The Balanced Labour Market Act (WAB) – what you need to know

The 1st January 2020 saw the introduction of one of the most radical changes to Dutch employment law in decades – The Balanced Labour Market Act or ‘Wet Arbeidsmarkt in Balans’, subsequently known as W.A.B. If you are an employer in The Netherlands, this has resulted in serious disruption in the Dutch temporary labour market.

Let’s start by highlighting the amendments:

  • The most significant change is that payrollers (people not directly employed by the organisation) are now entitled to the same rights and benefits as permanent employees within the company. This includes an ‘adequate’ pension scheme which will be reviewed in 2021.
  • On-call employees will have to be given a fixed-hour contract after 12 months. So, if you currently have on-call staff that have been working with you for over a year, you’ll need to change their contracts.
  • Employers will have to pay a transition payment (like a redundancy) to their temporary workers from the start of the contract instead of after two years.
  • A ‘Call Agreement’ has been established for on-call workers. Since they do not have established working hours, the worker must be given four days’ notice; otherwise, they are not obliged to turn up for work. Then, after a year, the employer must provide a fixed-hour contract based on the average amount of hours worked.
  • The payment towards unemployment benefit will be higher for flexible contracts than permanent ones.
The Balanced Labour Market Act Image

Of course, the most obvious effect of these changes is the huge extra cost that employers of the contingent staff are now burdened with. Equally as pressing, is the major changes that need to be implemented within every organisation’s working policy, employment contracts, processes and HR technology.

WAB was only announced in June 2019, a short amount of time to make such drastic changes. Do you know if your organisation is fully compliant with the new law? There’s a distinct possibility it isn’t. That’s why companies such as CXC can help manage the change, we are global payroll and compliance experts.

The introduction of the Balanced Labour Market Act is in line with trends we have seen in the UK, Ireland and Germany, to afford greater protection to temporary workers; but all this comes at a cost and attacks the flexibility that engaging temporary workers can bring.

CXC has been managing contingent workforces across the globe for almost 30 years. The advancement of technology, mobility and the global economy, as well as a cultural shift in attitude towards work, has revolutionised employment.

An increasing number of companies, in all continents, are realising the value of contingent workers – access to talent quicker, agility, addressing short-term skill shortages, reduced risk and most importantly, lower costs.

The Dutch government feels this is to the detriment of the worker. Hence, they have introduced WAB to address the increasing number of short-term temporary contracts in the country and to incentivise organisations to offer permanent employment instead. My view is that the extra benefits being offered to contingency workers decrease their desire to opt for a permanent position.

Just like many elements of the economy, there needs to be a supply and a demand. For many years now, in western culture, we have seen a shift in attitude from the younger working population away from the permanent full-time job model. Instead of fitting their life around their job, they want the opposite. So, they choose the freedom, flexibility and autonomy of contingency work.

It will be interesting to see how many contingent workers in The Netherlands transition to permanent roles in the next five years and the effect it has on future Foreign Direct Investment.

For now, if you’d like any advice or assistance with becoming WAB compliant, please get in touch. We’d be delighted to help.

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