
of the period of unemployment for the employee
costs related to promoting the wider employability of the employee during the
period of the employment contract.
No entitlement to transitional compensation arises if the employment contracts ends
or is not continued after the employee reaches state pension age or a higher or lower
contractual retirement age. The same applies if the employment contract is not continued because the employee has reached that age.
A ‘serious culpable act or omission’ (for example theft) on the employee’s part
eliminates the entitlement to transitional compensation. A ‘serious culpable act or
omission’ (for example harassment) on the employer’s part may constitute grounds
for the sub district court to award additional compensation.
Until 1 January 2020 a transitional arrangement will remain in place for employees
aged 50 and up upon dismissal. A higher standard applies for calculating the transitional compensation for the years that the employee was employed by the employer
after reaching the age of 50, provided that the employee was employed for at least
10 years: one month’s salary per year of service from the age of 50 up. This higher
standard does not apply in respect of small employers: employers with fewer than
25 employees during the last six months of the calendar year preceding the calendar
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year in which the employment contract ends.
Collective employment agreements may deviate from the statutory rules for transitional compensation if they include an equal arrangement.
Note:
• 30% not applicable on Transitional remuneration
• Transitional remuneration is fee from employers social security premiums
In case of severe culpability of the employer, a Judge may grant the employee an additional, “reasonable”, compensation. No criteria have been formulated to determine
the amount of such a compensation. Most likely, common case law will make some
sort of guideline in time.
Given the above, the Cantonal Judge formula will no longer apply in procedures that
are entered into after July 1st 2015. In negotiations on amicable terminations, the
transition and possible additional compensation will be leading.
The procedure on “manifestly unreasonable dismissal” will no longer exist.
11. Termination with the employee’s consent
11.1 Cancellation with the employee’s consent
Under the new rules, the employer may cancel the employment contract without
requiring a decision by the sub district court of the Public Employment Service of
the Employee Insurance Agency. To this end, the employee must confirm in writing
that he or she consents to the cancellation. This consent does not result in imputable
unemployment.
11.2 Termination with mutual consent
The parties may still terminate the employment contract with mutual consent. However, the rules will change.
The first change is that the termination must be agreed in writing.
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11.3 Right of withdrawal, right of rescission
In case of amicable termination (mutual consent, settlement agreement), a reconsideration period of 14 days will be introduced on behalf of the employee. Within those
14 days, the employee may withdraw his consent, which leads to continuation of the
employment agreement or reopens negotiations. The employer is obliged to inform
the employee about that possibility
For a space of two weeks, the employee has the right to withdraw his or her consent
or to rescind the termination agreement, without being required to explain his or her
reasons. To this end, the employee must send a written statement to the employer.
This period is extended to three weeks if the employer does not notify the employee
in writing of the right of withdrawal and the right of rescission within two business
days after the consent has been given.
The right of withdrawal and the right of rescission cannot be invoked if the employee
has already exercised either of these rights during the six months prior.
12. Unemployment Insurance Act: suitable employment
After six months of benefits under the Unemployment Insurance Act, all jobs qualify
as suitable employment. Under the present rules this is one year.
13. Obligation to provide education
This stipulation will especially be of importance in cases concerning malfunctioning.
The present practice already requires the employer to provide a malfunctioning employee with sufficient tools to improve, but our expectation is that the legal stipulation will be applied more strictly in those circumstances;
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14. Labor Relations Decree (BBA)
The Extraordinary Labor Relations Decree 1945 (BBA 1945), will be extinguished.
A separate regime applies to the Extraordinary Labour Relations Decree 1945
(‘Buitengewoon Besluit Arbeidsverhoudingen, BBA 1945’) which provides for the
need to obtain permission from the relevant authorities prior to giving notice of
termination to an employee. The possible applicability of this Decree is based on a
separate scope-rule, which differs from the rule for determining the applicable law.
Until recently, as a rule of thumb it could be said that if it was foreseeable that a
foreign employee who had been dismissed would return to the Dutch labor
market (i.e. apply for a new job in the Netherlands), the Decree was applicable,
which meant that the employer had to obtain permission from the Employee
Insurances Implementing Agency (UWV) before he could dismiss this employee.
However, in 2010, there were two cases before different courts, where these courts
decided that the question whether the employee will, after his dismissal, return
to the Dutch labor market, is not relevant anymore. According to these courts, it is
more relevant whether the situation of the employee differs from the situation of his
Dutch colleagues. This means that if the foreign employee has more or less the same
contract and the same position as his Dutch colleagues, the Decree is applicable to
him, as it is to his Dutch colleagues. However, after these two cases, there have been
two other cases in which the “old rule” has been confirmed. This means that we have
to wait for a final decision of the Dutch Supreme Court in order to be certain which
rule will definitely apply.
According to established jurisprudence, a dismissal permit pursuant to Extraordinary
Labour Relations Decree 1945 (BBA) is required for an employment contract involving
social and economic relations in the Netherlands and in particular, the Dutch labour
market. If an employer employs a foreign employee, it is not always easy to determine whether this is the case. To assess this, the question of whether the foreign
employee will resort to the Dutch labour market on dismissal is often considered.
If this is not the case, in principle the BBA does not apply and no permission from
the UWV is required in order to terminate the employment contract. However, the
Court’s decision modifies this to a certain degree.
As per July 1ste BBA perish.
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15. Income offset
The principal rule of the Unemployment Insurance Act is that if a person on benefits
resumes working, on a full-time or part-time basis, the number of hours worked will
be deducted from the benefits under the Act. The entitlement to benefits remains
for the hours that this person is still unemployed.
The Work and Security Act introduces the concept of income offset. Under this system, part of the additional income is deducted from the benefits, while the remainder is not deducted. As a result, it is always worthwhile to find new work.
Important factors for employers effective 1 July 2015:
• The dismissal file must be up-to-date and complete. For example, in the case
of the employee’s unsuitability a development course must be in place. The
employer also has a reassignment obligation. In almost all instances, the possibilities for a suitable job must be investigated. It is advisable to begin including
these aspects now when compiling files.
• If and insofar as this is possible and indeed cheaper, put of reorganisations and
individual dismissals until the transitional compensation rules come into effect.
• However, if it is necessary to agree on a redundancy programme now that includes compensation (either based on the sub district court formula or otherwise), make sure that this programme only remains in place until 1 July 2015.
• The possibilities for flexibility in fixed-term employment contracts will diminish.
In this connection, it is advisable to consider whether working with sole traders
or payrolling might offer possibilities.
• For single or successive fixed-term employment contracts: agree on terms of less
than two years, to avoid having to pay transitional compensation when they end.
• Consider the possibilities of an industry or company collective employment
agreement. The new legislation makes it possible for collective employment
agreements to deviate more from the new dismissal rules.
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Changes effective 1 January 2016
16. Unemployment Insurance Act: composition and duration of
benefits
The maximum duration of benefits under the Unemployment Insurance Act will drop
from 38 months to 24 months.
The composition of rights under the Act depends on the individual’s employment
history:
• one month of benefits per year for the first 10 years of past employment;
• half a month’s benefits for each subsequent year of past employment.
17. Modernization of regulations governing leave and working
hours
On 1 January 2015, the Work and Care Act (Wet arbeid en zorg) and the Working
Hours (Adjustment) Act (Wet aanpassing arbeidsduur) will be amended due to the
adoption of the legislative proposal titled ‘Modernization of leave and working hours
regulations’ (Modernisering regeling voor verlof enarbeidstijden) by the Upper House
of the Dutch Parliament. (http://www.eerstekamer.nl/wetsvoorstel/32855_modernisering_regelingen)
The amendments are intended to facilitate the combination of work and care obligations. The proposal simplifies leave regulations through modifications to the Work
and Care Act and the Working Hours (Adjustment) Act that make it easier for
employees to take parental leave, adoption/foster care leave or long-term care leave.
17.1 Work and Care Act
Maternity leave (ante-natal)
The Act is to include extended entitlements to maternity leave for employees who
are pregnant with more than one child. In cases of multiple pregnancies, employees
shall be entitled to commence maternity leave up to ten weeks prior to the expected
delivery date, and must start leave no later than eight weeks prior to the due date.
Maternity leave (post-natal)
The Act will include an extension of the statutory post-natal maternity leave if the
child becomes ill during this period and must be hospitalized due to its medical
condition. In such cases, the employee’s statutory post-natal maternity leave will be
extended by no more than ten weeks. Employees will be entitled to extended leave
if the child is hospitalized for more than seven days, including multiple short admissions that together total more than seven days.
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The Act will also state that, if the female employee dies during her post-natal maternity leave, her partner will be entitled to the remainder of the leave with salary
retention.
Another significant change to the Act concerns the option of taking post-natal maternity leave in stages. It is now possible to split up the leave period, starting from 6
weeks after entitlement to the leave commences. The female employee may take the
remainder of the leave any time within a 30-week period. The scope of the leave that
is to be split up and taken later shall be equal to the working hours per week during
the period of maternity leave following the actual date of birth. This means that if
an employee works 40 hours per week, six weeks after giving birth she can decide to
start combining work and maternity leave, either full-time or part-time. For example,
she can work 20 hours per week, and take the remaining 20 hours as maternity leave.
Parental leave
The Act will include a stipulation entitling the partner to three days of unpaid parental leave in addition to the two days of paid parental leave upon the birth of the child.
The requirement stating that the employee must have been in the employer’s service
for at least one year will cease to apply, as will the statutory stipulations on the procedures for requesting parental leave.
Foster care/adoption leave
Currently, employees are entitled to unpaid adoption leave for a period of four
consecutive weeks. Starting on 1 January 2015, employees may request to take the
adoption leave in stages, i.e. the four weeks of leave need no longer be consecutive.
The leave can be taken during a 26-week period (currently 18 weeks) starting from
four weeks prior to the actual adoption date.
Emergency and other short-term leave
The Act will be amended to entitle employees to paid leave in the event of urgent
and unforeseen doctor or hospital visits that cannot be scheduled outside working hours. These entitlements shall also apply if employees need to accompany
close relatives or loved ones to medically necessary doctor visits, or to provide the
necessary care on the first day of illness. As of 1 July 2015, this shall apply not only
to partners, parents and children (including adopted or foster children), but also to
siblings, grandparents and grandchildren, housemates or others in the employee’s
social circle.
Short and long-term care leave
On 1 July 2015, the circle of those requiring care under short and long-term care
leave will also be expanded to include employees’ siblings, grandparents and grandchildren, housemates and others in their social circle. The statutory restrictions on
the procedures for requesting long-term care leave will also cease to apply, increasing flexibility in taking long-term care leave.
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17.2 Working Hours (Adjustment) Act
As of 1 January 2015, employees will be entitled to submit one request per year to
adjust their contractual working hours. Currently such requests are only permitted
once every two years. This means that employees no longer need to wait for two
years before asking for their working hours to be adjusted. In the case of unforeseen
events (such as a partner’s sudden illness), requests may be submitted even sooner.
The criterion stating that employees must have been in the employer’s service for at
least one year shall also cease to apply.
An additional amendment to the Act will allow employees to request adjustments for
varying periods and with varying scope.
18. Formalities surrounding instant dismissal of key importance
The law states that if an employer wishes to dismiss an employee on the spot, the
dismissal must occur without any delay. This means that the employer must take
fairly immediate action after having become aware of the existence of just cause for
instant dismissal. Furthermore, the employer must inform the employee immediately of the reason for the instant dismissal. The cause for dismissal must be issued
simultaneously with the dismissal itself. This requirement has been included because
the employee should be made immediately aware of the behavior that led to the
termination of his/her employment, allowing him/her to determine a standpoint
with regard to the dismissal. The reason communicated upon dismissal determines
the reason for dismissal. A recent case before the Supreme Court of the Netherlands
once again illustrated the importance of the formulation of the dismissal notice containing the reason for instant dismissal.( ECLI:NL:HR:2014:3126)
The case concerned an employee who had been employed and working in a hotel in
Aruba since 1992. On 17 October 2010, an incident took place on the hotel premises
involving the employee and a colleague. Ten days later, on 27 October 2010, the employer fired the employee on the spot due to the incident. In the dismissal letter, the
employer gave the employee’s aggressive behavior on 17 October 2010 as the reason
for the dismissal. The letter stated that the employee had pushed a female colleague
causing her to fall over, after which the employee kicked her while she lay on the
ground bleeding. Another colleague had to intervene.
On 1 November 2010, the employee claimed that the dismissal was invalid, and
stated his willingness to resume duties. The employee then initiated legal proceedings, claiming continued payment of wages. The court of first instance granted the
employee’s claim, but the Court of Appeal dismissed the claim, stating that the
instant dismissal was justified. According to the Court, Aruban hotels devote special
attention to respectable behavior among their staff, and impose heavy sanctions on
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improper conduct. Tourism is crucial to the Aruban economy, and it is in the public
interest that Aruba’s good reputation among tourists not be blemished.
The facts and circumstances on which the Court based its decision that the instant
dismissal was valid were not the reasons given originally by the employer in the
dismissal letter.
The Supreme Court therefore ruled that the Court of Appeal had failed to acknowledge that the information communicated in the dismissal letter is what determines
the reason for dismissal. According to the Supreme Court, the Court of Appeal had
not established any demonstrable link with the reason for dismissal given to the
employee by the employer in his letter dated 27 October 2010. Finding the ruling to
be insufficiently substantiated, the Supreme Court nullified the verdict of the Court
of Appeal. The case was then referred for further hearing and judgment.
Recommendation
This verdict by the Supreme Court once again demonstrates the importance of
formulating the reasons for dismissal clearly and in full in any dismissal letter issued
to an employee who is fired on the spot. If there are multiple reasons for dismissal,
employers are advised to inform the employee expressly via the dismissal letter that
each separate action named constitutes just cause for instant dismissal in itself. If
one of the actions does not stand up in court but the others do, then it is clear that
these actions also constituted just cause for the employer to dismiss the employee,
preserving the validity of the instant dismissal.
19. Amendments to the Dismissals Decree
A payrolling amendment to the Dismissals Decree will come into force on 1 January
2015, giving more security to payrolled employees.
Payrolling gives rise to a special contractual relationship between the official employer, the employee and the client. Although the employee officially enters the service
of the payroll company, the latter has no authority over the employee – this authority rests with the client, which is the party that recruited and selected the employee.
The payroll company then hires the employee, and fulfils its salary payment obligations.
The Social Agreement of 11 April 2013 states that it would be advisable to introduce
changes in order to improve the statutory framework for triangular employment
relationships. As a result, special dismissal regulations applicable to payrolling will be
introduced on 1 January 2015.
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The amendments to the Dismissals Decree will mean that payroll employees cannot
be dismissed without just cause. Protection for payroll employees will also be made
equal to that of employees who hold a permanent position with the same client.
As of 1 January 2015, the mere termination of a payroll agreement by the client will
not constitute sufficient grounds for the Dutch Employee Insurance Agency (UWV)
to issue a dismissal permit to the payroll company. From now on, the client’s circumstances will be the deciding factor in the evaluation of any intended dismissal.
Demonstrating these circumstances will remain the responsibility of the payroll company, however. It is therefore the task of the UWV to establish whether the client’s
circumstances justify the termination of the agreement with the payroll company.
Additionally, as of 1 January 2015 Annex B to the Dismissals Decree shall no longer
apply to payroll companies. This means that the provisions concerning the order of
dismissal that apply when the client initiates dismissal shall now also apply when the
payroll company terminates the employment agreement due to economic business
considerations.
Conclusion
The amendments to the Dismissals Decree increase the difficulty of dismissing payroll
employees. This is expected to reduce the attractiveness of pay rolling as a form of
flexible employment. It is also anticipated that payroll companies will try to make the
client (at least partly) responsible for dismissals.
20. The Conditions of Hiring-Out of Workers, in particular the
Supply of Workers by Temporary Employment Undertakings [Article
3(1)(d) of the Directive]
Temporary Agencies Act (Dutch acronym: Waadi):
Conditions of hiring-out of workers, in particular the supply of workers by temporary employment undertakings, are laid down in the Temporary Agencies Act (Dutch
acronym: Waadi). The most important provision of the Waadi is Article 8: Temporary
workers are entitled to the same wage and other allowances as comparable workers
in the industry where the worker is temporarily carrying out his work, unless a (applicable) collective agreement provides other rules (the so-called comparable wage
norm).
Article 8 Waadi: Main rule: Article 8, par. 1 Waadi ensures that those supplying
workers owe those workers the wages and other allowances equal to the wages and
other allowances paid to workers in equal or equivalent positions in the company to
which the workers are supplied. The reason for this is that the terms of employment
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of the hired workers should not distort the system of terms of employment operative
in the company hiring the workers.
There are two exceptions to the main rule. On the basis of par. 2 and 3 Article 8
Waadi two exceptions may be made to the main rule as laid down in par. 1:
•
•
Art. 8, par. 2 Waadi:
The main rule does not apply when the collective labour agreement of the
supplier contains provisions on the wage rate and other allowances of supplied
workers. In that case the wage provisions in the collective labour agreement of
the supplier take precedence and deviation from the aforementioned main rule
is allowed;
Art. 8, par. 3 Waadi:
The main rule also does not apply when a collective labour agreement applies to
the hiring company that contains provisions on the basis whereof the company
must pay the supplied workers wages and other allowances in accordance to the
provisions of that collective agreement.
The exceptions to the main rule mentioned above pertain to collective labour agreements in force in the Netherlands, i.e. collective labour agreements that comply with
the Dutch Collective Labour Agreement Act that have been submitted in compliance
with Article 4 of the Wage Formation Act.
Furthermore, Article 11, Waadi obliges the employer to give temporary workers all
information about necessary vocational qualifications and working conditions, before
the temporary work begins.
21. Don’t forget!
21.1 Termination by giving notice during illness
Under current law, the employer is not entitled to give notice to an employee, during
the first two years of illness of the employee. As a result thereof, in practice, employees tend to report themselves ill as soon as they find out that their employer has
filed a request with the Regional Labour Office in order to obtain permission to give
notice as a result of which the permit, if granted, may not be used.
Under the Act, illness of an employee will not frustrate the termination of the
employment agreement by giving notice, provided that the employee’s illness has occurred after the em-ployer’s request for a dismissal permit has been received by the
Regional Labour Office.
Furthermore, the prohibition to give notice during the first two years of illness of an
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employee will not apply if this notice is based on the termination of the activities
performed by the company or by the division of the company where the employee
mainly or solely performs his activities.
21.2 Sick pay
If you own a company in the Netherlands and one of your employees becomes ill,
you are required to pay at least 70% of the wage last earned by this employee. You
are obliged to do this for a maximum of two years.
The amount you pay is linked to a maximum daily wage. If the amount is lower than
the statutory minimum wage, you are obliged to supplement it to the minimum wage
in the first year of illness. This statutory minimum wage guarantee does not apply to
the second year of illness.
Article 7:629 Inability to Work Due to Sickness, Pregnancy or the Delivery of a Child
1.
2.
3.
Where the employee is unable to perform the contracted work due to sickness,
pregnancy or the delivery of a child, he remains entitled to 70 % of his wages
fixed in money terms for a period of 104 weeks, as far as these wages are not
higher than the maximum daily wages meant in Article 17 paragraph 1 of the Financing Social Security Act, on the understanding that during the first 52 weeks
of his inability to work he is at least entitled to the minimum wages as set under
law for a person of his age.
Where an employee, in service of a natural person, usually works exclusively
or nearly exclusively in the household of this natural person, the right to wages
referred to in paragraph 1 only lasts for a period of six weeks.
The employee has no right to wages as referred to in paragraph 1:
• if he has caused his sickness intentionally or if his sickness results from a
disability about which he has given false information at his pre-employment
medical examination and, because of this, the test to determine if he meets
the special medical fitness requirements for the job could not be carried out
correctly;
• over the time during which his recovery has been obstructed or slowed
down by him or from his side;
• over the time during which he, although capable of doing so, did not perform suitable alternative work as meant in Article 7:658a, paragraph 4, offered to him by his employer and to be performed on behalf of his employer
or of a third person appointed to this end by his employer, unless he has a
sound reason for not performing this suitable alternative work;
• over the time during which he has refused to carry out reasonable instructions or measures issued, either by his employer or by an expert appointed
to this end by his employer, which instructions or measures are intended to
enable him to perform suitable alternative work as meant in Article 7:658a,
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paragraph 4, unless he has a sound reason for not properly responding to
these instructions or measures;
• over the time during which he has refused to collaborate in making, evaluating or adjusting an action plan as meant in Article 7:658a, paragraph 3,
unless he has a sound reason for not cooperating;
• over the time that has expired after the moment on which he should have
submitted an application for a social security payment as meant in Article
64, first paragraph of the Act on Work and Income in proportion to Labour
Capacity, unless he has a sound reason for this delay.
4. Contrary to paragraph 1, a female employee has no right to wages as referred to
in paragraph 1 over the period during which she enjoys maternity or birth leave
in accordance with Article 3:1 paragraph 2 and 3 of the Work and Care Act (she
then receives full payment of her wages from the State].
5. The wages are reduced by the amount of any financial payment to which the
employee is entitled pursuant to any social insurance required by law and of
any financial payment out of an insurance policy or from any fund in which the
employee has not contributed or participated. In addition the wages are reduced
by the amount of any income earned by the employee, in or out of service, for
work he has performed during the period in which he could have performed the
contracted work for the employer if he would not have been unable of doing so.
6. The employer is entitled to withhold the payment of wages referred to in
paragraph 1 over the period during which the employee has not complied with
reasonable written checking instructions of the employer concerning the provision of information needed by the employer to determine the employee’s right
to wages.
7. The employer cannot invoke any ground meant in the present Article for any
non-payment of wages or for withholding any payment of wages if he has not
notified the employee of this ground immediately after he suspected or should
have suspected its existence.
8. Article 7:628, paragraph 3, applies accordingly.
9. It is not possible to derogate to the disadvantage of the employee from the
present Article, with the exception that the employer may stipulate that the employee has no right to wages over the first two days of the time period referred
to in paragraph 1 or 2.
10. For the purpose of paragraph 1, 2 and 9, periods of time in which the employee
has been unable to perform his work due to sickness, pregnancy or the delivery
of a child will be added up together if they have followed each other in succession with an interruption of less than four weeks. Periods in which the employee
has enjoyed maternity or birth leave in accordance with Article 3:1 paragraph 2
and 3 of the Work and Care Act are not taken into account in determining the
interruption period of four weeks, unless the inability to work prior to the maternity or birth leave reasonably cannot be considered to result from the same
cause as the inability after the maternity or delivery leave.
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11. The period of 104 weeks, meant in paragraph 1, is extended:
• with the duration of the delay if the application, meant in Article 64 paragraph 1 of the Act on Work and Income in proportion to Labour Capacity, is
later submitted than it should have under that Article;
• with the duration of the extended period as determined by the Social Security Agency on the basis of Article 24 Act on Work and Income in proportion
to Labour Capacity, and with the duration of the period, meant in Article 25,
ninth paragraph, first sentence, of that Act;
• with the duration of the prolongation of the waiting period, meant in Article
19, first paragraph, of the Invalidity Insurance Act, if that waiting period is
extended pursuant to the seventh paragraph of that Article; and
• with the duration of the period as determined by the Social Security Agency
on the basis of Article 71a, ninth paragraph, of the Invalidity Insurance Act.
12. If the employee performs suitable alternative work as meant in Article 7:658a.
paragraph 4, the employment agreement remains fully in force.
13. For the purpose of paragraph 2, by ‘work performed in the household’ is understood also the provision of care to members of that household.
22. General information Non-competition clauses
The principle of the right to freedom of movement is laid down in a number of international treaties such as the European Social Charter and the International Convention on Economic, Social and Cultural Rights as well as in the national Constitution.
This principle, together with the principle of freedom of contract, conflicts with noncompetition clauses, which are defined in the NCC as stipulations between employers
and employees by which the employee is restricted in accepting other employment
after his contract of employment has come to an end.
Non-competition clauses aim to protect the employer from any infringement by the
former employee of the employer’s economic interests, such as the application of
know-how. If there is no written agreement or the employee had not yet reached
majority of age when the contract was concluded, a non-competition clause will be
deemed void and the employer will not be able to derive any rights from it.
The activities which an employee is prohibited from carrying out must be described
as clearly as possible and the prohibition must be limited to a certain period of time.
A period of one year is usually deemed acceptable. A non-competition clause must
also define the territory within which the former employee is prohibited from carrying out those activities.
The courts have the power to limit the scope of a non-competition clause or to set it
aside altogether regardless of whether it is legally valid. This power may be exercised
if the employer has no interest in maintaining the non-competition clause or if the
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employer’s interest in maintaining it carries less weight than the employee’s in having it limited in scope or set aside. In addition, the court has the power to order the
employer to pay the employee compensation for the duration of the period in which
he wishes to enforce the non-competition clause.
As stated above, an employer cannot derive any rights from the non-competition
clause if he has terminated the employee’s employment in an irregular manner, that
is to say, without having given notice or without due observance of the provisions
applicable to termination.
Example non-compete clause
10. Competition clause
10.1 Without the Employer’s prior permission in writing, whilst the Employment
Contract is in force and for a period of 12 months after the end of the Employment
Contract, the Employee will not establish, manage, co-manage or cause others to
manage, in any form whatsoever, a business similar or related to that of the Employer, the Client and/or the Recipient of Services, whether directly or indirectly, nor
work for such a business in any way whatsoever, whether or not as an employee,
whether or not for a consideration, or to have any participation or interest therein of
any nature whatsoever.
10.2 Without the Employer’s prior permission in writing (which permission will not
be refused on unreasonable grounds), whilst the Employment Contract is in force and
for a period of 12 months after the Employment Contract has ended, the Employee
will not enter into an employment agreement or any other agreement to provide
services, whether directly or indirectly with , or, with a view to doing so, approach:
• the Client/Recipient of Services or their legal successor(s);
• companies affiliated with the Client/Recipient of Services or their legal
successor(s);
• any (other) natural person or legal entity with whom the Employee has maintained relevant relations for a period of 12 months preceding the termination of
the Employment Contract in connection with this Contract and/or in connection
with the performance of his/her duties at the Recipient of Services and/or to
which he/she has supplied services for, for the benefit of and/or in the name of
the Employer and/or the Client.
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10.3 Without the Employer’s prior permission in writing, whilst the Employment
Contract is in force and for a period of 12 months after the end of the Employment
Contract, the Employee shall not, whether directly or indirectly:
• make contact with or attempt to entice away from the Employer and/or the Recipient of Services any persons with whom he/she maintained business relations
during the 12 months prior to the termination of his/her Employment Contract;
• maintain business relations (including the provision of services which are competitive with those of the Employer and/or the Client and/or the Recipient of
Services) with any eligible persons with whom he/she maintained business relations during the 12 months preceding the termination of his/her Employment
Contract.
10.4 At the end of his/her employment, the Employee shall inform his/her new
employer about this competition clause. Legal proceedings may also be instituted
against the new employer if it is acting wrongfully by making use of the Employee’s
failure to comply with this clause.
11. Non-solicitation clause
11.1 During a period of 12 months after the termination of the Employment Contract, the Employee shall not have and/or maintain relations, without the Employer’s
prior written consent, with the clients and business relations of the Employer, Client and/or Recipient of Services and companies and businesses affiliated with the
Employer, Client and/or Recipient of Services, with whom the Employee has maintained relevant relations for a period of 12 months preceding the termination of the
Employment Contract in connection with this Contract and/or in connection with the
performance of his/her duties at the Recipient of services and/or to which he/she
has supplied services for, for the benefit of and/or in the name of the Employer and/
or the Client whether in a personal/private or business context, which shall include in
any event the approach of clients and/or business relations, to advertise with or for
them, to recruit their staff, to enter into an agreement with them, to accept orders
from them and to perform duties (of whatever name or title and whatever nature),
whether for a consideration or for free. The foregoing will be applicable irrespective
of the manner in which this has taken place (and through whatever medium, including expressly – without limitation – social media such as Facebook, LinkedIn and Twitter), irrespective of which party has taken the initiative and (if there is any commercial contact) irrespective of whether or not this takes place for the Employee’s own
account or in the service/for the benefit of another party.
11.2 At the end of his/her employment, the Employee shall inform his/her new
employer about this non-solicitation clause. Legal proceedings may also be instituted
against the new employer if it is acting wrongfully by making use of the Employee’s
failure to comply with this clause.
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12. Confidentiality
12.1 Both during and after his/her employment, the Employee shall observe strict
secrecy vis-à-vis third parties, including the Employer’s staff, the Client’s staff and the
Recipient of Services staff, with regard to all that which has come to his/her notice in
the performance of his/her duties in connection with the operations and interests of
the Employer, the Client and the Recipient of Services. This duty to observe confidentiality shall include all information from the clients or other business relations of the
Employer, the Client and the Recipient of Services, which comes to the Employee’s
notice within the context of his/her performance of duties.
13. Penalty clause
13.1 If the Employee fails to comply with (one or more of) the prohibitions and/
or injunctions in (one or more of) the foregoing articles (6.9, 9, 10, 11 and 12), the
Employee shall be entitled to impose a penalty on the Employee of € 5,000 (in words:
five thousand euros) for each non-compliance, increased by € 500 (in words: five
hundred euros) for each day or part thereof during which the non-compliance continues. The Employee herewith acknowledges that as the occasion arises he/she shall
owe the penalty(-ies) if imposed by the Employer. The penalty may be imposed and
claimed immediately without notice of default or any other prior notice (whether
or not within the meaning of section 6:80 ff. of the Dutch Civil Code) being required.
The fact that the Employer is entitled to impose this penalty shall be without prejudice to the Employer’s other rights pursuant to the law or this settlement agreement,
including in any event the right to demand fulfilment of this settlement agreement
and the right to claim damages. The Employer shall not be entitled, however, to
impose a penalty and claim damages in respect of the same non-compliance. Any
penalty(-ies) imposed shall be in favour of the Employer, which constitutes, insofar
as applicable/relevant, an explicit departure from the provisions of section 7:650
sub 3-5 of the Dutch Civil Code. Non-compliance may furthermore be regarded as an
urgent reason for summary dismissal.
13.2 If the Employee’s gross salary is equal to the statutory minimum wage, the
penalty referred to in the previous paragraph shall nevertheless be equal per week,
pursuant to section 7:650 sub 3-5 of the Civil Code, to the amount of the salary of
half a working day per week.
13.3 The parties understand and the Employee acknowledges that the Employee’s
position, with the related/required specific knowledge and duties, make the competition clause and non-solicitation clause necessary due to the weighty business and
service interests of the Employer, the Client and the Recipient of Services. The small
market segment in which the Client provides its specific services, the specific expert
assignment given by the Recipient of Services/the Client, the Employer’s unique
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service formula and the fact that the Client/Recipient of Services have requested
the Employer to include the competition clause, in combination with the extremely
aggressive methods of acquisition, staff recruitment and collection of information applied by the Client’s competitors, make it necessary for the Employer to protect both
its own interests and those of the Client and the Recipient of Services by means of
the competition clause and non-solicitation clause.
13.4 The parties agree that the clauses described above and in articles 9, 10, 11 and
12 are separate and severable and are regarded as reasonable by the parties in all
their details. If for any reason whatsoever one or several of the clauses would be declared null and void or unenforceable, but would be declared valid or enforceable if a
part of the formulation would be removed/changed, these clauses shall be applicable
with such omissions or revisions in order to render them valid or enforceable, as long
as these clauses remain consistent with the parties’ intentions.
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23. Disclaimer
A great deal of care has been taken in the creation of this information brochure.
The information it contains is intended to provide interested parties with information. This information is not intended as advice. If you seek advice, we recommend
you to contact one of our qualified experts.
Liability
AAme Accountants en Belastingadviseurs does not accept any liability for direct or
indirect losses due or relating to the use of information provided in this publication.
AAme Accountants en Belastingadviseurs is not liable for any inaccuracies and/or
incompleteness of the information provided in this publication, nor can any rights be
derived from it’s contents.
Copyright
This information brochure and it’s contents are protected by copyright. With the
exception of personal and non-commercial use, it is not permitted to reproduce any
part of this information brochure, to store it in an electronic file or to publish it in any
form or manner whatsoever without first obtaining written permission from AAme
Accountants en Belastingadviseurs.
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AAme Accountants and International Tax Advisors
Olof Palmestraat 24
2616 LS Delft, The Netherlands
T
F
E
I
+31 (0)15 - 215 88 15
+31 (0)15 - 212 56 24
[email protected]
www.aame.nl