The Dutch government has taken further emergency measures in order to keep the economy going and to secure jobs. The short-time work reduction-regulation (WVT) is inactivated and will be replaced by the Temporary Emergency Measure to Secure Business-regulation (Noodmaatregel Overbrugging voor Werkbehoud in Dutch). This new regulation will be implemented within the next few days, but some measures have already been announced.
Who is entitled to financial compensation from the Dutch government?
All entrepreneurs who expect a turnover loss of at least 20%, will be compensated for the costs with regard to continued salary payment for their employees. This applies to fixed-term employment contracts, permanent contracts and on-call contracts (such as zero-hours contracts and temporary workers).
Conditions for financial compensation
The company is entitled to financial compensation if it continues to pay the (full) wages of the employees and if it refrains from making any employee redundant for business reasons during the period for which the compensation has been awarded.
The amount of the compensation
The compensation amount is directly linked to the expected loss of turnover. In case of an expected 100% turnover loss, the compensation is limited to a maximum of 90% of the labour costs.
- 100% loss of turnover: compensation of 90% of the labour costs:
- 50% loss of turnover: compensation of 45% of the labour costs;
- 25% loss of turnover: compensation of 22,5% of the labour costs.
Duration of the Temporary Emergency Measure to Secure Business-regulation
The compensation will initially be granted for 3 months, retroactively as per 1 March 2020 to 31 May 2020. The compensation can be extended (once) for another 3 months.
How does the new regulation work?
- The application must be submitted to UWV (Employee Insurance Agency Netherlands). Further explanation will follow as for the precise procedure;
- UWV will provide an advance of 80% of the expected compensation to the employer;
- The employers continues to pay the (full) wages of the employees (accrued unemployment rights will not be effected by this new regulation);
- The (actual) decrease in turnover will be determined afterwards and may lead to an adjustment to the compensation of the labour costs.
What if the company has already applied for the short-time work reduction-permit?
As mentioned before, the short-time work reduction-regulation (WVT) is inactivated and will be replaced by the Temporary Emergency Measure to Secure Business-regulation. If an employer has already submitted an application for a short-time work reduction-permit and not received the permit yet, the application will be transposed and dealt with under the new regulation. If an employer has already applied for the short-time work reduction-permit and has already obtained the permit, this permit will remain in force.
Renate Vink-Dijkstra and Guus Wife
Under ‘special circumstances’ such as a fire, a flood or an epidemic, employers in various sectors will be confronted with lower client demand and a subsequently reduced workload. These circumstances are not considered to be a regular business risk. The COVID-19 virus, better known as the coronavirus, qualifies as an epidemic and will result in loss of business. Employers can take measures to reduce the relevant financial impact.
Employers may apply for financial assistance from the Dutch government when their business is reduced by a minimum of 20% for a period of at least 2 weeks with a maximum of 24 weeks. Financial support should be requested through the Ministry of Social Affairs and Employment (Ministerie SZW) by using a digital form. A list of personnel must be attached. If the loss of business due to the coronavirus is expected to last longer than 24 weeks, the permit will be refused.
The permit, if granted, shall apply for 6 weeks and will be extendable three times, in parallel with the maximum allowed of 24 weeks (4 x 6 = 24 weeks).
In the context of such a claim it is important that employers substantiate the direct relationship between the coronavirus and reduction in work/business, due to the strict conditions imposed by the Ministry of Social Affairs and Employment.
Scope of the permit
The permit shall only apply for the period after the application has been submitted to the Ministry of Social Affairs and Employment and not for the period prior to the date on which the application has been received by the Ministry of Social Affairs and Employment.
In addition, the permit can not be applied for in case of on-call employees with a zero-hours contract and temporary workers.
UWV (Employee Insurance Agency)
If the permit is granted, this must be reported immediately to UWV via the form notification of working time reduction. After the end of the permit period of 6 weeks, the employer may apply for unemployment benefit in the event of a reduction in working hours, if the conditions of the Unemployment Insurance Act have been met.
This unemployment benefit in the event of a reduction in working hours must be applied for within one week after the end of the 6-week permit period.
The above-mentioned conditions do not apply to employees who are already ill. In that case the employer can not apply for an unemployment benefit in the event of a reduction in working hours, due to the legal obligation to pay wages in the case of illness. This legal obligation continues to apply.
During the permit period, the employer should continue to pay the relevant wage to the personnel as usual. The UWV subsequently reimburses 70% of the wages afterwards for the hours that the personnel did not work during the permit period. This shall only apply to the hours for which a permit has been obtained. As a result, employers ultimately pay less personnel costs, while personnel remain fully employed.
When the permit expires, and there is still no improvement with regard to the loss of business, extension can be requested, unless the maximum duration of 24 weeks has been reached. The request for extension must be submitted within the period of 6 weeks for which the (previous) permit already has been granted.
Renate Vink-Dijkstra and Guus Wife
It is common practice for private individuals and companies to hire cleaners. However, the arrival of the online platform Helpling, has changed the process considerably, making it more convenient. ‘Customers’ and cleaners are able to register with the Helpling platform. After registering, customers are able to select a cleaner on the basis of certain criteria. It is then up to the cleaner to either accept or refuse the cleaning job.
The interesting issue from an employment law perspective is the role that Helpling plays in this interaction between parties. For example, if Helpling turned out to be the employer of the cleaners, this would mean a long-term failure on its part to comply with the collective labour agreement for the cleaning and window-cleaning industry. If it were a question of job placement, this would mean Helpling had breached the Placement of Personnel by Intermediaries Act (Wet allocatie arbeidskrachten door intermediairs – “WAADI”) by requesting a commission on the amount payable to the cleaners.
The FNV, one of the largest trade union in the Netherlands, brought proceedings against Helpling on this issue. A recent decision given by the Amsterdam Court on 1 July 2019 shows the arguments put forward by the parties and how the subdistrict judge ultimately ruled. Below is the summary:
The dispute mainly concerned the question of whether there was a relationship of authority between Helpling and the cleaner. This is an essential element for assuming the existence of an employment contract. One characteristic of the relationship of authority is the power to give instructions. In this context, Helpling’s operational management demonstrates the following:
- The customer can contact Helpling by telephone and via the website, ask questions and submit complaints about the hired cleaner.
- Helpling offers the option of sending invoices on behalf of the cleaner, managing calendars and acting as the contact person for customers.
- If there are too many complaints, Helpling can close the cleaner’s account.
According to the subdistrict judge, although these circumstances appear to constitute the power of giving instructions on the part of Helpling, they did not outweigh the following:
- The cleaners themselves set the rate at which they offer their services. This is an important difference with the operations of, for example, Deliveroo and Uber.
- The cleaners can decide for themselves if and when they will carry out the work. Cleaners who don’t accept jobs do not have their rating reduced, as is the case with Uber, for example.
- The instructions for carrying out the assignment are provided by the customer.
- The only conditions that cleaners must comply with are Helpling’s general terms & conditions for use of the platform.
Based on these facts, the subdistrict judge came to the conclusion that there was no relationship of authority between Helpling and the cleaner and that there was therefore no employment contract. This also means that the criteria for agency work – which was also suggested in the proceedings as a form of contract – have not been met.
Does this mean Helpling has won the battle against the FNV? Not quite. The clue can be found in the title to this blog. The subdistrict judge ruled that there is a question of job placement between Helpling, the customer and the cleaner. Thanks to Helpling’s ‘involvement’, an employment contract is indeed formed between the customer and the cleaner. That is how Helpling meets the requirements for job placement, as set out in Article 1(1)(b) WAADI. Article 3(1) of the same Act then states that, in the case of job placement, Helpling may not ask the jobseeker (in this case the cleaner) for any compensation in return. This poses a major problem for Helpling, because its business model is to ask for a commission on the cleaner’s wages.
The ruling means that Helpling will need to act quickly in order to find another, creative way to make money. However, the fact that the subdistrict judge – in view of this relatively new form of service provision – considered it unreasonable to prohibit requesting commission payments with retroactive effect, does offer a ray of hope.
On 18 January 2019, the Dutch Supreme Court confirmed that in the case of international groups, there are reasonable limits to the obligation to redeploy employees before they can be dismissed. This makes it clear that redeployment should not automatically be considered an option in the case of a large employer that has branches worldwide. Employers like Shell can breathe a sigh of relief at this point.
What about the redeployment obligation in the Netherlands? Before an employer can dismiss an employee, the options for reassigning the employee to another position, with or without training, must be investigated. This obligation follows from Book 7, Article 669(1) of the Dutch Civil Code and is broader than the obligation previously applicable before introduction of the Wet werk en zekerheid [Work and Security Act]. Previously, the obligation only applied if an employee who was dismissed due to long-term sickness or if an employee was dismissed for operational reasons. However, the current redeployment obligation applies to all grounds for dismissal, except for ‘culpable acts or omissions by the employee’. In all other cases (e.g. ‘inadequate performance’), this therefore means that in principle the obligation to redeploy applies, unless the employer can demonstrate that redeployment ‘is not reasonable’. This may be the case, for example, if the ground for dismissal is ‘damaged employment relationship’.
The redeployment obligation is often a problem for large international employers. Employees who are threatened with dismissal and who are prepared to work abroad, regularly take the view that they should be given priority for a placement in one of the foreign companies belonging to the group. Employees usually invoke Article 9(2) of the Ontslagregeling [Dismissal Regulation], in which the redeployment obligation is set out in further detail. It states that if the employer is part of a group, the investigation into redeployment options should also look at jobs in other companies that form part of the same group. The Dismissal Regulation is silent on whether jobs in foreign companies belonging to the same group as the employer should also be considered. In the explanation to the Dismissal Regulation, it is explicitly stated that an employee who is threatened with dismissal has priority over an external applicant.
A Shell expat threatened with dismissal also made reference to this. He argued that Shell’s global opportunities should be investigated in his case and that he should be given priority over external applicants. On 19 September 2017, the Court of Appeal of The Hague (see ECLI:NL:GHDHA:2017:2654) ruled that it is indeed necessary to look for suitable positions within the Shell group worldwide. However, the Court of Appeal disagreed with the issue of priority that was claimed. According to the Court, this would not be reasonable because these vacancies and appointments are for separate, local companies of the Shell group and that if priority were given, this would interfere with the freedom of these companies to implement their local personnel policies according to their own needs and wishes. Moreover, according to the Court of Appeal, it is not clear how a company in the Netherlands could legally enforce outside the Netherlands any priority given to an employee, partly in the light of corporate governance within a large international group.
The Supreme Court (see ECLI:NL:HR:2019:64) ruled in cassation that the redeployment obligation should not be regarded as an obligation to achieve an objective, but as a best-endeavours obligation. It should be examined whether it is possible or reasonable to redeploy the employee. In determining whether it is reasonable, one should also look at circumstances that do not make redeployment self-evident or reasonable. The employer therefore has a certain margin of discretion. The redeployment obligation is thus considerably nuanced in an international context.
Caroline Mehlem, legal team Labour, Employee Participation & Pensions
Employers are making a big mistake if they assume that outstanding holidays will lapse after the statutory expiry date. The Court of Justice of the European Union (EU Court of Justice) recently ruled that there can be no question of automatic expiration: holidays can only expire if the employee has actually been enabled to take them. The employer has the clear task of proving this – if necessary.
The right to paid annual leave is one of the fundamental rights as laid down in the EU Charter and this right is further elaborated in the Working Time Directive (Directive 2003/88/EC). The case law of the EU Court of Justice also shows that this right to holidays is considered an extremely important principle of EU law. In two rulings of 6 November 2018 (ECLI:EU:C:2018/872 and 874), the EU Court of Justice again emphasised the importance of actual holiday rest. In order to promote this so-called recuperation function of holidays, it is not acceptable to provide incentives to give up holiday rest (as already follows from earlier rulings of the EU Court of Justice). The aforementioned rulings now also mean that employers have an obligation to ensure in a specific and demonstrable manner that employees are actually given the opportunity to take outstanding holidays. If necessary, the employer must even encourage the relevant employee to take the outstanding days of leave in good time.
In the Netherlands, an expiry deadline is applicable to the minimum holiday entitlement (the so-called statutory holidays that amount to four times the number of working hours per week): the minimum holiday entitlement expires six months after the calendar year in which it was accrued (Book 7, Article 640a of the Netherlands Civil Code). However, as a result of the rulings discussed here, employers may no longer simply assume that holidays automatically lapse after this period.
In other words, a holiday entitlement can only lapse if it is established that the employee, after having actually had the opportunity to take the holiday, has consciously and in full knowledge of the consequences waived it.
In practical terms, this means that employers must repeatedly inform their employees in writing, well in advance of the expiry date, about the imminent expiry of their holidays and the need to take them in good time. It is important to keep these warnings, reminders and requests to employees in writing and to have the employee formulate a specific holiday schedule. If the employer fails to do this, the employee may argue that his holiday entitlement has not lapsed and, for example, must be paid to him upon termination of his employment. If an employer does not have the above mentioned supporting documents in its record-keeping system, this can then come with a hefty price tag!
I am not ruling out the possibility that this could play a major role in negotiations on the termination of employment relationships by mutual consent (by means of a settlement agreement). That is to say, case law now makes provision for employees to ask their employer to produce the evidence. If there is no evidence, this could result in unpleasant extra costs for the employer. Therefore, this is something to be aware of.
For questions, please contact Caroline Mehlem, lawyer specialising in Labour, employee participation & pensions.
The District Court of Amsterdam has ruled in two individual cases (one and two), brought by the FNV, that riders working for the meal delivery service Deliveroo are entitled to an employment contract. It is remarkable that the District Court gave this decision because in July 2018, the same court came to the conclusion that the self-employed status of a Deliveroo rider was not sham and therefore, the rider was not entitled to an employment contract. I have previously written a blog about this case.
Why did the subdistrict court arrive at this different decision?
In February 2018, Deliveroo made the decision not to extend the employment contracts of its riders. Riders were only able to work by means of a contract for services, a so-called ‘partner agreement’. The question was whether or not this partner agreement actually constituted an employment contract. The only way to verify this has been to compare the legal conditions of an employment contract with the partner contract and how the partner contract is actually put into practice. The subdistrict court reached the following decision:
Work: the way riders are able to use the Deliveroo app gives them little room to refuse. According to the subdistrict court, this room is more limited than the partner agreement suggests. Here, the subdistrict court paid particular attention to the performance criteria. Riders who perform well are given a certain priority position when logging in for certain (desirable) sessions. This results in an obligation to perform work.
Pay: Despite the fact that the pay received by riders in the partner agreement is higher than the minimum wage and that their pay varies for each specific session, it still constitutes pay in the opinion of the subdistrict court. One of the factors in this is particularly the fact that the remuneration was not so much higher than the minimum wage for a contract for services could be assumed. The pay is moreover a fixed rate that cannot be negotiated.
Relationship of authority: Throughout the partner agreement, there is an emphasis in various places on the independence of the rider. However, according to the subdistrict court judge, these rights and obligations do not indicate self-employment. For example, the riders must meet various health and safety requirements. The use of the Deliveroo meal box and clothing has since been made optional, but can be ordered from Deliveroo at a reduced price. This encourages the use of Deliveroo material. Moreover, the rider is still externally recognisable by the customer, because the order is placed via Deliveroo. There is therefore still a relationship of authority.
During a specified time period: The subdistrict court found it unlikely that only a small number of deliveries would be made, so that the criterion of carrying out work during a specified time period would not be met. Moreover, it is conceivable that riders would turn their Deliveroo activities into a business, thus relegating the features of an employment contract further into the background. Since these are exceptional cases, the subdistrict court rejected these arguments for those issues on which a decision had to be given. Deliveroo therefore lost this case.
We can discuss this judgment of the subdistrict court at length. This also applies to the earlier ‘Deliveroo case’ on which a subdistrict court judge of the same court ruled differently. In each instance, it depends on the circumstances of the case and the arguments put forward as to who is the winning party. I repeat: would a legal form lying between a contract for services and an employment contract not be a solution?