Overview important changes in employment law
In this blog, I provide a new overview of important legislative changes and proposals in the field of employment law that HR professionals need to be aware of. This will help you anticipate the necessary adjustments in your organisation's administration and policies.
1. Changes in legislation in 2024
Uniform minimum hourly wage and indexation of minimum wage
As of January 1, 2024, a statutory minimum hourly wage has been introduced, and fixed minimum monthly, weekly, and daily wages no longer exist. Employers are required to pay employees at least the statutory minimum hourly wage. A uniform minimum hourly wage applies to all employees aged 21 and older - as of July 1, 2024, this will be € 13.68 per hour, and from January 1, 2025, it will be € 14.06 per hour. Fixed minimum youth wages per hour apply to employees under 21 years old.
Increase of tax-free travel allowance
As of January 1, 2024, the tax-free travel allowance has been set at € 0.23 per kilometre, regardless of the type of transport, including cycling, walking, and driving.
CO2 mobility reporting obligation
From July 1, 2024, organisations with 100 or more employees must comply with the work-related personnel mobility (WPM) reporting obligation. If you have less than 100 employees then you may report voluntarily. This concerns all business trips and commuting for which employees receive a financial compensation or are provided with a vehicle. You must report on (the annual totals of) the number of kilometres, the type of transport, and the type of fuel. The government is exploring ways to simplify these regulations, making it easier for companies to comply without heavy administrative burdens.
Tax-free public transport card
As an employer, you no longer need to withhold payroll taxes when reimbursing employees for a public transport card (public transport subscription or discount card). The only condition is that the employee also uses the public transport card (to whatever extent) for work-related purposes, including commuting. This change took effect on January 1, 2024.
2. Planned changes in legislation for 2025 and 2026
Discontinuation of the low-income benefit and termination of the wage cost subsidy for employees aged 56 and older
The compensation for employers in wage costs for employees covered by the low-income benefit (LIV) will be discontinued. This subsidy has not significantly contributed to encouraging companies to employ and retain employees with a fragile labour market position.
The wage cost subsidy (LKV) for employees aged 56 and older will also be ended. An evaluation shows that this wage cost subsidy has a limited effect. The proposed effective dates for these changes are January 1, 2025, and January 1, 2026, respectively.
Simplifying and making it more attractive to employ people with disabilities
If your organisation has more than 25 employees, it will become easier to employ people with disabilities. There will be a wage cost subsidy (LKV) for an employee with a disability for the duration of the employment contract. Additionally, a specific declaration from the UWV will no longer be required. This change is expected to take effect on January 1, 2025.
Furthermore, a bonus scheme (a higher LKV) will be introduced by January 1, 2026, if you employ more people with disabilities than required by the quota system.
Changes to expatriate scheme
The previously planned reductions to the 30% ruling have been partially reversed. The changes, depending on the employee’s start date, are:
- If the 30% ruling started before January 1, 2024: you may continue to pay 30% of the employee’s salary tax-free for 5 years. The income threshold remains at € 46,107 (with annual indexation).
- If the 30% ruling started after January 1, 2024: in 2024, 2025, and 2026, you can pay up to 30% of the employee’s salary tax-free. The income threshold remains € 46,107 (with annual indexation). From 2027 onwards, you may pay up to 27% tax-free. The income threshold will increase to € 50,436 (with annual indexation).
Note: lower income thresholds apply to expats under 30 years old.
These changes are expected to take effect on January 1, 2025.
Compensation for transition allowance only for small employers
Since November 2019, employers who have paid a transition allowance upon the termination of an employment contract due to long-term illness can claim compensation from the UWV. In the new proposal, set to take effect on July 1, 2026, this compensation will only apply to employers with fewer than 25 employees.
3. Other legislative proposals with an undetermined effective date
Equal pay
The equal pay legislation is an amendment to the equal treatment act for men and women. This new law introduces several measures aimed at addressing unequal pay, placing more responsibility on the employer.
Mandatory confidential advisor for employers with ≥ 10 employees
Every employer with 10 or more employees will be required to appoint an internal or external confidential advisor. Key responsibilities of this confidential advisor are: supporting, guiding, and advising employees who are confronted with inappropriate behaviour in the workplace and, if necessary, referring them to professional help.
More security for flexible workers
This proposal provides more security for flexible workers by abolishing zero-hour contracts (with exceptions for students and school pupils) and modifying the so-called chain regulation - the interruption period will be extended to 5 years instead of 6 months - to limit "permanently temporary work."
Clarification of the position of freelancers
The draft legislation clarification of assessment of employment relationships and presumption of employment includes assessment criteria to determine whether there is an employment relationship, which is one of the conditions for the existence of an employment contract. The proposal has already been adjusted on several points, and discussions regarding the precise design of this new legislation are still ongoing.
Note: from January 1, 2025, the enforcement moratorium will no longer apply, and the tax authority will enforce regulations against false self-employment. The Ministry of Social Affairs and Employment has created a tool that supports contracting parties to verify which type of contract should be used.
Stricter rules regarding competition clauses
The proposed adjustments include: a maximum duration of the non-compete clause of 1 year, a requirement to specify the geographical area restriction, a description of the reasons for the applicability of the non-compete clause, and if the clause is enforced, the employer must pay a compensation to the employee.
Legal right to bereavement leave
There will be a legal right to paid bereavement leave in the event of the death of the employee’s partner or minor child. The duration of the leave will be 5 days for a 40-hour workweek.
Adjustments to tax rates and income tax brackets and reduction of wage tax credit percentage
The rates and brackets for income tax will be adjusted. Additionally, the percentage of the wage tax credit will be reduced.
Earlier clarity on replacing employees who are unable to work due to illness for SMEs
This draft legislation provides companies with fewer than 250 employees with more flexibility to not reintegrate employees who are unable to work due to long-term illness within their own company after the first year of illness and to allow for their replacement.
For legislative changes and proposals that have not yet been implemented, it is not yet fully certain whether they will be introduced (unchanged) and on what date.
More information on new legislation can be found on this website: https://business.gov.nl/.
Questions or need any help?
Do you have any questions about the new legislation or need help drafting or adjusting policies or regulations within your company? Please feel free to contact Made Simple HR | Legal.