The WAB: the balanced labour market legislation
The WAB legislation is a continuation of the previous law ‘Wet Werk en Zekerheid’ (legislation labour and security) that went into effect in 2015. The intended objective for that law has not been met. The new law focuses on a less complicated dismissal law, extension of the chain legislation (ketenregeling) and making flex-workers financially less appealing. This is done by rewarding employers that offer permanent contracts and because the right for transition compensation goes into effect from the first workday and not after two years.
The adjustments affect the following matters:
- Dismissal law
- WW (unemployment law) premium for employers
- Transition compensation
- Chain legislation
- Equalisation payrollers
- On-call agreement
- Payroll administration will get more tasks
Below is an explanation for each point.
1. Dismissal law
The reason for dismissal will be expanded with the ‘cumulative basis’. This means that the concurrence of one of the eight existing reasons combined with a disruption of the labour relations. With this, smaller employers, that often did not compile a complete dismissal file, would still have the possibility to rely on the grounds for dismissal. The dismissal will need to be presented to a judge. Dismissal based on financial reasons will go through the UWV.
2. WW Premium will be dependent on period of contract
To counter the flexibilisation of the labour market, entering a labour agreement of indefinite time will be cheaper for the employer than a labour agreement for a certain time. The WW (unemployment law) premium for a labour agreement of indefinite time is 5% lower than all other cases. This is €5,- cheaper per €100 gross wages. The WW premium will be dependent on the contract duration and no longer on the business sectors. The employer that has various contract hours will have a high and low WW premium, starting on January 1st 2020.
3. Transition compensation
The Transition compensation will commence on day one of the employment. The accumulation for everyone is ⅓ of the gross monthly salary for each year of employment. The transition compensation will go into effect retroactively. This means that the time of employment before 2020 also count for contracts that end after January 2020.
Pay attention: If you are a small employer (less than 25 employees), you will receive the WAB compensation for transition compensations that you will need to pay if you terminate your enterprise because you are sick or you are going to retire.
4. Chain legislation
The chain legislation goes back to a maximum of three subsequent labour agreements in a maximum of three years. Breaking this chain is only possible when a break of six months in the employment occurs. It is, however, possible to reduce this six month term to three months in the collective agreement.
5. Equalisation payrollers
Payrollers will have the same rights as employers of the hirer in regards to primary and secondary labour conditions. The payroll provider will need to offer a pension plan that is equal to that of the arrangement of the hirer. The purpose of this equalisation is to prevent competition based on labour agreement arbitration. This means a difference in payment between the payroller and the employee of the hirer.
6. On-call contracts
The 0-hour agreement and min/max agreement remains. An on-call employee may refuse to work when an employer does not notify the employee of the work hours at least four days in advance. When the labour is cancelled the employer must pay out the agreed upon hours if this happens within four days of the agreed work. When an employee has worked for 12 months, the on-call employee will be entitled to an agreement of, at the least, the average amount of hours that the on-call employee has worked. The employer is obligated to offer this within a month.
7. Payroll administration will get more tasks.
Control and enforcement of the WAB legislation will primarily go through the payroll administration. This in in regards to:
- Copy agreement in payroll administration
Nature and length agreement on the payslip per January 1st 2020.
The payroller will need to add the nature and length of the agreement in the payroll administration. Therefore we will need to be provided with the contract per 01/01/2020 that has been signed by both parties (employer and employee)
With new labour agreement the following will need to be added to the payroll administration and tax:
- Whether or not it is an on-call agreement
- Whether or notthis is agreed upon in writing
- If the agreement is permanent or temporary
If the agreement is based on the standard annual hours*
- * Standard annual hours: A contract that has an even distribution of pay is not considered an on-call contract.
Pay attention: Revision pay calculation from low to high WW premium
When terminating the permanent agreement within two months or when more than 30% extra is paid out than was determined in the contract a revision takes place.