The Labor Market in Balance Act (WAB): Important changes as of January 1, 2020

As of January 1, 2020, various changes will again be made to labor law with the entry into force of the Labor Market in Balance Act (WAB).

The core of the WAB is that the government wants to make it more attractive for employers to hire employees on a permanent basis by reducing the differences between permanent contracts and flexible labor. This includes changes to the chain arrangement, the (calculation of the) transition compensation, the introduction of the ‘cumulative dismissal ground’ as a ground for dismissal, and the WW premium for flexible contracts.

We have listed the changes:

1. Transition compensation

Employees are entitled to transition compensation from the first day of employment in the event of dismissal. The amount of this is 1/3of a month’s salary per year worked. The higher transition compensation for employees aged fifty or older will therefore lapse.

2. Chain arrangement

The chain arrangement will return to 3 years – just as it was before the introduction of the WWZ in 2015. This means that an employer may enter into a maximum of 3 fixed-term contracts with an employee in a period of 3 years. The chain will restart if there are at least six months between two fixed-term contracts.

3. Cumulative ground

An additional ground for dismissal will be added (the ‘i-ground’), which means that an employer may combine multiple grounds for dismissal. As a result, a judge may dissolve the employment contract in the event of multiple‘incomplete’ grounds for dismissal. The introduction of this cumulative ground makes it slightly easier for employers to dismiss employees.

However, the judge may (in addition to the transition compensation and any fair compensation) award extra compensation to the employee as compensation. This extra compensation amounts to a maximum of half of the transition compensation.

4. On-call agreement

Employers must in future call up on-call workers at least 4 days in advance. If this call takes place later, the on-call worker is not obliged to come to work.If the call is withdrawn or changed within 4 days before the start, the on-call worker is entitled to wages according to the original call.

If the on-call agreement has lasted 12 months, the employer is obliged to make an offer within one month thereafter for a contract with a fixed scope that is at least equal to the average number of hours worked in the previous year. If an on-call worker has already been employed for more than 12 months on January 1, 2020, this offer must be made before February 1, 2020.

5. Payrolling

The lighter labor law regime that applies to the temporary employment contract no longer applies to payrolling. In addition, the payroll employee is entitled to the same primary and secondary terms of employment as employees of the client and payroll employees are entitled to an ‘adequate’ pension scheme.

6. Compensation transition payment

Employers can (retroactively) apply to the UWV for compensation for the transition payment due when they dismiss an employee who has been incapacitated for work for more than two years. This scheme will take effect from April 1, 2020.

8. Premium differentiation WW premium

In order to make it more attractive for employers to conclude an employment contract for an indefinite period, there will be a lower premium for employment contracts for an indefinite period and a higher premium for employment contracts for a fixed period. Whether there is a fixed-term or indefinite-term contract must be visible on the payslip.

This is a summary of all changes as of January 1, 2020 as a result of the introduction of the WAB. For our clients and relations, we have drawn up a white paper that can be sent to you free of charge on request. Please send us an e-mail for this: info@lvdadvocaten.nl