Highlights of the Autumn Covenant

 In Employment & employee representation

In October the coalition partners and some of the opposition partners agreed on an elaboration on the so-called social accord (Sociaal Akkoord). The issues that will affect employment law relations are outlined below.

Reduction in the tax and social insurance contributions

  • Employer contributions will be deduced in part, making employment cheaper.
  • The lowest tax bracket rate will be reduced in 2014; this is meant to stimulate expenditure in the near future.
  • The reduced VAT rate for construction and renovation work will apply throughout 2014, in accordance with current arrangements; the rate will also apply for architects and gardeners.

Increase in the tax and social insurance contributions

  • The wages substantial interest holder will be determined on the basis of the so-called customary wages: the wages that are customary for the level and the duration of the work. These wages may be 30% lower than the wages applied in the market. This percentage will be reduced to such extent that the measure will bring in € 150 m.
  • The work bonus for working persons between 61 and 64 will be abolished for new cases as from 2015. Until 2018 the work bonus will remain unaltered for existing cases; in 2018 the work bonus will be abolished altogether.
  • New measures will be taken to counter bogus schemes. As a consequence, minimum wages regulations and collective agreements, for example, can no longer be circumvented by deploying self-employed persons that actually do their work like employees. These measures will be taken to put an end to improper use of some of the entrepreneur facilities.

Employment

The parties to the Autumn Covenant will speed up a number of measures listed in the social accord. Furthermore, some extra measure have been proposed to reduce unemployment in the near future and to stimulate employment in general. It should also become more attractive for elderly staff to continue working after having reached the state pension age. Furthermore, the position of flex workers will be improved.

  • The measures related to flexible work and the termination of employment will be enforced at an earlier date (1 July 2014 and 1 July 2015 respectively). Flex workers will sooner be entitled to a permanent contract because only 3 consecutive employment contracts will be allowed in a period of 2 years (instead of a 3-year period). Moreover, if the period of time between consecutive employment contracts is less than 6 months (instead of 3 months) the contract terms will be added up. Furthermore, employees who lose their job will have to be provided with a transition budget at an earlier stage and the rules with respect to the termination of employment contracts will be streamlined at an earlier date as well.
  • In 2014 and 2015 a third of the available budget for the sector plans will be applied for combatting youth unemployment.
  • For regional policy € 50 m. will be made available to support economic activities in shrinking regions.
  • Employers in the market sector have promised to provide 5,000 jobs for disabled persons in 2014.
  • The cabinet will speed up a collective pension fund for self-employed persons, to be joined on a voluntary basis.
  • As from January 2015, any job will be seen as ‘suitable’ after a period of 6 months for persons entitled to an unemployment benefit (now: 12 months); the rules will be strictly enforced. The income set off will be brought forward to 1 January 2015, which means that it will pay to work.
  • The assessment whether a quota should be enforced for employing persons with an impairment will be brought forward to the end of 2015 to ensure that jobs will become available.

Apart from the measures listed above, it will be investigated in how far the labour market can be stimulated in any other ways. One of the issues to be investigated is more effective progression in education programmes. It will also be investigated if the adaption of working hours will positively affect employment in the long run. Possible bottlenecks in continued payment of disabled employee will also be tackled.

Please note that the most important issue to keep in mind are the speeded-up measures with regard to termination of employment contracts and to the position of flex workers. A temporary employment contract will be converted into a permanent contract much more quickly and an employee who is dismissed will be entitled to a transition budget, even if the contract is a temporary contract.
If you should have any questions, we will be happy to give further advice about these measures.

Source: letter sent to the Second Chamber by the Minister of Finance on 11 October 2013

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