The Work and Security Act has recently been adopted by the Lower House and Senate in record time. This Act will have major consequences for employers and employees. It is advised that you start with preparations and when necessary take measures to adequately deal with the consequences. Doorn en Keizer Employment Lawyers will gladly assist you via several newsletters regarding the Work and Security Act and we will provide you with the appropriate tips and tricks.

This newsletter will regard the first changes which are related to flexible work. These changes will enter into force as of 1 January 2015.

Please note that in the meantime remedial legislation could be introduced to fill possible gaps and/or provide further explanation to certain parts of the Work and Security Act. We will inform you further of any possible changes.

The first changes effective 1 January 2015:

Employment law reforms

1. Objectives first legislative changes

2. Probationary period

3. Non-competition clause

4. Notification term

5. Transitional arrangement


Reforms employment law

1. Objectives first legislative changes

It is of importance to understand the underlying objectives of the legislator in order to place the reforms in the right context. Employment security is the overarching   objective, such opposed to job security of the current labour market policy.

According to the legislator, the position of the flexible worker with a definite term employment agreement or a variable work schedule will be strengthened. Further, the advancement from a flexible to a permanent employment should be facilitated and the long term deployment of flexible workers needs to be limited.

The legislator has, amongst others, introduced the following relevant changes in order to achieve these objectives:

– limitation of the possibility to agree upon a probation or non-competition clause in an employment agreement;

– introduction of a confirmation requirement at the end of a definite term contract.


2.  Probationary period (article 7:652 DCC and article 7:676 DCC)

Current situation:

Employers can agree upon a probationary period of one month in case of an employment agreement for a definite term of at most two years.

Further, at request of the employee, employers provide the reasons for a dismissal during the trial period on the basis of good employment practices, in the absence of an explicit rule in the law.

As of 1 January 2015:

Employers shall be limited in their possibilities to agree upon a probationary period. It will no longer be possible to agree upon a trial period in case of an employment agreement with a duration of six months or less. Should you do so, the clause will be null and void (automatically invalid). It will still be possible to agree upon  a probationary period if the employment agreement is for the duration of seven months or longer.

Also, a new rule will apply which states that – at the request of the employee – an employer will provide the reasons for a dismissal during the probationary period in writing.

Tips and tricks:

You need to assess whether it is advisable for your company to only conclude employment agreements for a definite term for a longer period than six months with a probationary period or rather opt for an employment of six months or less without a probationary clause.

If you have a staff manual, then the clauses should also be brought in line with the new legislation and possibly with your new policy in this respect.

It is uncertain whether six months and one day is sufficient to conclude a trial period under the new law. However, based on the desired protection of flexible workers in order to be certain that a written probationary clause is valid, it seems that a longer period, for example 7 months, is wise for the time being. As of now, it is impossible to provide you with a turning point.


3. Non-competition clause (article 7:653 DCC)

Current situation:

Employers are allowed to agree upon a non-competition clause in writing with an employee older than 18 years. Such regardless of whether the employment is entered into for a definite or indefinite term. In the Netherlands, it is quite common to include a non-competition clause in an employment agreement.  However, it depends on the circumstances of a case whether or not a Dutch court shall (fully or partially) uphold a clause. Nevertheless, we advise employers to include it.

As of 1 January 2015:

Employers will be limited in their possibilities to conclude a non-competition clause with their employees. It will no longer be allowed to agree upon a non-competition clause in case of an employment agreement for a definite term, unless the employer has “substantial company interests” for non-competition restrictions. In such event, the employer  should also motivate in writing that such a clause is necessary.

A court will look at the interests at the moment which these are called upon by the employer (and not the interests that existed at the time of agreeing upon the clause). If a motivation is missing or determined to be insufficient by a court, the non-competition clause is subject to nullification. At the request of the employee, a court can nullify the clause fully.

Tips and tricks:

Unfortunately, the legislator has not explained the scope of the new requirement “substantial company interests”. The terminology does resemble that of the Working Hours (Adjustment) Act. The case law with respect to the last-mentioned act shows that the requirement is quite strict.

Based on the objective of the Work and Security Act to strengthen the position of flexible workers, it seems that “substantial company interests” will be strictly interpreted by courts. Again, only future case law will show if this assumption is correct.

It is necessary to assess whether your company has such “substantial company interests”, should you wish to include a non-competition clause in an employment agreement for a definite period. Further, should this be the case, then you should confirm your reasons and motivate in writing in the employment agreement itself or for example as an enclosure to the employment agreement. We advise you to assess this motivation from time to time. In addition, it is advisable to also – next to a non-competition clause – agree upon a non-solicitation clause (for safety’s sake also take into account the new requirement which applies to non-competition clauses).

If you have doubts about complying with the new criteria, it could be wise to avoid any discussion. It might be advisable for certain cases to immediately conclude an indefinite employment agreement (for example in the event of an important sales position).


4. Confirmation requirement at the end of definite term (article 7:668 DCC)

Current situation:

The main rule is that an employment agreement for a definite term ends automatically (unless parties have agreed in writing that a prior notice is required).

As of 1 January 2015:

A new confirmation obligation for employers will be introduced subject to a “fine”. Please note that such an obligation is not the same as a notice. Employers will be obliged to provide an employee with a definite contract of six months or longer with a confirmation ultimately one month before the end of the employment agreement. This obligation implies that the employer should inform the employee in writing of:

– whether or not the employment agreement will be continued;

– in the event of a continuation, of the conditions thereof.

The new obligation does not apply to:

– an employment agreement for the duration of less than six months (therefore it does apply in case of an employment agreement of six months);

– an employment agreement which ends on a date which is not set on a calendar date (for example at the end of a project); and

– a secondment agreement.

Employers who do not notify the employee are obliged to pay a compensation to the employee:

– in case of not complying: one month’s salary; and

– in case of not complying timely: a pro rata compensation.

The request of payment of a “confirmation fine” should be demanded via a court request of the employee within two months after the end of the employment agreement at the risk of forfeiting his rights.

Tips and tricks:

We advise to strictly monitor the end dates of the temporary employment contracts and place them on the HR agenda. Further,  inform the employee in writing more than one month before the end of the employment agreement and in case of extension simultaneously also explicitly mention the conditions. It is only necessary to inform the employee, there is in principle no need to motivate the decision. You could in principle also send a message via (standard) email, preferably with a return receipt.

Please note that you always need sufficient evidence that your message timely reached the employee (if an employee does not respond to an email, send the message again per fax, registered post and/or courier).

It might be possible to inform the employee beforehand at the start of his employment that the employment agreement will not be extended, but it is uncertain if this is compliant with the new requirement.


5. Transitional arrangements

The above-mentioned amendments will be applicable as of 1 January 2015 with respect to employment agreements, unless there is a CBA deviates from this starting date.

Please note that with respect to:

– the trial period and the non-competition clause, the current legislation will remain applicable to employment agreements concluded before 1 January 2015 (also if they end after 1 January 2015);

– the confirmation term, this new obligation will not apply to employment agreements which will end within one month after the Work and Security Act enters into effect (31 January 2015 or earlier). If a definite term contract ends on 1 February 2015, this means that the employee will have to be notified ultimately on 1 January 2015.