The Supreme Court and compensation on grounds of fairness
In addition to the statutory transition payment that an employer must generally pay upon terminating an employment contract, the court may also award ‘reasonable compensation’ in cases where the employer is considered to have acted in a seriously culpable manner. This reasonable compensation is paid in that scenario to compensate the employee for the employer’s improper actions. Until now the exact method of calculating reasonable compensation has been unclear, particularly what factors were to be taken into consideration.
An order rendered by the Supreme Court on 30 June 2017, has shed some light on this. The Supreme Court indicated that the consequences the employee is facing because of the dismissal can play a part in establishing the amount of the reasonable compensation, where these consequences are attributable to the culpable actions of the employer. When determining reasonable compensation, all circumstances of the case must be taken into consideration.
In conclusion, the Supreme Court order provides the option for tailor-made calculations of reasonable compensation. However, its application will be limited to situations in which the employer’s culpable action has already been proven. In practice this will not so readily occur, meaning that in practice the amount of reasonable compensation will often remain a (wild) guess.
Legislative changes in 2017
Employers in transportation responsible for full wages
From 1 January 2017 a client or employer in the transport sector is responsible for an employee’s total wage even where the client or employer is a subcontractor.
Rationalisation of partial incapacity insurance contributions
As of 1 January 2017, both contributions to the ‘Insurance for partially incapacitated employees (‘WGA’) fixed and flexible, are integrated into one contribution.
Lowering the age at which employees are entitled to adult minimum wage
The age for entitlement to the adult minimum wage was lowered to 22 in 2017: as of 1 July 2017, 22-year-olds are entitled to 100% of the full statutory minimum wage. The wage for employees between the ages of 18 and 21 was also increased. From 1 January 2018, a 21-year-old is entitled to 100% of the full statutory minimum wage.
Youth with occupational impairments
The Participation Act and the Jobs Agreement Act were simplified in 2017. It is now easier for companies to hire young people out of secondary education pursuant to the Jobs Agreement, since they can be placed on the target register (a national register containing all persons falling within the scope of the Jobs Agreement) by the UWV, the employee insurance agency, without a prior assessment. It has also been made possible to request a wage subsidy for young people already employed by the employer who are not making the minimum wage.
Adjustment to the Working Conditions Act
Further increase to the state pensionable age (AOW)
From 1 January 2017, the pensionable age was raised to 65 years plus 9 months. Every year the pensionable age is increased by three months. In 2018, therefore, it will be 66 years and by 2021, the state pensionable age will be 67.
Increase to transition payment
The maximum statutory transition payment was raised to EUR 77,000 in 2017 and increased to EUR 79,000 in 2018.