Legislative changes 2023
Laws and regulations are constantly changing. On January 1, 2023, a number of legislative changes have already come into effect. The statutory minimum wage and the tax-free travel allowance have increased, and pensions are being reformed. What other changes have been implemented and which are still on the agenda? And what do these changes entail? We have listed the 10 most important changes:
1) Increase in minimum wage and more labor tax credit for employees
Due to inflation, there is an additional increase in the statutory minimum wage. On January 1, 2023, the minimum wage increased directly by 10.15%. Employees aged 21 and older have been entitled to a gross salary of at least € 1,934.40 per month since January 1, 2023. That is € 12.40 per hour for a 36-hour workweek. Additionally, employees will benefit from more labor tax credit in 2023. As a result, they will retain more net salary. It is one of the measures taken to further boost purchasing power in the Netherlands. The maximum labor tax credit in 2023 is € 5,052.
2) Shortening of phase A and B
The phase system is the system in which a temporary worker gains more rights and better (dismissal) protection the longer they work as a temporary worker. This is laid down in the Collective Labor Agreement for Temporary Workers and consists of three phases: A, B, and C.
The phase system has been adjusted, and this means the following as of January 2, 2023:
The temporary worker who has worked in phase A for 52 weeks or more on January 2, 2023, enters phase B;
The temporary worker who has not yet worked 52 weeks or more in phase A on January 2, 2023, enters phase B on the date when the number of weeks worked after January 2, 2023, reaches 52 weeks, and the employment is continued.
Upon entering phase B, the current or new temporary employment contract is considered the first temporary employment contract in phase B. The 53rd to the 78th weeks worked in phase A before January 2, 2023, do not count in duration and number of temporary employment contracts in phase B.
The temporary worker who has worked in phase B for more than three years on January 2, 2023, enters phase C on the date when their temporary employment contract is continued on or after January 2, 2023;
The temporary worker who has not yet worked more than three years in phase B on January 2, 2023, enters phase C on the date when the duration in phase B has lasted three years, and their employment is continued.
3) Increase in free space under the Work-Related Costs Scheme (WKR)
Through the Work-Related Costs Scheme (WKR), employers can provide tax-free allowances to employees. As of January 1, 2023, the WKR has been temporarily expanded to 3% up to a wage sum of € 400,000. Above € 400,000, the free space remains 1.18%. Due to the expansion, entrepreneurs are more flexible, and it is possible to provide additional tax-free allowances to employees, for example, in connection with higher energy costs.
4) Statutory right to work from home
The 'Work Where You Want Act' is a legislative proposal initiated by D66 and GroenLinks. Upon implementation of this law, employees may submit a request if they wish to work at a different location. The proposal amends the Flexible Working Act (Wfw). This law was created to promote flexible work among employees. Under this law, employees can submit several requests to the employer regarding adjusting working hours, working times, and, through the proposal, also adjusting the workplace. With the 'Work Where You Want Act', adjustments for a work-from-home or workplace request are treated the same as other requests. This means that a request can only be denied when there are compelling business interests. The law was still under consideration by the Senate at the end of 2022. Implementation is likely to take place on July 1, 2023.
5) Expansion of the hirer's remuneration
The hirer's remuneration means that temporary workers must receive the same remuneration as employees who are directly employed by the client.
Most changes to the hirer's remuneration came into effect on January 3, 2022:
- This concerned the work-from-home allowance and one-time payments, such as a thirteenth month.
- General wage increases with retroactive effect also apply to temporary workers unless they no longer work for that client.
- Clients must classify temporary workers at the level that matches their work experience and duties.
As of January 2, 2023, temporary workers are also entitled to a fixed year-end bonus according to the level and conditions that apply at the client. The year-end bonus is not paid retroactively for the year 2022.
6) Higher tax-free work-from-home and travel allowance
Since 2022, employers have been allowed to give their employees a tax-free allowance for the costs they incur while working from home. As of January 1, 2023, this amount has been increased to € 2.15 per day.
The tax-free travel allowance has also been increased from € 0.19 per kilometer to € 0.21 per kilometer as of January 1, 2023. As of January 1, 2024, the maximum will be further increased to € 0.22 per kilometer.
7) Improvement of the childcare allowance system
For parents with irregular working hours, such as entrepreneurs, it is difficult to estimate how many hours they work per month. The link between worked hours (KGU) could therefore lead to (high) recoveries and thus pose a barrier to the labor participation of these parents. From 2023, there is therefore a right to childcare allowance regardless of how many hours are worked per month. This is part of the major reform plan of the childcare system. How this will be shaped is not yet clear.
8) Pension future bill
On March 29, 2022, the Pension Future Bill was submitted to the House of Representatives. This makes the pension system more transparent and personal and better aligns with the current labor market. Premiums are central, and benefits move more quickly with the economy, creating more perspective for indexation. The bill further describes the frameworks that should ensure a balanced transition for all participants to the new system. Additionally, the bill includes a proposal for the reform of the survivor's pension. On Budget Day, the cabinet still aimed to have the new legislation come into effect by January 1, 2023, but the effective date has since been postponed to July 1, 2023.
9) Mandatory certification
The cabinet is working on a certification system for temporary employment agencies and wants to ensure good working and living conditions for temporary workers with this system change. Temporary employment agencies must demonstrate that they meet the certification standards (be certified), and hirers must demonstrate that they work with certified lenders. This is intended to improve the vulnerable position of labor migrants, at least that is the intention, and level the playing field for all lenders. The cabinet, with broad support from the House of Representatives and in close cooperation with social partners (including the ABU), is well advanced in the elaboration. The bill will be submitted to the House of Representatives in the spring of 2023. The ABU believes that mandatory certification alone is not sufficient. It can only be successful with strict enforcement. It must cut off parties without a certificate from doing business. For this, more and effective government oversight is absolutely necessary. Additionally, the system must remain feasible, manageable, and affordable. The ABU will focus on these components in further elaboration.
10) Equal opportunities supervision law in recruitment and selection
With the Equal Opportunities Supervision Law in recruitment and selection, employers and intermediaries are required to establish a procedure to prevent discrimination in the recruitment and selection of employees. Employers with 25 or more employees must put this procedure in writing. When hiring external workers, an employer must also check whether this obligation is being met by the intermediary or the temporary employment agency. The Labor Inspectorate will check whether employers comply with the rules. If they do not have a written procedure, the Inspectorate can impose a fine, which will be made public, after a warning and a period to comply.
The aim of the law is to make employers more aware of labor market discrimination. The bill is still under consideration by the House of Representatives and amends the Working Conditions Act and the Allocation of Workers by Intermediaries Act. Implementation of the law will likely take place at the earliest in July 2023.
If you have any questions about any of these legislative changes, we are happy to help. Please contact your Timing contact person for this.