Newsflash! Clarity and leniency re contribution differentiation for unemployment insurance

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We recently informed you about the contribution differentiation for unemployment insurance (WW-premiedifferentiatie) that allows employers to pay lower unemployment insurance contributions (in Dutch: WW-premie). Based on this stimulus which is to be introduced along with the Dutch Balanced labor Market Act (Wet arbeidsmarkt in balans (WAB)) on 1 January 2020, employers will be able to save 5% of their unemployment insurance contributions for every employee on an open-ended employment contract. This will enable big companies in particular to make considerable savings every year.

However, the government has imposed considerably higher administrative demands for employers making use of this scheme, including the obligation for both parties to have a written and signed employment contract on file and to include certain things on the salary slip. You can find the exact conditions here. We see that many clients have already struggled with this, for example because their policy was to extend employment contracts tacitly or by issuing a unilateral confirmation letter. This meant that they did not have any written and signed employment contracts.

Fortunately, however, the Ministry of Social Affairs and Employment has now provided clarity by issuing an update on the Information Document on Contribution Differentiation for Unemployment Insurance (in Dutch: Kennisdocument Premiedifferentiatie WW); this is an addendum that states that it is sufficient for employees to be on an open-ended contract by 31 December 2019 at the latest. In addition, evidence of this may also be submitted using a digital signature or by email or by inputting it into an HR system.

A leniency scheme has also been introduced that gives employers some more “breathing space”. Under this scheme, the administrative requirements for lower unemployment contributions only have to be met by 1 April 2020. This will make it easier for employers to satisfy the requirements and it will considerably reduce their additional administrative burden.

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About the author

Eric van Dam

+31 (0)6 101 72 222

evd@clintlittler.com

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