Employment law changes

Employment law is in constant flux. While no major legislative changes will enter into force in 2025, there are various bills underway which will be worked out further in the coming year. We highlight a few of the proposed changes below.

Current situation regarding self-employed workers

On 1 January 2025, the enforcement moratorium was lifted, allowing the Tax Administration to revert to the 'normal' rules allowing them to impose payroll tax adjustment obligations, additional assessments and fines without first giving an instruction (warning). 

The Tax Administration can impose these measures with retroactive effect from the date that the moratorium was lifted, i.e. 1 January 2025. However, in the event of malice or inadequate compliance with instructions, a five-year period will apply. On 18 December 2024, to ensure a 'soft landing' in 2025, it was announced that no fines for omissions and neglect or fines for an offence would be imposed for the qualification of employment relationships. 

The Tax Administration published its Explanation of the Assessment of Employment Relationships (in Dutch) to clarify the decision and assessment framework used in its enforcement decisions.

In addition, parties can request a prior consultation with the Tax Administration about whether a particular assignment counts as work performed in salaried employment or work performed by a self-employed person. Prior consultation can shed light on the Tax Administration's position on the matter, but provides only conditional (and therefore no absolute) assurance. There is also a web module available (in Dutch) that gives an indication of whether any particular worker is self-employed or in an employment relationship. However, answers to parliamentary questions show that the outcome will not provide assurance in disputes with the Tax Administration.

The proposed Assessment of Employment Relationships and Legal Presumption (Clarification) Act (Wet verduidelijking beoordeling arbeidsrelaties en rechtsvermoeden) amends the statutory definition of employment agreement and introduces a civil law presumption of an employment agreement if an hourly rate of EUR 33 or less is paid. The bill met with criticism from the Council of State and others and will probably be amended. According to the legislation calendar of the Ministry of Social Affairs and Employment, this bill will be submitted to the Dutch House of Representatives in Q1. 

Implementation of the Pay Transparency Directive

The EU Pay Transparency Directive must be implemented in Dutch legislation by 7 June 2026. Its purpose is to promote equal pay for equal work or work of equal value between men and women. The main consequences for employers are as follows:

• Reporting obligations: employers with 100 workers or more must report annually on the pay differences between female and male workers.
• Transparency rights: employers must inform applicants and workers about the initial pay or its range and are not allowed to ask applicants about their current pay or prior pay history. Additionally, during their employment, workers have a right to obtain information on the average pay levels for the category of workers performing the same work as them or work of equal value to theirs, and employers must inform their workers about the objective and gender-neutral criteria used to determine these pay levels.
• A reversed burden of proof applies in the event that certain pay transparency obligations are not being complied with, meaning that the employer must prove that there has been no direct or indirect discrimination.

The online consultation on the Directive's implementation will probably be launched at the end of January 2025. This will give us more insight into how the Dutch legislature will embed the Directive in Dutch legislation. It is crucial for employers to act quickly by checking how these matters are regulated within their organisation and drawing up an action plan to close any pay gaps.

Flexible Workers (Increased Security) Act

The Flexible Workers (Increased Security) Bill (wetvoorstel meer zekerheid flexwerkers) aims to provide greater security for flexible workers. The proposed measures focus on three types of flexible employment agreement: temporary agreements, on-call agreements and temporary employment agency agreements. The main changes for each type of agreement are as follows.

Temporary agreements

• Chain provision: the current scheme allows up to three successive temporary agreements within three years, with a six-month interruption period needed to start a new chain of agreements. To prevent revolving door arrangements, this interruption period will be replaced by a five-year expiry period. 
• Derogations by collective labour agreement: the possibilities to derogate from the chain provision by means of a collective labour agreement will be further limited.
  
   

On-call agreements

• On-call agreements ban: on-call agreements, like zero-hours agreements and min-max agreements, will, in principle, no longer be allowed and will be replaced by 'range agreements'. Under the new agreements, the maximum number of working hours agreed must not be more than 130 percent of the minimum number. 
• Wage exclusion clause: the option to stipulate in an on-call agreement that the casual worker will not be entitled to wages on hours not worked (wage exclusion clause) will be eliminated.

Temporary employment agency agreements

• Validity period of the temporary employment agency clause: this period (phase A) will be set at 52 weeks under mandatory law, in line with current practices.
• Reduction of the temporary period: after phase A (52 weeks), agency workers can only work under temporary agreements for up to two more years in phase B. After this period, the employment agency must offer them an agreement for an indefinite term.
  
   

The proposed changes for temporary employment agency agreements mainly serve to lay down in law what is already common practice today. The bill will probably be submitted to the Dutch House of Representatives in Q1.

Modernisation of the non-compete clause

In March 2024, a draft bill was published containing the following proposals to amend the rules on non-compete clauses:

• The maximum duration for non-compete clauses is one year, calculated from the end of the employment agreement.
• The area in which the employee will not be allowed to work must be specific and substantiated.
• The compelling business or service interests justifying the non-compete clause must be substantiated in writing in all employment agreements, no longer only in employment agreements for a definite term.
• Employees will be entitled to compensation from their employer if the employer invokes the non-compete clause.
• The compensation will be 50% of the last monthly salary for every month that the clause is in force. For example, six months will entitle the employee to three months' salary.
  
   

In response to a passed motion, the government explored the option of prohibiting non-compete clauses in employment agreements below a minimum salary threshold (1.5 times the modal wage). However, the Minister indicated that an employer's market position is unrelated to employees' salaries. Commercially sensitive information and strategic know-how can be managed by employees in any salary scale. Setting a salary threshold would strip employers of the possibility to protect their market position in respect of employees falling below the threshold, which could harm the employers' operations and competitiveness. 

The online consultation is closed and the bill is expected in Q3 2025.