On 9 February 2016 Minister Asscher of Social Affairs and Employment submitted a legislative proposal on the secondment of employees within the EU to the House of Representatives. This legislative proposal provides for an improved enforcement of the rules with regard to seconded employees within the EU and is an implementation of the new EU Enforcement Directive.
Based on the currently already applicable Posting of Workers Act - an implementation of the EU Posting of Workers Directive 96/71 - in the Netherlands, employees with an employment contract subject to foreign law, who are temporarily seconded to the Netherlands, are entitled to the 'hard core employment conditions and/or protection' in the Netherlands. These include minimum wage and holiday allowance, statutory holidays, working conditions and equal treatment, also if these are a result of an applicable mandatory collective labour agreement. This way, an Eastern European employee who temporarily works in the Netherlands under a contract subject to foreign law is entitled to these hard core employment conditions and/or protection of Dutch Law. This legislation doesn't only protect foreign employees, but also protects Dutch employees from unfair competition from 'low-pay countries'.
According to the Minister, practice has shown that rogue employers tried to find a way around the Posting of Workers Act in recent years. This is the most important reason to intensify enforcement of the Act. We shall point out the most important changes below.
- Firstly, the new Act does not apply to employees seconded to the Netherlands from non-EU Member States. Strangely enough, this is hardly mentioned in the Explanatory Memorandum to the legislative proposal. For example, US employees who are on secondment in the Netherlands are subsequently less protected as the hard code employment conditions and/or protection do not apply to these employees anymore as a result of the new legislative proposal. We expect this to be further discussed during the debate of the bill in the House of Representatives.
- Secondly, the legislative proposal introduces a duty of notification to the Social Affairs and Employment Inspectorate for service providers (including the self-employed in sectors such as the building industry and employment agencies, but also intra-group seconders). Prior to the secondment the service provider is required to notify when which individuals will perform which jobs. Furthermore the service provider has to have documents such as payslips, working hour statements, proof of payment, immediately available in the workplace (or immediately digitally retrievable). The service provider should also provide the name of a contact person so that the Social Affairs and Employment Inspectorate can contact such person in case of questions or lack of clarity.
- Thirdly, the new Act shall include an obligation to the recipient of the service to verify the notification of the service provider prior to the start of the work. With this verification the recipient of the service should not only check whether or not the notification has been completed, but also whether or not it has been done correctly.
The Social Affairs and Employment Inspectorate can impose a fine on the service provider and/or the recipient of the service if they fail to meet the requirements of the duty of notification and the duty to verify as described above. The amount of the penalty is related to the nature and the gravity of the offence and a number of other factors and can accumulate to EUR 20,250. Taking this into account, we consider there is a rather good chance the recipients of the service and the service providers will fulfil their duty to report and to verify.
Finally we point out that on 8 March 2016 the European Commission announced that the Posting of Workers Directive shall be amended. These changes are meant to increase the protection of seconded employees within the EU. Employees will not only be entitled to minimum wage of the country where they are on secondment, but also to all provisions (in mandatory collective labour agreements) with regard to pay, including, in our opinion, continued payment during illness. The European Commission also intends to grant the seconded employee within the EU, entitlement to all employment conditions of the country where they are on secondment after 24 months.
The aforementioned developments involve major changes which will continue to make it less appealing to service providers to employ employees from low-pay countries in the Netherlands. We shall closely monitor the developments for you.
For more information, please contact Cara Pronk.