The New Balanced Labour Market Act:
Fixed contracts for some while others must be self-employed workers
The set of new rules for the labour market should provide more security for flexible workers. But some of those rules are counterproductive. The rules, contained in the Balanced Labour Market Act (‘WAB’), took effect on 1 January 2020, and came with a lot of changes. Temporary employment agencies and experts believe that the WAB will result in more self-employed workers in various branches of industry. ‘Clients will tell flexible workers “why not become self-employed”, explains Werner Klaassen, director of TempoTeam. ‘People leave on Friday as an employee only to come back on Monday as an entrepreneur,’, Antoinette Willems of Yellowstone International agrees. The Federation of Private Employment Agencies (‘ABU’), too, sees a rise in the hiring of self-employed workers, primarily in industries that employ many lower-qualified workers like agriculture, construction, industry and hospitality. In the glasshouse industry and distribution centres the share of independent contractors is on the rise as well due to the WAB, adds Werner Klaassen. ‘It is reason for concern. Self-employed workers working for less than 20 euros. That does not leave them with enough to pay for their insurance or pensions.’
‘People leave on Friday as an employee only to come back on Monday as an entrepreneur’, Antoinette Willems of Yellowstone International
Self-employed workers are the only type of flexible workers not covered by the WAB. Ever since the first plans for the act were devised, experts have been warning that the act is basically an escape route for employers, as they can hire more self-employed workers. The Tax and Customs Administration does not check or rarely whether self-employed workers comply with the relevant requirements. ‘In practice, the enforcement of the rules for self-employed workers is virtually non-existent these days’, says employment lawyer Hendarin Mousselli.
Balanced Labour Market Act
According to the CBS, there were just under 2 million self-employed workers and employees with flexible or fixed-term employment contracts in 2018. In the unions’ opinion the WAB should stop this out-of-control flexibilisation by making permanent contracts less permanent. It has become easier and cheaper for employers to terminate contracts. Conversely, flexible contracts have become less flexible. Such employees will be more expensive and have more rights. That makes it more difficult and more expensive for employers to give those workers the push.
An unintended effect of the WAB is an increase in self-employed workers, creating a merry-go-round of temporary workers. After twelve months those temporary workers will be entitled to a fixed number of hours, i.e. the average of the hours they have worked over those twelve months. Employers who cannot or will not assign those hours, simply start looking for new temporary workers. NS, the Dutch railways, let go 160 temporary workers, hiring new workers in their place to do the same jobs. NS claims these are people who, for instance, attend to train passengers during large events like the Four Days Marches in Nijmegen and King’s Day. During peak times we can accommodate 68 fulltime workers, but during slow periods we need just 16 full-timers. Because the work is so flexible, NS cannot give any guarantees on hours, so NS says.
‘Temporary workers should have more security but instead they fall between two stools’ – Anoeshka Maaskant, YoungCapital
NS’ temporary workers are provided by YoungCapital. That agency notices that more candidates must be placed with other clients. ‘Many of our other clients also have problems with the hourly guarantee’, says Anoeshka Maaskant. ‘Temporary workers should have more security but instead they fall between two stools’. Still, Maaskant also sees clients hiring temporary workers on a permanent basis.
Plenty of work
‘This act makes you think twice about who to hire on a permanent basis and who not’, comments Kristel Groenenboom, director and owner of a container company. Groenenboom decided to hire several flexible workers. ‘Because we have plenty of work for the new year, but also because it is now much more expensive to get someone through a temporary agency. That way we can save a lot of euros per hour.’
It is too soon for an overall picture of the consequences of the WAB for flexible workers. Many employers have no idea yet of the impact of the new act, explains ABU. This is the reason why many employers have not yet taken a decision. Several experts confirmed this. Even the large group of workers under a permanent contract have to wait and see how the WAB will work out. As after 1 January it has become easier and cheaper to dismiss employees, employment lawyers expect a wave of dismissals. In September 2019 it was clear that dismissal proceedings were being postponed. Workers aged 50 and over on long-term employments are among the most vulnerable.
Consequences of the WAB
• Payroll workers will have the same rights as employees under permanent contracts. This means they get paid the same and have the same fringe benefits, with the exception of pension accrual. As from 2021 all terms will be standardized, which will lead several companies to completely stop using payroll workers.
• After twelve months, on-call workers and temporary workers must be made proposals for a fixed number of hours.
• From the first day of work employees will be entitled to transition payments even if they are working under flexible contracts.
• Employers must pay 5 percentage points more in unemployment contributions for flexible workers. That is 2,000 Euros more for gross salaries of 40,000 euros per year.
• Dismissing permanent workers will become easier.
• Transition payments will fall. This will mean thousands of euros less and in some cases even tens of thousands of euros.