Dutch Dismissal Law: modification of unemployment benefits

In this series of articles I will keep you informed of developments relating to the Dutch Dismissal Law: wet Werk en Zekerheid. I will try to translate this into practice: what are the consequences, what are the opportunities and what are the threats?

In the first article, I outlined the background of the Dismissal Law. In the second article, I talk about the position of the flexible workers. The third article will contain proposals regarding the reform of the dismissal law and, in this final article, the changes in unemployment benefits.

The main goal is to make you aware of the changes to come. The following legislation will take effect on July 1, 2015.

Unemployment benefits will be more prevalent

The government would like unemployment benefits to act like a trampoline to a new job, rather than a safety net. Several measures have been taken to make that trampoline more powerful. An important tool in preventing unemployment is the encouragement of work-to-work programs. The government primarily looks at the social partners for its implementation of this program and introduces the transition compensation.

A clearly different purpose is to reduce long-term unemployment. To achieve this, two relatively simple, yet probably effective, measures will be taken:
• Limitation of the maximum duration of unemployment benefits
• Modification to the concept of suitable employment

The latter measure contains an adaptation which receives little attention; in the past the number of hours worked would be deducted from unemployment benefits received, this will now change to the revenue received. This means that in the future it pays to accept a job that pays less.

Limitation of the maximum duration

The maximum duration of the right to receive unemployment benefits is determined by the years of employment history. Now, each year of employment means an extension of one month of employment benefits. However, this will change. During the first 10 years the current structure of benefits will be maintained. Every year after that relates to an extension of half a month of unemployment benefits. The employment history that has been accumulated before 2016 will be taken into consideration.
Maximum duration of unemployment benefits right now is 38 months. This bill will reduce the maximum duration to 24 months. As is the case at the moment, social partners are able to take responsibility for privately financed top-ups to unemployment benefits through collective labour agreements. This enables the continuation of the current structure and duration of 28 months.
Starting in 2016, the maximum duration of benefits will be reduced by 1 month every 3 months until the desired 24 month maximum has been reached.

De maximale duur van de WW is nu nog 38 maanden. Met dit wetsvoorstel wordt dat beperkt tot maximaal 24 maanden. Sociale partners kunnen (zoals nu overigens ook het geval is) via cao-afspraken de verantwoordelijkheid nemen voor privaat gefinancierde aanvullingen op de WW, waardoor de opbouw en duur gelijk kunnen blijven aan de huidige situatie. Om van de huidige 38 maanden te komen 24 maanden, wordt de maximale duur met ingang van 2016 per kwartaal met één maand teruggebracht.

Suitable employment

There are several obligations tied to receiving unemployment benefits. One of them is the obligation to try and find suitable employment. The definition of ‘suitable’ can be found in ‘Guidelines for suitable employment’.
The central theme of the guidelines is that the longer someone is unemployed, the more it is expected for that person to also look for work at a lower (degree) level.
In the current situation, someone is allowed to look for work on the same level as they worked at when they became unemployed, for the first 6 months of unemployment. After the first 6 months, work on a lower level is deemed ‘suitable work’ and after 1 year of unemployment all jobs are deemed ‘suitable work’. In the bill, the definition of ‘suitable work’ will be amended. That amendment will mean that instead of after 12 months, all jobs will be considered ‘suitable work’ after 6 months of unemployment.

A very important change which I believe will really help, is getting rid of the deduction in benefits based on the number of hours worked in the new job and replace it with a deduction of income, when taking on another job. Right now, when someone finds a new (part-time) job, unemployment benefits are affected by the number of hours they work. This could result in someone receiving less money if they accept a job that pays less than their unemployment benefits will. To counter this and not discourage accepting work that pays less than the benefits, instead of deducting pay from the benefits based on the number of hours worked, they will be deducted based on the income the person receives.
With the new rule, a part of the income will be deducted from the unemployment benefits. This ensures someone who is unemployed will be better off working again.

Security or false security?

In my previous articles I concluded that changes in labour law will probably give an employee less security. If the employee become unemployed, the changes will not help him. Changes in the unemployment benefits will be a ‘swift kick in the pants’, which seems to me to be a security.

Marcel Reijmers is a partner at FlexKnowledge and is a strategic advisor for, among others, Holland Payroll in the fields of legislation, sectoral payroll, collective labour agreements and remuneration schemes. He is also a columnist for FlexNieuws and editor of the FlexWijzer and CAOWijzer. Reijmers has 20 years of experience of working in the flex market.