Works council involvement in workforce recruitment and contracting
On 3 November 2023, the Dutch Supreme Court ruled that employers must consult the Works Council on any proposed decision related to intragroup recruitment or contracting of workers. This applies even when the employer argues that the agreement with a temporary employment agency is routine or customary for the business.
The ruling clarifies that, regardless of whether the agreement is customary or exceptional, the employer must seek advice from the Works Council before proceeding with workforce recruitment or contracting decisions within the group.
(HR 3 november 2023, ECLI:NL:HR:2023:1514)
Dismissal of directors: Legal considerations
A significant case in 2024 has shed light on the dismissal of directors.
The Court of Appeal ruled on the dismissal of a director who failed to address workplace safety concerns. Despite successfully expanding the department, the director ignored multiple warnings about social safety issues. The court found the dismissal justified due to the director’s negligence in ensuring a safe work environment. This case emphasizes the importance of holding directors accountable for workplace safety.
(Hof Arnhem-Leeuwarden 15 juli 2024, ECLI:NL:GHARL:2024:4644)
Mandatory CO2 registration for employers
As of 1 July 2024, companies with 100 or more employees are required to report their business travel and employee commuting emissions to the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland). The first report, due by 30 June 2025, must cover data for either the second half of 2024 or the entire year. From 2026 onward, this reporting will become an annual requirement.
This regulation mandates accurate tracking of business travel and commuting emissions, aligning with the **Corporate Sustainability Reporting Directive (CSRD)**. Compliance requires establishing systems to collect and report data in line with government standards. Failure to comply may result in penalties or reputational damage. Proper compliance, however, can enhance sustainability efforts and reduce operational costs. It is essential to stay updated on further guidelines from the Netherlands Enterprise Agency to ensure ongoing compliance.
Minimum wage & work-from-home allowance increases
From 1 July 2024, the minimum hourly wage in the Netherlands has increased to €13.68. Employers need to ensure all employees aged 21 and over receive at least this amount, while youth minimum wages still apply for younger employees.
Additionally, the tax-free work-from-home allowance will increase to €2.40 per day in 2025. This is a small but significant increase that allows employers to support remote workers without tax implications.
AI Act: Protecting employees from AI risks
On 1 August 2024 the European Commission introduced the AI Act to regulate the use of AI technologies, particularly in employment, to address the risks associated with algorithmic decision-making. AI systems are increasingly used in recruitment, employee evaluations, and monitoring, but they present unique challenges. These systems may create unsafe working environments, promote bias, and lead to decisions that are difficult to explain due to the opaque nature of some algorithms.
The AI Act aims to mitigate these risks by categorizing AI systems into three risk levels:
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Prohibited AI Practices: AI systems used for harmful manipulation, unjust social scoring, or emotion recognition in sensitive environments, such as education, are banned.
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High-Risk AI: This includes AI systems used in work environments. These systems are subject to stringent requirements, including risk management, data quality, transparency, and oversight. Employers must ensure compliance with these requirements, as non-compliance will result in prohibition.
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Limited-Risk AI: AI systems that generate content or interact with users, such as chatbots, must clearly disclose their AI nature. Additionally, deepfakes must be labeled to ensure transparency.
Phased Implementation:
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February 2025: Provisions related to prohibited AI practices come into effect.
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August 2025: Oversight for general-purpose AI models begins, and registration mechanisms must be established.
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August 2026: Full enforcement of regulations for high-risk AI systems starts, ensuring comprehensive oversight in the workplace.
The AI Act will come into effect in the Netherlands and all member states without any implementation needed. We expect that the Dutch legislator may introduce additional requirements around AI for employees, potentially mandating works councils a specific role beyond the current advice and consent rights in respect of technology and employee monitoring.
Platform workers directive
On 11 March 2024, EU ministers agreed on the Directive on Platform Work, which introduces a presumption of employment for platform workers, shifting the burden of proof onto platforms to demonstrate that no employment relationship exists. The directive also ensures that significant decisions affecting platform workers, such as dismissals, cannot be made solely by algorithms.
The directive also includes provisions for the protection of platform workers' data, prohibiting digital platforms from processing personal information about workers' emotional states, beliefs, or psychological data. Member states have two years to integrate the directive into national law following its formal adoption.
End of self-employment enforcement freeze
As of 1 January 2025, the Dutch Tax Authority will resume enforcement against sham self-employment. Employers must reassess their relationships with freelancers to ensure compliance. Misclassifications could lead to retroactive corrections from 2025 onward, though only in cases of clear intent. However, there will be a one-year transition period where employers will not face penalties if they can show they are proactively addressing potential issues.
We recommend reviewing all freelance agreements before the year ends to avoid any compliance risks. We are available to assist in this process.
Clarifying employment relationships: New legislative proposal
The Dutch government is refining how employment relationships are defined, focusing on distinguishing employees from independent contractors. The proposed amendments to Article 7:610 of the Dutch Civil Code introduce three key elements:
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Employee Indicators: Work under supervision and organizational direction.
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Independent Contractor Indicators: Working at one’s own risk and expense.
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Entrepreneurial Status: If the above indicators are balanced, additional factors will determine whether the worker operates as an entrepreneur.
This proposal aims to clarify the difference between employment and freelance work, but it introduces stricter rules. For example, an interim manager who substitutes a regular employee could be classified as an employee under this framework. This could lead to retroactive reclassification for up to five years. While the law isn’t expected to take effect until 2026, businesses should start reviewing their contractor arrangements now.
Transparent and predictable employment conditions
On 22 September 2023, the Dutch Supreme Court expanded the employer's obligation to disclose information to employees. The ruling established that, while employers do not have an advisory duty on tax matters, they may still be required to inform employees of regulatory changes that affect their tax position.
This ruling places a far-reaching obligation on employers to provide transparency, even when the matter falls outside the typical scope of employment duties.
(HR 22 september 2023, ECLI:NL:HR:2023:1276)
Summary
These legislative developments could have far-reaching consequences for businesses operating in the Netherlands. We are here to help you navigate these changes and ensure compliance with the new rules. If you have any questions or need tailored advice, please feel free to reach out.
Stay tuned for more updates in 2025!
