The labor market has changed significantly in recent years. More and more people are working on the basis of a flexible contract, for example as a on-call worker, temporary employee or via a payroll structure. In 2020, the Balanced Labor Market Act (WAB) was introduced to reduce the differences between permanent and flexible work. But what exactly does this law mean for employers and employees? And where are the biggest risks?
The employment lawyers at Arslan Advocaten explain how the rules work, what has changed since the WAB was implemented and how you can prevent problems.
What is the Balanced Labor Market Act (WAB)?
The WAB aims to narrow the gap between permanent and flexible work. Employers should find it more attractive to hire employees on a permanent basis, while flexible workers gain more security. The law applies to all employment contracts concluded or renewed after January 1, 2020.
Main changes due to the WAB
1. On-call workers: more security for employees
If an employer wishes to have an on-call worker work, they need to summon the worker at least four days in advance. If this happens later, the employee can refuse. If a summons is cancelled within four days of the workday, the employee retains the right to pay for the planned hours.
After 12 months, the employer must also offer a fixed number of hours that corresponds to the average number of hours worked in the past year. This gives on-call workers more certainty about their income.
2. Transition compensation from the first day of work
Before the WAB, an employee was entitled to a transition fee after two years of employment. Since the WAB, that right has applied from the first day of work. This also applies to temporary contracts and termination during the trial period.
For employers, this means that any termination of an employment contract, no matter how short, can result in financial consequences.
3. Chain rule: three contracts in three years
The so-called chain rule determines how many temporary contracts an employer can offer before an automatic permanent contract is created. Since the WAB, employers are allowed to offer a maximum of three temporary contracts in three years. After that, the employment contract is automatically considered permanent.
If an employee interrupts their employment for more than six months, the chain starts again. In collective labor agreements, this period can be reduced to three months for seasonal work.
4. Payroll structures: equal working conditions required
An employer who hires staff via a payroll company may no longer, since the WAB, take advantage of cheaper employment conditions. Payroll employees have the right to equal working conditions as employees in the service of the client, including salary, leave and pension.
This prevents unfair competition between permanent and flexible forces.
5. Lower unemployment insurance contribution for permanent contracts
Employers pay a lower unemployment insurance contribution for employees with a permanent contract than for flexible workers. The rationale is simple: permanent jobs are made more attractive. If an employee with a permanent contract leaves service within a year, the employer still has to pay the higher premium.
Despite the clear rules, things often go wrong in practice. The most common mistakes are:
- Not summoning or cancelling employees in a timely manner within four days
- Not making an offer after 12 months of on-call work
- Incorrect application of the chain rule
- Unequal treatment of payroll employees
- Inadequate calculation of transition compensation
These errors can lead to wage claims, fines or an unjustified dismissal that is annulled by the court.
Risks for employees
Employees also encounter risks. For example, someone who refuses a summons or doesn’t show up can lose their right to wages. And while the WAB provides more protection, the position of flexible workers remains vulnerable. Employees who have been working flexibly for a long time should seek legal advice on whether they now have the right to a permanent contract.
Tips for employers
- Document summoning periods and availability in writing
- Check the chain rule in your collective agreement
- Document summons, cancellations and hours worked
- After 12 months, make a timely offer of a fixed number of hours
- Ensure equal treatment of payroll employees
- Check each termination of employment for transition compensation
Tips for employees
- Keep all summons, emails and schedule changes
- Check whether you receive an offer for fixed hours after 12 months
- Request a written confirmation when your contract changes
- If in doubt about your legal position, let an employment lawyer take a look
Frequently asked questions about the WAB and flexible contracts
How many temporary contracts can my employer give me?
You can receive up to three temporary contracts in three years. After that, a permanent employment contract is automatically created unless there has been a break of more than six months.
What happens if my employer summons me too late?
If you are summoned later than four days in advance, you are not obliged to come to work. If the summons is cancelled within four days, you retain the right to wages.
Am I entitled to a transition fee with a temporary contract?
Yes, since the WAB, you have been entitled to a transition fee from the first day of work, even if your contract is not renewed.
What is the difference between payroll and temping work?
With payroll, the employee is formally employed by a payroll company, but works for one client. With temping work, employees can be deployed to multiple clients. Since the WAB, payroll employees have been entitled to the same employment conditions as permanent employees.
Arslan Advocaten assists with flexible contracts
Whether you are an employer or employee: the rules around the WAB are complex. The employment lawyers at Arslan Advocaten assist with the assessment of employment contracts, summons arrangements and dismissal issues. We also represent clients in procedures concerning wages, transition compensation and chain rule.
Would you like to know if your flexible contract complies with the WAB or are you doubting the legality of a summons? Contact our office for immediate legal advice.
