News Update Employment & Pensions

Implementation of partial payment of salary during parental leave
29 October 2021

In this News Update Employment & Pensions you can read about the developments and latest news in the area of employment law. Houthoff keeps you informed, up to date on upcoming regulations and legal implications.

Implementation of partial payment of salary during parental leave

Under the new Dutch Paid Parental Leave Act (Wet betaald ouderschapsverlof) (only in Dutch), entering into force on 2 August 2022, parents will be able to take parental leave with partial payment of their salary after the birth of their child.
Under the current rules, each individual parent is already entitled to 26 weeks of parental leave, which they may take during the first eight years of their child’s life. This is generally unpaid leave unless the employer and employee make other arrangements (either company-specific or under a collective labour agreement).

Studies show that this appears to make parents reluctant to take this leave: only one parent in three takes unpaid parental leave. The new legislation is intended to encourage them to actually take parental leave. The Dutch Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, "UWV") will cover part of the parent’s salary for the first 9 weeks of the 26 weeks of parental leave, provided that those 9 weeks are taken during the first year of the child’s life.

Any leave that the parent does not take during the first year may be added to the 17 weeks of unpaid leave, which will remain available until the child's eighth birthday. The parent will not be paid for that time, although employers and employees are still free to make their own arrangements.

Under the new system, the UWV will pay parents 50% of their daily wage, capped at 50% of the daily wage maximum (July 2021: EUR 225.57 per day).

The introduction of paid parental leave comes shortly after the introduction of additional post-childbirth leave for partners: on 1 January 2019 an arrangement was introduced under which partners are entitled to take five days’ leave immediately after the birth of their child, and on 1 January 2020 a further five weeks of paid leave was added, to be taken during the first six months of the baby’s life.

This means that partners of mothers are now entitled to a total of 15 weeks’ paid leave during the first year of the child’s life. Mothers are also entitled to the same nine weeks of paid parental leave, on top of the existing arrangements for pregnancy leave and childbirth leave.

Creating greater diversity and inclusion in the workplace

The Dutch Senate recently passed new legislation (only in Dutch) aimed at achieving a better balance between men and women on the supervisory boards of publicly traded companies, with at least one third of the members being men and one third being women. This “transitional quota” (ingroeiquotum) applies to both women and men.

Additionally, large public and private limited liability companies will be required to establish targets to create greater balance in the male and female membership of their supervisory boards, boards of directors and the levels below (executive committee or senior executive roles). They will be required to prepare a plan of action, and report on the results annually in their directors’ report and to the Social and Economic Council of the Netherlands (SER).

During the Parliamentary discussions on the bill for the new legislation, the government announced that the measures in the bill make up one part of a broader series of measures to create equal opportunities. A key factor in achieving equal opportunities for women on the labour market is being able to balance labour and care. Arrangements that have recently been introduced to make it easier to combine work and caregiving include additional childbirth leave, affordable daycare, and tax incentives for working more hours. Employers are advised to talk to their employees about their working hours, their needs in balancing work and caregiving, and safety in the workplace. The SER will help companies to realise effective and successful diversity and inclusion policies. Further details are available in the SER’s diversity portal (only in Dutch).

Read the News Update from our Corporate M&A experts to find out more about the bill for the new legislation.

Highlighted Publication: Co-determination and IPOs

Until now, professional literature has given relatively little attention to co-determination aspects of IPOs. In a new contribution in the Dutch corporate law periodical Ondernemingsrecht, Claire Reynaers and Charlotte Kroon explain how a company needs to involve its works council when preparing for an IPO, and on what basis (legal and otherwise). The authors give particular attention to whether or not the works council has a right to advise under Article 25 of the Dutch Works Councils Act (Wet op de Ondernemingsraden). A key factor is the distinction between the acts preparing for the IPO and the actual IPO itself. The article explains that the various preparations can lead to multiple different consequences, which could be governed by either Article 25 or Article 27 of the Act. The IPO is effectively the final step in the process, though it is impossible to state with certainty whether an IPO falls under Article 25(1)(a) or (e) of the Act – determining this will hinge on additional circumstances. Another question they address is how to handle situations where it is the company’s parent or grandparent that is going public, but the works council exists at the level of the subsidiary (or sub-subsidiary).

In each case, it will benefit the company and the employees to take the works council seriously, and if possible, involve it in the process and share information. Continuing on this topic, a further question that the article examines is at what points in the IPO (if any) the works council needs to be involved. Since the Act does not concretely indicate or instruct on this matter, Claire and Charlotte provide several practical tips for each of the various scenarios that are possible, comparing the timing of requests for advice with a public takeover bid. They conclude that at present, the Act permits companies to do largely as they please.

The full article is available here. The article is only available in Dutch. 

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Advocaat | Managing Partner
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Key Contact

Advocaat | Partner
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