Gerard Zuidgeest

Article 7:653a of the Civil Code dictates that an employer may not prohibit or restrict an employee from performing ancillary activities  unless there is an objective reason for doing so. How does this clause work in practice, specifically when an employee is sick?    The effect of the ancillary activities clause  Ancillary activities are activities that an employee performs outside of his work. In principle, ancillary activities are permitted. In practice, the clause often includes the condition that an employee may only perform ancillary activities with the prior consent of the employer.  The employer may only refuse such consent if he has an objective justification. Examples of such an objective justification included in the law are:  the health and safety of the employee;  the protection of confidentiality of company information;  the integrity of public services;  the avoidance of conflicts of interest; and  the violation of a legal requirement.   The employer does not have to include the objective reason in the employment contract but must provide it when invoking the agreed-upon clause.  Performing ancillary activities during illness  Suppose an employee is sick and the employer finds out that this employee is performing ancillary activities. How does a judge rule in such a situation? In a case before the District Court of The Hague, an employee of the municipality of Amsterdam reports in sick. This employee is receiving  benefits due to occupational disability of 80-100%.   In July 2022, this employee reports in sick for her reintegration work due to a corona infection. The employer submits a termination request to the Netherlands Employees Insurance Agency (UWV) due to  long-term disability, but it is rejected because recovery is considered possible within 26 weeks. In October 2023, the employer again applies for a dismissal permit, which is then rejected because it turns out that the employee has been performing similar work at the Municipality of Rotterdam. An integrity investigation follows which shows that the employee has been working 24 hours a week at the Municipality of Rotterdam , which she did not report as stated in the absence protocol and code of conduct of the Municipality of Amsterdam. The Subdistrict Court ruled that the employee had violated Section 8 of the Civil Servants Act, which constitutes a breach of contract. The employee should have reported her intention to enter the service of the Municipality of Rotterdam. The employee should also explicitly have  asked permission to do so, and should have reported this to the company doctor. What was reported by the company doctor cannot be interpreted in any other way than that there was (a degree of) intent on the part of the employee to mislead the company doctor and therefore also the municipality. The overpaid wages must be repaid by the employee (Section 7:629 (5) of the Dutch Civil Code). The employment contract is terminated, without awarding the transitional compensation.  Practical tips for employers  Although the inclusion an ancillary activities clause employee may be important, an employer can also take steps in the situation where no clause is agreed upon but the employee does perform ancillary activities  during illness. The employer has several options depending on the situation. The employer may have grounds to  dismiss the employee either by instant dismissal or through a termination  procedure in court. In the latter case, the employer can choose to terminate  the employment contract for breach of contract. The options are highly intertwined with the circumstances of the case; in some cases, the employer has to tolerate that the sick employee also performs work elsewhere.  Contact Would you like to know more about ancillary activities? Feel free to contact Gerard Zuidgeest, Rose Horstman or one of our other specialists in employment law. Do you have another question? With expertise in eighteen areas of law, La Gro is happy to assist  you.

It is often assumed that Dutch employment law requires an employer to initiate a mediation process before an employment contract can be terminated  on the grounds of irreconcilable differences in the employment relationship (the g-ground).  Such a requirement is based on  case law, where mediation is often deemed necessary as an effort that can be expected of an employer in order to restore the relationship. But is mediation always mandatory, or can the employer in some cases make a plausible case that there is no longer any point in initiating mediation?  The Court of Appeal of Den Bosch recently ruled that in that specific case an attempt at mediation was not  necessary. The case in question involved a small organisation with only six employees. The employee had been hired as a driver, with the prospect of becoming a shareholder. However, it soon became apparent that this partnership would not succeed. The employee had scolded his supervisor stating he was a  “bad manager” and the employee had been working under the influence of drugs. The employee claimed that his behavior stemmed from a lack of recognition, while the employer proposed a personal improvement plan. The employee refused to cooperate with this plan. He had also called in sick; the company doctor recommended mediation. Eventually, the employer proposed a settlement agreement to end the employment agreement, but an agreement could  not be reached.   The employer petitioned the subdistrict court to terminate  the employment contract because of a disrupted working relationship. The employee argued that the elements to terminate the employment agreement due to irreconcilable differences (g-ground) was not sufficient because no mediation had taken place, despite the company doctor’s advice.  The appellate court ruled that mediation was  not mandatory in this situation. The appellate court ruled that the relationship between the parties had hardened to such an extent that mediation had no chance of success. The size of the organisation also played a role: with only six employees, re-employment or avoidance of contact between the parties was impossible. The court emphasized that an employer is not obliged to start a mediation process “against his better judgment,” even if the company doctor advises it. According to the court, the company doctor’s advice in this case was a standard response, without knowledge of the actual gravity of the situation.  Practical implications   This ruling seems to be an exception to the general line in case law, where mediation is often seen as necessary. Especially if the company doctor advises mediation, since an employer will want to avoid being blamed for ignoring the advice of the company doctor in the context of illness.  At the same time, this case is quite common in  practice. In many cases it is quite clear that an employment relationship has been disrupted to such an extent that recovery seems out of the question. This ruling  may well set a precedent for smaller employers. However, it remains important to consider whether mediation can be useful in a particular case. If an employer skips mediation too easily, he runs the risk of a termination request being denied and having to (temporarily) retain the employee in question or to pay a high termination fee.  Do not come to the conclusion too quickly that no mediation needs to take place.    Practical tips for employers  Evaluate the situation carefully: seriously consider whether mediation really does or doesn’t have  a chance of success; it should not be ruled out too quickly; Document well: if mediation is not an option, make sure you can justify and corroborate this, such as with correspondence or statements about the seriousness of the situation.  Smaller organisations:  an additional argument for skipping mediation may be found in the fact that contact between severing quarreling colleagues cannot be prevented due to the size of the organization. In larger organizations, however, transfer will often be a possible outcome and thus mediation will more often be an obligation to which the employer must cooperate.  Company doctor’s advice: while the advice of a company doctor to start mediation is important, an employer does not always have to blindly go along with it if it is clear that the prospects of reconciliation are highly unlikely.  How can La Gro be of assistance?  Feel free to contact Gerard Zuidgeest, Jaap Harrijvan or one of our other specialists in employment law. Do you have another question? With expertise in eighteen areas of law, La Gro is happy to assist  you.

Most employment contracts include a confidentiality clause. Under such a clause, the employee is obliged to keep sensitive company information confidential. It may happen that an employee downloads confidential and sensitive data, for example on his private laptop or phone. This could have major consequences for the employee.  Case Law  In a recent case before the District Court of Gelderland, both a confidentiality clause and a penalty clause had been agreed upon in the employee’s employment contract. The employer had informed the employee that he was dissatisfied with the employee’s performance and intended to terminate the employment relationship. A few days after the employer presented the employee with a settlement agreement, the employer received a security alert from Microsoft due to suspicious activity on the employee’s account.   When questioning the employee regarding the suspicious activities, it appeared that the employee had downloaded company files on his private laptop. The employee feared being excluded from access to his work environment and therefore could not defend himself against the alleged underperformance at work. However, the employee had downloaded a significant amount of files including reports from the company physician and performance of other staff members subordinate to employee.  The judge ruled that downloading all of this company-sensitive information was culpable. The employee thereby seriously damaged the employer’s trust. However, the high bar of serious culpability was not met because, in the judge’s opinion, the employee did not act intentionally to harm the employer.   In a recent similar case before the Court of Appeal in The Hague, an employee had also downloaded confidential and sensitive company information for the purpose of his defense at the the Netherlands Employees Insurance Agency (UWV). In this case it was not established whether the employee had only downloaded information which he could use for the procedure or also other (confidential) documents. The immediate dismissal by the employer was upheld.  Practical tips for employers  As an employer, it is wise to check whether an employee has downloaded information in the context of a dismissal case. Because the verification should not violate the General data protection regulation (AVG), it is good to have a policy in place when certain information may be checked. Sending confidential information can constitute  a violation of the confidentiality clause. If the employment contract includes a penalty clause for this circumstance, the employer can impose a fine on the employee.  It is wise to design the confidentiality clause so that even sending company information to employees’ own accounts counts as a violation.  Can La Gro be of assistance?   Do you have a question about confidentiality and protecting company information? Feel free to contact Gerard Zuidgeest, Rose Horstman or one of our other specialists in employment law. Do you have another question? With expertise in eighteen areas of law, La Gro is happy to assist  you.

Heads-up: there has been an update on this subject. The Dutch Tax authority has taken mitigating measures, softening the blow from enforcement in 2025. As of January 1, 2025, the Dutch tax authority will fully enforce on pseudo self-employment. For every client who works with freelancers and where the freelancer can actually be considered an employee, this enforcement on false self-employment can have major legal and tax consequences. What is pseudo self-employment? Pseudo self-employment means that a contractor is formally regarded as self-employed, but in practice works under circumstances that are more similar to an employment contract. This can be the case, for example, if the contractor works side-by-side with your own employees and has little control over his prices, working hours and the way he should perform the work. With pseudo self-employment, actual independence is often lacking, such as own investments, own acquisition, multiple clients or bearing (financial) entrepreneurial risk. This can lead to disguised employment, where the employment relationship meets the legal characteristics of an employment contract. Risks in pseudo self-employment The tax authorities play an important role in the assessment of pseudo self-employment. They look  whether the criteria for an employment contract are actually met, namely authority, personal work and a (fixed) payment. The agreements you have made with the self-employed person, for example that no employment is intended, are therefore not decisive. If false self-employment is established, the tax authority can hold both the client and the self-employed person liable. This often leads to retroactive levies of payroll tax and social security contributions, as well as possible fines. In addition, the self-employed can successfully claim the rights of an employee, such as dismissal protection and continued payment of wages during illness. For clients, the financial and legal consequences are significant, which emphasizes the importance of carefully assessing the employment relationship. “VBAR” Act The case law surrounding pseudo self-employment has been evolving in recent years. More test criteria are determined and more and more often conclusions are drawn that there is an employment contract, regardless of contracts to the contrary. These developments have led to the legislative bill Verduidelijking Beoordeling Arbeidsrelaties en Rechtsvermoeden (VBAR), which will (possibly) take effect on January first, 2026. Practical consequences Although the VBAR Act is not yet in place, the tax authority is drawing its own plan. As of January first, 2025 the Dutch tax authority will fully enforce on pseudo self-employment. This means that all organizations (companies, but also governments and health care institutions) that employ self-employed workers for work that should actually be done as employees, can expect fines and additional taxes up to a maximum of 5 years back. Relevant to note is that the lifting of the enforcement moratorium has no retroactive effect. The tax authorities will not check for employment relationships that were not properly qualified before January first, 2025 (barring malicious situations). Furthermore, there will be a transition period of one year during which clients will not yet be fined if they demonstrate that they are taking measures against false self-employment. Think for example of processes aimed at reducing the number of abusive self-employed relationships or converting these self-employed relationships into employment. Advice: check your pseudo self-employed As a result of the lifting of the enforcement moratorium, as of January 1 2025, you will be at immediate risk if assignment relationships with self-employed persons in practice contain characteristics of an employment relationship. It is therefore important to take action now and take stock of your collaborations with self-employed persons and adjust them where necessary and possible. We would like to give you a step-by-step plan to check the collaborations and take measures: 1) Make an inventory of all people working for your organization on the basis of a contract of assignment, including positions (core, staff or “company alien”), nature, scope and duration of the assignment and rate agreements; 2) Assess for each self-employed person what contractual arrangements have been made, whether they are being followed, and to what extent the self-employed person is integrated into your organization; 3) Assess the degree of entrepreneurship of the self-employed person, such as what financial risks does he run when performing the assignment and does he work for multiple clients; 4) Act on conclusions, engage with your freelancers and maintain the relationship as self-employed, hire through an agency or reform to employee; 5) Adjust your contracts. You can use current model agreements from the tax authority for now, but be aware that these model agreements are limited in content. Crucial topics such as liability, specifically if it is judged that there is a disguised employment relationship, are missing in them. In view of the new legislation, it is also better not to conclude assignment agreements with self-employed persons for an indefinite period of time. Would you like to know more about the upcoming enforcement by the tax authorities? Expertise in 18 legal fields enables La Gro to offer broad legal assistance. Feel free to contact Angela van der Does-Mekes en Gerard Zuidgeest or one of our other specialist colleagues.   

Dutch labour law is complex and changes constantly. This is challenging for employers, as it requires a sharp and forward-thinking approach. La Gro is forward-thinking and actively informs its relations about developments regarding labour law with the aim to fully unburden you, so that your business can remain your top priority. La Gro regularly shares insights in various legal fields, because we believe that this is the key to growth. This quarterly report aims to give a brief overview of important labour law developments in the last quarter. It also looks ahead to developments that may require action from employers. If you would like to receive the quarterly report automatically via email fill out the form below.  Legislative developments Further regulation of non-compete clauses expected A legislative proposal outlines the way in which the use of non-compete clauses might soon be regulated. The internet consultation phase for this proposal has now been completed. The proposal is expected to significantly change the agreement and enforcement of non-compete clauses in new employment contracts. Click here for more information on this topic. Newly proposed rules with regard to transfer of employees in the event of bankruptcy A new legislative proposal regulates the transfer of employees when a bankrupt company is taken over. The proposal leaves room for an objective and transparent method of partial transfer of employees due to business economic reasons and regulates non-competes and the consultation of employees  in such transfers.  Click here for more information on this topic. Proposed mourning leave Coinciding with a broader intention to reshape special leave legislation, a separate legislative proposal aims to introduce an entirely new form of leave: mourning leave. This form of leave would extend the current leave  between passing and funeral and would set a minimum standard of five days in case of loss of partner or minor child.  Click here for more information on this topic. Case law developments Clarification of Xella case law If a long-term sick employee whose employment contract can be lawfully terminated so requests, the employer must cooperate with the termination of the employment agreement, except in exceptional cases. The Supreme Court now clarifies the way in which the existence of such an exception must be assessed. You can read more about this ruling here. Relationship clause violates Waadi  In a recent ruling, the Court of Appeal in Den Bosch has declared an employee’s relationship clause null and void after the work was found to be temporary agency work. The ruling contains important lessons about temporary agency work, relationship clauses and the effect of European law on labour contracts.  To learn more, click here.    Sick pay does not require a sickness notification by the employee  After an employer can reasonably know that an employee is sick, the correct actions must be taken. Any (unintentional) violation of legal obligations can cost an employer dearly. Recently, the Court of Appeals in The Hague assessed whether calling-in sick is relevant with regards to those obligations. Read more about this ruling here.  Labour market developments Labour shortage remains   The Dutch labour market remains in a shortage, but labour market tension eased slightly in Q1 of 2024. The ratio of job vacancies for every 100 unemployed fell to 110, compared to 114 vacancies in Q4 of 2023. Unemployment rose slightly to 3,7%. Increase of wages at the start of Q3 Many employees will see their wages increase per 1 July 2024. Many collective labour agreements stipulate such increases. On the same day, the statutory minimum wage for all employees will also increase by 3,08%. Employers will need to update their salary administration where necessary. For more information on the correct payment of (minimum) wages, click here. Effects of the coalition agreement 177 days after the general elections, four political parties have reached a coalition agreement. The main proposals with regards to the labour market are: lower taxes on labour, more commitment to permanent contracts, reduction of the maximum unemployment benefit to 18 months, continuation of major pending legislative proposals (including the Vbar, the Wtta and the modernisation of the compete clauses) and limitation of compensation of transition payments to small employers. The coalition agreement contains no proposals to change the dismissal system. How can La Gro be of assistance?  The second quarter of 2024 brings many new developments in the field of employment law but also other areas of Dutch law. Are you curious about what recent developments mean for your organisation? Do you have a pressing matter within your organisation? With extensive knowledge in eighteen areas of law, La Gro is perfectly positioned to assist in a broad spectrum of legal challenges within you business. Please feel free to contact any of our experts to inquire about the possibilities. We would be more than happy to assist you.

In the Netherlands, the minimum wage is regulated by the Minimum Wage and Minimum Holiday Allowance Act (“WML”). This does not cover employees working outside the Netherlands, unless they live in the Netherlands and their employer is also based here. Workers under 21 years of age are eligible for a percentage of the adult minimum wage and no minimum wage applies to workers under 18 years of age.  Until 1 January 2024, a monthly minimum wage applied (based on a maximum of 40 hours per week). As a result, the minimum wage per hour varied per sector because  in different sectors varying weekly work hours apply. From 1 January 2024, minimum wage is calculated by the hour. This makes abuse of authority and underpayment more apparent. The new minimum hourly wage is based on a 36-hour work week. Employees who work(ed) 40 hours a week therefore saw an additional increase in their minimum wage on a monthly basis, although it remains possible to compensate extra work hours with paid time off, provided this is covered in the collective bargaining agreement and agreed to in writing.  The minimum wage is a gross sum adjusted on 1 January and 1 July each year, usually according to the percentage change in contract wages in different sectors. After sharp increases in 2023, the minimum wage was increased with another 3.75% on 1 January 2024.  Many employees will see their wages rise again per 1 July 2024. Collective bargaining agreements usually provide for such increases, and not just for employees earning the minimum wage. But also for employees without a collective bargaining agreement, the legal minimum wage will increase by 3.08%.   Employers will therefore need to adjust their payroll where necessary to meet the new statutory minimum wages. In doing so, they must take into account the correct calculation of the minimum wage. Only certain (purely financial) wage components count toward the calculation of the minimum wage; income in kind and certain financial income components, such as vacation allowances and year-end bonuses, do not count. Furthermore, necessary expenses related to the employment may not be charged to the employee if this brings the wage below the minimum.   Employees that work more than the stipulated amount of hours (for example, 40 hours while the collective bargaining agreement requires 36 hours), will have to be compensated by their employers.   Improper payment of (minimum) wages can have financial consequences for employers. If an employee has received too little wages, he can claim the difference for up to five years after the fact. That includes salary payments below minimum wage. Such late salary payments may also be subject to a statutory increase, which can amount to 50% of the original salary amount. Furthermore, the Dutch Labor Inspectorate (Nederlandse Arbeidsinspectie) can impose administrative fines for non-compliance and in certain cases even shut down operations for three months in case of non-compliance with the WML.   How can La Gro be of assistance?  Do you have a question about (minimum) wage payment in the Netherlands? Are you confronted with a wage claim? Do you have a different question? Expertise in 18 legal fields enables La Gro to offer broad legal assistance. Feel free to contact Gerard Zuidgeest or one of my specialist colleagues.