Stricter legislation on hiring foreign workers will enter into force on 30 July 2020

27/07/20

The stricter legislation on hiring foreign workers will become applicable based on the revised Posted Workers Directive. Member states need to implement the goals as set out in the revised Posted Workers Directive into their local legislation ultimately on 30 July 2020.

By decision of 9 July 2020 it is announced that the Dutch Implementation Act will enter into force exactly on 30 July 2020. This means, among others, that foreign workers posted to the Netherlands are entitled to extended hard core terms of employment, while the maximum duration of temporary secondment will be set at 12 months. This will have numerous implications for foreign companies posting workers to the Netherlands and the Dutch hiring companies. Below we address these and other changes.

Hard core terms of employment

Foreign companies are obliged to assign minimum terms of employment to the workers temporarily posted to the Netherlands. Based on the Posted Workers Directive ("PWD") (and the Dutch implemented legislation as a result thereof), a ‘hard core’ of clearly defined protective rules should be observed (regardless of the choice of foreign law that has been made in the employment contract) when posting workers to the Netherlands. These terms are meant to protect posted workers from receiving benefits that are lower than the minimum benefits Dutch employees are entitled to.

The foreign companies have to pay these hard core terms of employment to the posted workers insofar these Dutch terms are more beneficial than their home country terms of employment. The hard core terms include e.g. minimum wage and 8% holiday allowance, minimum paid annual leave (20 holiday days based on fulltime employment), maximum work periods and minimum rest periods, non-discrimination, equal treatment and health, safety and hygiene at work.

Similar hard core provisions as included in a Dutch branch collective labour agreement (’CLA’) may have to be applied to the employment contract of the posted workers depending on the facts at hand.

Maximum duration of temporary secondment set at 12 months

Based on new legislation (the revised PWD), the hard core terms will be extended. In addition, the maximum duration of temporary secondment will be set at 12 months. If the secondment lasts more than 12 months, the posted worker will be entitled to almost all mandatory provisions under Dutch law. This includes (among others) the obligation for the foreign company to pay the posted worker during illness in accordance with Dutch law.

In the Netherlands, during the first 2 years of illness employees are entitled to 70% of their last earned salary, with a minimum equal to the monthly statutory minimum wage and a maximum equal to 70% of the maximum daily wage. Dutch dismissal law, supplementary pension arrangements and social security are excluded from the mandatory provisions that would apply after 12 months.

The secondment period of 12 months can be extended to 18 months by means of submitting a motivated request to the Minister of Social Affairs within the last 3 months of the secondment (so as of the start of the 10th month).

The extension will only be granted in the event it was reasonable to expect that the secondment would last maximally 12 months beforehand (so at the moment the secondment started). Two consecutive secondments, in which a posted worker is replaced by another posted worker after 12 months - who will perform similar duties on the same location - will be considered as one secondment.

Both regulations (extension not easily to be obtained and replacement is not possible) serve as to safeguard the rights of posted workers.

Transitional arrangement for secondments that commenced before implementation in Dutch legislation

In the event workers have been posted prior to the legislation entering into force, the secondment period of 12 months is 'assumed' to be set at 18 months. This means that almost all mandatory provisions under Dutch law will apply as of the 19th month. If a secondment has lasted more than 18 months as of the moment the legislation enters into force, almost all mandatory provisions under Dutch law will apply as of the date the legislation enters into force (so not retroactively).

Payment of the hirer's reward

Foreign companies are obliged to pay the 'hirer's reward' if their posted workers perform their duties in the Netherlands under the direction and supervision of the client and the relation between the foreign company and the client does not qualify as secondment intra-concern. If this would be the case, the posted workers are entitled to the same hourly wage and benefits as earned by employees of the client in the same/a similar position. A comparison of employment benefits needs to be made in order to ensure that the posted worker receives (at least) the same benefits as the client's employees.