In the coalition agreement “Getting started,” D66, CDA, and VVD presented a broad package of proposed measures in the areas of labor, social security, and pensions.
In this Alert, we list a number of important plans for you and explain what they could mean for employers and employees.
Continued payment of wages and reintegration:
The coalition parties want to make continued payment of wages during illness “more manageable,” especially for SMEs. Whether this will also lead to a reduction in the obligation to continue paying wages is currently unclear.
The coalition agreement also states that the coalition parties want to reduce the administrative burden of the Gatekeeper Improvement Act. Reporting obligations should be limited and uncertainty about wage sanctions should be eliminated. At the same time, more room will be created for customized solutions and more direct contact between employers and employees during the reintegration process.
Social security: reform of unemployment benefits (WW) and disability benefits (WIA)
. Starting in 2028, the duration of unemployment benefits (WW) will be reduced to one year. Starting in 2030, the duration will be further reduced to half a month per year of service. The benefit will be increased from 75% to 80% of the last earned salary for the first two months.
In the short term, the proposed government aims to improve collaboration between occupational health physicians and insurance physicians, impose conditions on reassessments, and abolish the IVA benefit for new cases by 2030. Furthermore, efforts are being made to reduce the influx into disability schemes. Barriers to working or earning additional income must be removed, for example, by creating a fallback option for people trying to return to work. The social security and benefits system will also be simplified by harmonizing concepts and conditions.
Dismissal: transition payment and adjustment of the reflection principle.
A drastic measure is the intention to completely abolish the compensation scheme for transition payments in the event of long-term incapacity for work. The budget appendix to the coalition agreement indicates that this abolition is intended to take effect on January 1, 2028, and will apply to all employers.
In addition, the transition payment must be used more explicitly for its intended purpose: guiding employees from job to job. The use of the transition payment will be linked to the Lifelong Development infrastructure. Employers who have demonstrably invested in training, retraining, or reintegration may face a lower or even no obligation to pay a transition payment.
In addition, in the future, when applying the reflection principle, more account should be taken of the personal circumstances of employees.
Non-competition clause
The non-competition clause is being modernised, probably on the basis of the draft bill from 2024. Important elements are (i) a maximum duration of one year, (ii) mandatory motivation, (iii) geographical delimitation and (iv) a compensation of 50% of the monthly salary for each month that the clause applies.
Self-Employed:
The introduction of the legal presumption of employment for self-employed individuals will continue. The remaining provisions of the Vbar (Self-Employed Persons Act) will be replaced by the Self-Employed Persons Act, which will be implemented in phases and will take into account European regulations. Employers will also be given more responsibility for housing migrant workers and breaking dependency relationships.
AOW retirement age linked to life expectancy.
Starting January 1, 2033, the AOW retirement age will be directly linked to increases in life expectancy, without a delay or cap. This could lead to a faster increase in the AOW retirement age than under the current system.
For higher incomes, the budget appendix clarifies that no further reduction of the pension cap will be implemented regarding supplementary pension accrual. Instead, the pension capping base of €137,800 per year will be frozen for the next six years. Due to the lack of indexation, the fiscal space for pension accrual for higher incomes will gradually decrease.
Employment conditions and work-related costs scheme.
The leave system will be simplified, based on the Social and Economic Council (SER) advisory report “Balance in social leave,” and the proposed government will continue providing virtually free childcare for working parents. Furthermore, active efforts will be made to combat labor market discrimination, which will have consequences for recruitment and selection, employment conditions, and other aspects.
In addition, the coalition agreement announces plans to simplify the work costs scheme and give employers more scope to help employees pay off student loans.
Finally,
we would like to emphasise that the foregoing is only an overview of proposed plans from the coalition agreement and that it is therefore not certain whether and when these will lead to concrete changes in the law. We will keep you informed of further developments.