Dutch Government Clarifies and Relaxes Employer Requirements for UI Premium Discount

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We recently reported on a new law in the Netherlands that sets different unemployment insurance contribution rates depending on the type of employment contract used (WW-premiedifferentiatie).  Under the new law, the Dutch Balanced Labour Market Act (Wet arbeidsmarkt in balans (WAB)), starting January 1, 2020, employers will be able to save 5% on their unemployment insurance contributions for every employee working under an open-ended employment contract instead of a fixed-term contract. This will enable large companies in particular to make considerable savings every year.

The government, however, has imposed significant administrative demands on employers seeking to take advantage of this program, including the obligation for both parties to have a written and signed employment contract on file and to include certain information on the salary slip. You can find the exact conditions here. Many employers have had difficulty meeting these obligations because, for example, their policy was to extend employment contracts tacitly or by issuing a unilateral confirmation letter. They therefore have no written and signed employment contracts on file.

Fortunately, 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 stating it is sufficient for employees to be on an open-ended contract by December 31, 2019 at the latest. In addition, evidence of this may also be submitted using a digital signature, by email, or by inputting the information into an HR system.

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

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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