Balanced Labour Market Act (WAB)
Here you will find frequently asked questions about the Balanced Labour Market Act (WAB). If your question is not listed or has not been fully answered, please contact us. We are happy to help you.
What does the Balanced Labour Market Act entail?
The Balanced Labour Market Act (WAB) aims to bring more balance to the labour market and make it more attractive for employers to hire people on permanent contracts.
With this new law, the aim is to repair the adverse effects (and unmet goals) of the Work and Security Act (WWZ). The ultimate goal is to narrow the 'gap' that has arisen between permanent and temporary work.
This means that the permanent contract becomes more flexible. For example, there will be some additional possibilities for the contract to be dissolved by the subdistrict court.
Conversely, flexible contracts become somewhat more 'permanent'. In addition, the WW premium, the transition compensation scheme, and the chain provision are being reviewed and adjusted.
The most frequently asked questions about the WAB:
What is the current status of the WAB?
When will the WAB come into effect?
What are the main measures of the bill?
What is the difference between payrolling and temporary staffing?
When is it considered payrolling and when is it considered temporary staffing?
What is the consequence of the difference between payrolling and temporary staffing?
When is there exclusive availability?
What is meant by allocation function?
What measures does Timing/Persoonality take to continue temporary staffing?
What does the WAB mean for my services?
Can I still deploy people flexibly in the future?
Someone had a temporary employment contract and it turns out to be a payroll agreement afterwards. What now?
Is it better for me to become an employer myself now?
Can I continue to use your services with certainty?
Will my temporary workers notice anything about the WAB?
What is the impact on my employees?
What does this mean for the rates I charge my hirers? (from the intermediary)
Where do you currently see alternatives and solutions?
What are the main measures from the bill?
Below you will find the main measures/changes of the WAB.
Dismissal
Dismissal becomes easier for the employer. Where the employer currently still has to fully comply with one of the 8 grounds for dismissal, it is also possible under the WAB to dismiss an employee when there is a combination of circumstances. This is called the so-called cumulative ground. With this new ninth ground, the judge has the option to combine different circumstances. What is important here is that the employee can receive an additional half transition compensation (on top of the transition compensation) when the cumulative ground is actually used for the dismissal.
Transition compensation
- Employees are entitled to transition compensation (severance pay) from the first day. This also applies during the probationary period;
- There will be a scheme for small employers to compensate the transition compensation if they have to close their business due to retirement or illness. This will be further elaborated in additional regulations;
- For long-term employment, the accrual of transition compensation will be reduced.
Availability of on-call workers
Measures are being taken to prevent mandatory and permanent availability of on-call workers. For example, an employee must be called by the employer at least 4 days in advance. On-call workers retain the right to wages when the work is canceled. In addition, the 4-day period can be shortened to 1 day by collective labor agreement.
Chain provision
- The succession of temporary contracts (the chain provision) is being expanded. It is now possible to enter into 3 consecutive contracts in 2 years. This will be changed to 3 years.
- It will also be possible to shorten the break between a chain of temporary contracts from 6 to 3 months by collective labor agreement when there is recurring temporary work. This can be done for a maximum of 9 months per year.
- An exception applies to the chain provision for substitute workers in primary education (for substitutions due to illness).
WW premium
For employers, the WW premium becomes more favorable when they offer an employee a permanent job (with fixed hours) instead of a temporary contract. Currently, the amount of the WW premium depends on the sector in which a company is active.
The final premium cannot yet be determined at this time. However, it is already clear that the difference between the high and low premium will be 5%.
Payrolling
Employees working on a payroll basis receive the same employment conditions as employees who are permanently employed, with the exception of pensions. For this, the so-called General Administrative Order (AMvB) has been submitted. This measure stipulates that the choice consists of:
1. Joining the (industry) pension fund of the client
2. Mandatory employer contribution of approximately 14%
What is the difference between payrolling and temporary staffing?
The temporary employment contract is an employment agreement between the temporary employment agency and the temporary worker, where the temporary worker works under the supervision of the hirer. In this arrangement, the temporary worker receives guidance and work instructions from the organization that has hired them.
Payrolling and temporary staffing are very similar. The similarities?
In both payrolling and temporary staffing, at least three parties are always involved: the temporary employment agency or the payroll company (the formal employer), the hirer, and the employee. Both the payroll company and the temporary employment agency enter into an employment agreement with the employee and then assign this employee to work for the hirer.
The main difference between payrolling and temporary staffing? In payrolling, the recruitment and selection of the employee are conducted by the hirer, and the employee cannot be assigned to a third party without the hirer's consent. The hirer selects (chooses) the employee they want to work with and then requests the payroll company to employ this employee. The respective employee is then made available exclusively to the hirer.
When is there payrolling and when is there temporary employment?
In the new bill, payrolling is distinguished from temporary employment.
However, this remains, as before, the ‘provision of employees to a third party, under the direction and supervision of this particular third party’.
In the bill, payrolling is defined as follows: based on an agreement (of assignment) between the employer and the third party, it is important to know that this has not been established in the context of matching supply and demand in the labor market. It is about providing a workforce. This workforce performs work under the supervision and direction of that client, whereby the one who provides the workforce is only authorized to provide the workforce to another with the client's permission.
In the above definition, two elements are important: the allocation function and the exclusivity. When an employee is not allocated by the employer and is also exclusively made available to the client, then there is payrolling and not temporary employment.
What is the consequence of the difference between payrolling and temporary employment?
For the temporary employment contract, there are a number of deviations from regular labor law based on article 7:691 BW and the applicable ABU or NBBU collective labor agreement. This allows temporary workers to be offered more flexible agreements.
For example, the chain regulation only applies after 78 weeks, and there are longer periods in which the obligation to continue paying wages can be excluded. The so-called hirer's remuneration also applies here.
At Persoonality, their own collective labor agreement is currently applicable, which stipulates that a maximum of 6 fixed-term contracts can be offered in 4 years. Once it is determined whether the WAB has been adopted or not, discussions with the unions will determine to what extent Persoonality can continue its own company collective labor agreement as of January 1, 2020. This is partly related to the scope of the new ABU collective labor agreement as of June 2019. This is expected to be concluded in the coming months.
The WAB aims to further reduce the difference between permanent and flexible employment. One of the measures wants payroll employees to be treated equally to permanent employees. The aforementioned facilities that do apply to temporary employment contracts do not apply to payroll contracts. As a result, payroll employees are entitled to at least the same employment conditions as the employees of the payroll employer who perform an equivalent function.
When is there exclusive availability?
There is talk of exclusive availability when the following indications are present:
- It is clear what agreements have been made between the client and the hirer, such as an exclusivity clause;
- How long the worker has been employed by the hirer (on the basis of exclusivity) and whether this worker has previously been employed by the hirer;
- The worker has been informed that he is made available exclusively to that company, and this has also actually taken place;
- Whether the worker also has to agree on practical matters related to, for example, his employment conditions with the hirer, such as his vacations;
- The hirer is also involved in the personnel policy for the benefit of the temporary worker. An example of this is performance reviews;
- The government points out that the requirement for consent cannot only be derived from a written exclusive availability agreed upon between the parties, but also from the facts and circumstances that show how the parties deal with this in practice. Such exclusive availability can also occur in the case of subcontracting via the subcontractor to the end client (and thus of payrolling). In payrolling, the subcontractor (third party) cannot simply make the worker available to another without the consent of the ultimate hirer and the formal employer. It is emphasized that the entirety of elements is important in this regard. Together, this entirety of elements can help determine whether there is exclusive availability to the hirer.
What is meant by allocation function?
When the agreement between the hirer and the employer is established with the aim of matching supply and demand in the labor market, there is allocation. In the following cases, there is allocation:
- The client/third party has been involved in the recruitment and selection process of the worker. In this situation, the hirer has fulfilled the allocation function themselves or has had a third party, not the formal employer, do it for them;
- The formal (temporary) employer has recruited and selected the worker, for example by posting a vacancy or actively approaching potential workers;
- The employees have previously been employed or otherwise worked at the hiring company, and the hirer themselves has fulfilled the allocation function. This is also known as the so-called revolving door construction;
- There is a temporary demand for labor by the hirer. The temporary employer is mainly engaged in matching supply and demand for temporary labor, such as replacing employees during illness or other absence or handling peak hours;
- The company (formal employer) does not engage in any allocation activities at all. Think of having and managing a vacancy site and/or employing intermediaries who actively recruit and allocate;
- The structural nature of the work or function that the worker must perform. In this case, there is no temporary demand for labor.
What measures does Timing/Persoonality take to continue broadcasting?
Timing with its labels Timing Uitzendteam and Persoonality Payrolling is a full-service HR service provider that is involved in the allocation of employees and the non-exclusive provision of these employees to its clients.
It is important to know that the new legislation affects situations where the legal employer does not fulfill an allocative role and when the employee is exclusively made available to one client. Without the consent of that client, the employee may not be made available to a third party.
The measures we take aim to make the allocative role we fulfill more visible to both employees and clients. Within the labels of Timing, we can actively help employees find the right job and offer training to better prepare them for the labor market and guide them from job to job. We have been doing this and will continue to do so.
Timing Uitzendteam and Persoonality Payrolling both stand for good employment practices. We specialize in executing the employment of our own employees, temporary workers, and payroll employees.
What does the WAB mean for my services?
Timing Uitzendteam and Persoonality Payrolling are full-service HR service providers that focus on the allocation of employees and the non-exclusive provision of these employees to their clients. An analysis of our customer base shows that in the vast majority of cases, we can continue to offer temporary employment contracts. For cases where payroll is involved, we can also continue to offer payroll services. We would be happy to explain how we do this in a personal conversation with you.
Can I still deploy people flexibly in the future?
Yes, definitely! Timing Uitzendteam and Persoonality Payrolling are full-service HR service providers that focus on the allocation of employees and the non-exclusive provision of these employees to their hirers. An analysis of our customer base shows that we can continue to offer temporary employment contracts in the vast majority of cases. In cases where payroll is involved, we can also offer payroll services, expectedly from January 1, 2020. We would be happy to explain how we do this in a personal conversation with you after it has been determined whether, and if so, 'how' the measures can be implemented.
Someone has had a temporary employment contract, and it turns out to be a payroll agreement afterward. What now?
In this case, it is likely that the employment conditions applicable to the hirer will be applied retroactively. It is important in this case to obtain clarity about the status of the agreement when entering into the agreement. We take that responsibility upon ourselves and ensure that the correct agreement is entered into, in consultation and in collaboration with our clients.
Back to most frequently asked questions overview
What is the impact on my employees?
In legal terms, nothing changes for the employee when we continue to dispatch, compared to other temporary workers. If you want to offer payroll contracts or if we conclude based on the employment relationship that there is a payroll contract, then a number of changes apply. At that point, the chain regulation applies as it does with the hirer, and all employment conditions must be applied in exactly the same way as with the hirer.
What does this mean for the rates I ask my hirers? (from the intermediary)
Temporary work is generally becoming more expensive. This applies not only to temporary workers but also to employees who are directly employed by the hirer. Employers currently pay a lower unemployment insurance premium under the current WAB for an employee with a permanent contract and fixed hours than for an employee with a flexible contract. Additionally, the nature of the contract will be visible to employees via the payslip.
The transition compensation also leads to an increase in cost price, as it will be owed to all employees from the first day.
Where do alternatives and solutions currently lie for you?
One of the focal points is the allocation of employees. We are a full-service HR service provider that is already engaged in the allocation of employees and the non-exclusive provision of these employees to its clients.
We continue to offer our services within the framework of the law. As a legal employer, we play an active role in the allocation and do not exclusively assign the employee to the client.
Other question
Do you have another question? Then contact your contact person.