News Update Employment

20 April 2021

When the Dutch Balanced Labour Market Act (Wet Arbeidsmarkt in Balans) entered into force on 1 January 2020, it became mandatory for employers to give a written offer for a fixed number of working hours to any employee with an on-call contract that has lasted 12 months. That number must correspond to the average number of hours that the on-call worker worked during the previous 12 months. The purpose of this rule is to give on-call workers a stronger position and more certainty.

If the on-call worker accepts the employer’s offer, the on-call contract becomes an employment contract; otherwise the on-call contract will be continued.

Since this legislation was introduced, however, it has become apparent that the rule is unclear, in that it provides no arrangements about the commencement date for the fixed number of working hours.

This can create undesirable situations. For example, if the employee does not accept the offer immediately, it will be unclear in which form the contract will be continued: as an on-call contract or as an employment contract. Another unwanted situation that can arise is if the employer’s offer specifies a commencement date long after the date of the offer.

Effective 1 July 2021, the legislation will be amended to include the following arrangements.

• The employee has one month to accept the offer for a fixed number of working hours. Under the existing legislation, the employee is allowed at least one month to consider the offer.
• If and when the employee has accepted the offer, the fixed number of working hours must commence no later than on the first day of the employment contract’s 15th month (i.e. no more than 2 months after the employment contract has been in place for 12 months). Commencement on an earlier date is permitted, but not on a later date.

Cooling-off period for publicly traded companies

The Dutch Senate recently passed legislation allowing publicly traded companies to invoke a cooling-off period of up to 250 days.

A publicly traded company’s board of directors may apply the cooling-off period in the following situations:

• if activist shareholders (whose focus is on short-term interests) call for dismissal of members of the board of directors or supervisory board who fail to follow up on their ideas for the company’s strategy; or
• in the event of a hostile takeover bid and a material conflict with the company’s interests.

In these situations, it is possible that the company’s proper consideration of its policies will come under pressure.

The new Dutch Cooling-Off Periods for Boards of Publicly Traded Companies (Wet inroepen bedenktijd door bestuur van een beursvennootschap) offers boards of directors more time and opportunity to properly consider the various interests of the company and all its stakeholders, including shareholders, the works council and vendors.

During the cooling-off period, shareholders cannot exercise their authority to appoint, suspend or dismiss members of the board of directors or supervisory board (or to present a motion to that effect). As a result, this way of indirectly influencing strategy can be temporarily excluded.

However, so as not to rule out the possibility of dismissing a fraudulent director or appointing a new director (for example if a seat on the board suddenly falls vacant) during the cooling-off period, the new legislation states that the associated authority will not be suspended if the motion for the appointment, suspension or dismissal was added to the agenda by the company’s board of directors.

The new legislation also provides various safeguards to prevent abuse of the cooling-off period. To invoke the cooling-off period, the board of directors must first have the supervisory board’s approval. Furthermore, the cooling-off period may only be invoked in the event of a material conflict with the company’s interests: a situation that jeopardises the company’s continued existence as a going concern, its independence or its identity. Another measure is that the Enterprise Division of the Court of Appeal in Amsterdam may be asked to end the cooling-off period by shareholders with a right to add items to the agenda: as a rule, this means a shareholding of at least 3%, although major publicly traded enterprises in particular are likely to specify other requirements in their articles of association.

The Dutch Senate was very critical during its discussions of the bill, arguing that corporate law already offers sufficient safeguards to hold off shareholders, that it would harm the Dutch business climate and that very few publicly traded companies would find the new rules useful. Despite this criticism, however, the legislation made it through the Senate. No decree has been published as yet that officially states when the new act will enter into force; however, it should come into force on 1 May 2021.

Latest news about the NOW facility

Extended application period for finalisation of NOW 1 subsidies
The period for applying to finalise subsidies under the NOW 1 facility (the Temporary Emergency Bridging Measure for Sustained Employment, in Dutch: Tijdelijke Noodmaatregel Overbrugging voor Werkbehoud) started on 7 October 2020. This means that employers may submit their applications to finalise their NOW subsidies.

Depending on the amount received up-front and the actual subsidy after finalisation, employers might need to submit an additional third-party statement or auditor’s opinion. Initially, the portals for filing applications were supposed to close on 23 March 2021 (for applications requiring no statement or requiring a third-party statement) and 29 June 2021 (for applications requiring an auditor’s opinion). For more details, see our related News Update of 25 January 2021.

However, it was recently announced that the period to apply for finalisation of NOW 1 subsidies will be extended until 31 October 2021. This extended period applies to all employers, i.e. including employers that do not need to include an auditor’s opinion.

No reduction to one day’s wage
Caretaker Minister of Social Affairs and Employment Wouter Koolmees also announced recently that the maximum qualifying wages under the NOW facility will not be lowered. According to previous announcements, effective April 2021 the maximum compensation would be lowered to a single day’s wage, i.e. to EUR 4,845. However, this has been reversed under the newly expanded support and recovery deals, and the maximum compensation will continue to be based on two days’ wages.