Netherlands

A person who performs work for the benefit of another for remuneration by the other party for three successive months, every week and for a minimum of twenty hours per month, is presumed to perform this work by virtue of a contract of employment.

How do you define an employment contract?

A contract in which the one party, the employee, undertakes in the service of the other party, the employer, to perform work for remuneration for a certain period.

What does an employment contract need to contain?

The employer is obliged to provide the employee with a written list which contains the following information as a minimum:

the name and address of the partie

the place or places where the work is performed

the post of the employee or the nature of his work

the time of entering into service

if the contract has been entered into for a fixed period the duration of the contract

the entitlement to holiday leave or the manner of calculating that entitlement

the duration of the period of notice to be taken into consideration by the parties or the method of calculating these periods of notice;

the remuneration and the dates on which payment is made and if the remuneration depends on the outcome of the performance of the work, the amount of work to be done by day or by week, the price per unit and the time reasonably involved in the execution;

usual working hours per day or per week;

whether or not the employee will participate in a pension scheme;

if the employee is to work for a longer period than a month outside the Netherlands, the duration of that work, the accommodation, the applicability of Dutch social security legislation or a statement from the bodies responsible for implementing that legislation, the currency in which payment will take place, the remuneration to which the employee is entitled and the way in which his return has been arranged

the collective agreement that applies or the scheme by or on behalf of a competent administrative body

whether the contract of employment is a temporary agency contract

Is there a legal requirement to provide an employee with a written contract and if so, when does this have to be provided?

Yes. The employer issues a statement within a month of the commencement of the work or earlier if the contract terminates.

How would you define a redundancy/economic dismissal?

Changes in the circumstances which are such that the contract of employment in all fairness should be terminated immediately or at short notice.

What is the procedure that an employer must follow when making an employee redundant/or dismissing on economic grounds?

An employer who wishes to terminate the employment of one of his employees may file a petition with the Subdistrict Court for rescission of the employment agreement.

An employment agreement may be rescinded on one of the following grounds:

such behaviour of the other party as would have warranted a termination of his employment with immediate effect for an ‘urgent reason'

changed circumstances of such nature that the employment agreement should reasonably come to an end immediately or within a short period of time.

‘Changed circumstances’ are generally considered to cover all conceivable grounds for termination. Although the court may reject a petition for rescission because of lack of evidence or because termination is not reasonable in the given circumstances, a petition is hardly ever rejected on the technical ground that the facts submitted tot the court as the basis of the petition do not constitute ‘changed circumstances’ within the meaning of the law.

There is no appeal from decisions of the Subdistrict Court on petitions for rescission.

At its discretion the court may decide that the petition will be granted if one party pays a certain amount of compensation, specified in the decision, to the other. Normally, the party which is to pay the compensation is allowed a period of two weeks to withdraw the petition if the amount of the compensation is considered too high.

The court may grant compensation to the employee at the expense of the former employer, the amount of which is set in the following way:

remuneration = A x B x C, in which

- A = the number of weighted years of service;

- B = the remuneration;

- C = the correction factor.

For the calculation of A (the number of weighted years of service) the years of service are rounded off to whole years. The years of service are then weighted in the following way: years of service before the age of forty count for 1, from forty to fifty for 1.5 and every year of service as of fifty counts for 2.

In calculating B (remuneration) the point of departure is the gross monthly salary, in any event increased by the fixed and agreed wage components such as holiday allowance, a fixed thirteenth month, a structural overtime compensation and a permanent shift allowance.

The correction factor (C). If a ground for termination is entirely in the risk domain of the employer and there is no cause for blame, the correction factor C is 1. If the ground for termination is entirely in the risk domain of the employee, without there being any cause for blame, then the correction factor is equal to 0. If there is a cause for blame on the part of one of the parties or if there is mutual cause for blame, then the seriousness of the blame is expressed by means of the C factor. The other special circumstances of the case are expressed by applying the C factor.

Do you have laws against discrimination, if so, what types of discrimination do you have and how are they defined?

Yes. Section 1 subsection 3 of the Collective Agreement Act. The stipulation obliging an employer to employ workers of a certain race or of a certain religion, ideology or political conviction or members of a certain association or which obliges him to refuse to employ them, is invalid.

Article 14 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR): the enjoyment of the rights and freedoms given in the Convention have to be assured without any without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.

Section 7:1 Decree on dismissal: In applying sections 4:1 to 5:2 inclusive the legal affairs officer pays extra attention to combating discrimination.

Do you recognise harassment and again, how is this defined?

Sexual intimidation, sexual harassment, requests for sexual favours or other verbal, non-verbal or physical behaviour, where the following points arise:

subjection to such behaviour is either explicitly or implicitly used as a condition for employing a person;

subjection to or rejection of such behaviour by a person is used as a basis for decisions that affect the work of that person;

such behaviour has the aim of impairing the performance at work of the person and/or creating an intimidating, hostile or unpleasant working environment or has the consequence that the performance or work by the person is impaired or that an intimidating, hostile or unpleasant working environment is created.

What can an employee do about discrimination?

Report to the Labour Inspectorate.

What is an unfair dismissal?

Termination of the contract of employment by the employer will be deemed to be apparently unreasonable in the following cases among others:

if this is done without giving reasons or giving a pretext or false reason;
when, bearing in mind the provisions that have been made for the employee and the possibilities of him or her finding other suitable work, the consequences of terminating the contract for him or her are too serious by comparison with the interests of the employer in terminating the contract;

if this occurs in connection with the employee being prevented from performing the stipulated work as referred to in section 7:670 subsection 3 Civil Code;

if this is done in derogation from a ratio or seniority arrangement which applies in the branch or industry or in the company by virtue of a statutory arrangement or in common practice, unless there are other weighty reasons to be considered;

if this is done because the employee refuses to carry out the stipulated work appealing to a serious conscientious objection.

What can an employee do about an unfair dismissal?

Institute a claim for compensation.

If a dismissal is found to be unfair, what compensation can the employee obtain?

The court may grant compensation to the employee at the expense of the former employer, the amount of which is set in the following way:

remuneration = A x B x C, in which
- A = the number of weighted years of service;
- B = the remuneration;
- C = the correction factor.

Do you have collective/trade union law?

No but there are collective bargaining agreements-see below.

If so, what rights does an employee have?

See below

Does the employer have to accept collective/trade union law?

There are no trade union laws. There are, though, collective bargaining agreements. A collective bargaining agreement is an agreement between one or more employers or employers’ associations and one or more trade unions in which rules are give for employment conditions which have to be observed in employment agreements.

The most important feature of a collective bargaining agreement is its so-called ‘normative’ effect. A collective bargaining agreement is binding upon an employer or an employee if the employer or employee is or becomes a member of an association or union which is a party to the collective bargaining agreement. A provision in a collective bargaining agreement on employment conditions which are intended to be applied to individual employment agreements is automatically (without further individual agreement) and as a mandatory provision (an individual agreement in deviation from it is void) applicable to an employment relationship between an employer and an employee who are both members of parties to the collective bargaining agreement. Collective bargaining agreements also have effect on employment agreements with employees who are not members of the union or unions which is or are party to the collective bargaining agreement. However, the normative provisions of the collective bargaining agreement are not automatically and by way of mandatory provisions part of the individual employment agreement with an ‘unorganised’ employee. In practice, however, an ‘organised’employer will treat his employees equally irrespective of whether there are members of the trade union(s) which is (or are) party to the collective bargaining agreement.

A collective bargaining agreement may be declared generally applicable. The Minister of Social Affairs and Employment may, at the request of one or more parties to a collective bargaining agreement, declare provisions from such agreement, which already apply to an important majority of employees working in one sector of industry, generally applicable for all employers and employees in that sector.

Can any individual from another country come and work in your country?

Yes.

If so, is there immigration controls/work permits that need to be applied for?

EU/EER Citizens:

No Residence permit is needed for employment in the Netherlands. However, it may be useful to have one as other authorities may request it, for example to open a bank account.

EU citizens from Cypres and Malta need a residence permit. EU citizens from Estonia, Hungary, Latvia, Poland, Slovenia, Czech and Slovakia need a residence permit and a work permit. Applications for residence permits are to be submitted to the Aliens desk at any Town Hall.

Non EU/EER Citizens

The employee needs both an authorisation for temporary stay (MVV) and a work permit. Applications for an MVV should be submitted to the Immigration and Naturalisation Service (IND). Applications for a work permit should be submitted to the Centre for Work and Income (CWI)

What criteria are used for any such applications?

A work permit is refused if there is supply on the labour market available which is given priority for the job in question. A work permit can be refused if the employer cannot demonstrate that he has made sufficient effort to fill the post with supply on the labour market enjoying priority.

What does an employer have to do if he receives an application from someone who is not a national in your country for a job?

Work permit to be applied for at the Minister of Social Affairs and Employment.

What is the tax position for a foreign employee?

The same as that of Dutch nationals. In individual cases the Minister of Finance can grant a franchise of 35% on the rate of income tax. This applies in particular for senior international officials.

Are employees protected in the event of a sale or a purchase of a business?

Yes.

If so, what rights do employees have and what can they do about it?

Yes, as a result of the take-over of an enterprise the rights and obligations applying at that point in time to the employer in that company deriving from a contract of employment between him and an employee working in that company are legally transferred to the party acquiring the company.

Nevertheless the employer continues to be personally committed for another year after the transfer alongside the acquirer for compliance with the obligations in the contract of employment and which arose prior to that date.

What does the employer have to do in the event of a sale or a purchase of a business which includes employees?

As emerges from the reply to question 22, the contract of employment legally devolves to the acquirer.

What is the position regarding agents in your country, briefly outline how agents are dealt with and what documentation is required.

A commercial agency agreement exists if the following criteria are met:

The agent is self employed. If the agent is a natural person and not a legal entity and especially if he represents only one principal, an agent will be considered an employee (and the agreement between agent and principal an employment agreement) if it is clear that there is a relation of authority between principal and agent. Not the wording used in the contract, but the actual relation between the parties is decisive for the qualification as agency or as employment agreement. Qualification as an employment agreement may have serious consequences for the principal who may be held liable to pay taxes and social security premiums;

The relationship between agent and principal is not of and incidental nature

The agent acts as an intermediary in the conclusion of contracts between the principal and third parties or he concludes contracts in the name and for the account of the principal. This means there will be no contract between the third party and the agent but only between the principal and the third party

Written document

Each party to the agency agreement must provide the other party at its request with a
signed document setting out the then existing terms of the agency agreement.

Due care and information

The agent must properly look after its principal’s interests and follow his reasonable instructions. The agent must provide all necessary information to the principal, in particular all contracts negotiated or concluded on his behalf.

‘Delcredere’

The agent can assume liability for the proper performance by third parties of their contractual obligations vis-à vis the principal. Such liability can only be undertaken in writing. The liability is restricted to the amount of the commission to which the agent is entitled in respect of the relevant contract. If, however, the agent, on behalf of his principal, has himself entered into a contract with a third party, his liability may exceed the amount of the commission but the courts may mitigate the amount of such liability.

Duties of the principal

The principal must do everything to enable the agent to carry out his work. In particular, the principal must provide the agent with the necessary documentation regarding the products and/or services and give him all necessary information. He must notify the agent immediately when he anticipates that the volume of transactions will be significantly lower than the agent could expect. He must also inform the agent within a reasonable period of his acceptance, refusal or non-performance of a transaction procured by the agent.

Commission after termination

The agent is entitled to a commission with respect to preparatory work for contracts
which are concluded after the termination of the agency agreement:

(1) if these contracts are concluded mainly as a result of the agent’s actions and within a reasonable periode after the termination of the agency agreement; or

(2) if the order of the third party reached the agent or the principal before such

termination.

Performance by third party

The principal can stipulate that a commission will only be due if the third party has performed his contractual obligations, provided, however, such stipulation has been explicitly made.

Statement of commissions due and control

The principal is obliged to provide the agent with a monthly written statement of the commissions due, unless the parties agree that such a statement must be provided every two or three months. The agent is entitled to inspect the underlying evidence and tot hire an expert for this pupose. The agent must keep the evidence confidential.

Minimum notice period

The notice period must be at least one month for the first year of the agency agreement, two months for the second year and three months for the third and subsequent years. If the parties have agreed on longer notice periods, these may not be shorter for the principal than for the agent. If an agent is a natural person and does not have more that two principals, the agency agreement can only be terminated after by the court or if termination takes place for ‘urgent reasons’.

Termination for ‘urgent reasons’

The party which terminates the agreement:

before the agreed term has expired’ or

without observance of the statutory or agreed notice period; and

without the consent of the other party,

is liable for damages, unless the termination is based on an ‘urgent reason’; the law gives definition of an ‘urgent reason’: circumstances of such a nature that the terminating party cannot reasonbaly be required to continue the agreement, not even temporarily.

If the agreement is terminated for ugent reasons for which the other party is to blame, this other party will be liable for damages. A clause which leaves the decision about the ‘urgency’of the reason to none of the parties, is void.

Compensation

In case of termination for ‘urgent reasons’by either party or by the court, compensation as referred to can be claimed in the form of an amout equal to the commission which would have been earned during the notce period - an amount which may be mitigated by the court - or in the form of complete compensation for damages incurred, in which case the claimant will have to prove the extent of such damages.

Restraint of trade clause

A restraint of trade clause is only valid if it is in writing and if it realtes to the kind of products and/or services, territory and group of customers covered by the agency. The principal cannot invoke a restraint of trade clause:

(1) if the principal has terminated the agreement without consent of the agent without observance of the legal or agreed term and without an ‘urgent reason’, immediately notified to the agent;

(2) if the agent ahs terminated the agreement for an ‘urgent reason’, immediately notified to the principal, for which the principal is to blame

if the court has terminated the agreement based on circumstances for which the principal is to blame.

The Subdistrict Court can mitigate or completely set aside the restraint of trade clause. The court may also mitigate any contractual penalties due in case of violation of the restraint of trade clause.

Special protection of agent’s commission

The following provisions are partly mandatory in the sense that they may not be deviated from to the detriment of the agent:

(1) if a stipulation ahs been made that the agent is only entitled to his commission if the third party has performed the contract, then commission becomes due at the latest when the third party has executed his part of the transaction or should have done so if the principal had executed his part of the transaction;

(2) the commission becomes payable at the latest on the date on which the wrtitten statement containing the commission due must be provided.

Goodwill indemnity

The following article may not be deviated from to the detriment of the agent before the end of the agreement:

Without prejudice to his right to claim damages, the agent is entitled to an idemnity at the end of the agency contract tot the extent that:

he has increased the number of customers or has considerably increased the volume of contracts with the existing customers adnthe contracts with these customers still provide the principal with considerable benefits’and

payment of this indemnity is reasonable, taking into account all circumstances, in particular the commission lost on the contracts with these customers.

The amount of the indemnity does not exceed the remunderation of the agent of one year, calculated on the basis of the average annual remuneration over the last five years or, if the agency contract ahs lasted a shorter period, over the entire period in question.

The indemnity must be claimed by the agent within one year after the end of the agreement. The indemnity is not due if the agreement is terminated:

(1) by the principal for an ‘urgent reason’for which the agent is responsible;

(2) by the agent unless for reasons attributable to the principal or for justified reasons such as age or illness of the agent;

(3) by the agent which, in accordance with arrangements made with the principal, assigns his rights and obligations under the agreement to a third party.

What does an employer have to do if he receives an application from someone who is a non-Netherlands’ national?

I Netherlands based employer

EU/EEA citizens

No residence permit is needed for employment in the Netherlands. However it may be useful to have one as other authorities may request it, for example to open a bank account.

EU citizens from Cyprus and Malta need a residence permit. EU citizens from Estonia, Hungary, Latvia, Poland, Slovenia, Czech and Slovakia need a residence permit and a work permit. Applications for residence permits are to be submitted to the Aliens desk at any town hall.

Non EU/EEA citizens

The employer needs both an authorisation for temporary stay (MVV) and a working permit. Applications for an MVV should be submitted to the Immigration and Naturalisation Service (IND). Applications for a working permit should be submitted to the Centre for Work and Income (CWI).

II Employers based in other EU member states

EU based companies employing non EU citizens are allowed to provide services in the Netherlands without the need of a permit. However these companies must give prior notice of these non EU employees to the Centre for Work and Income (CWI).

Charles van Beuningen

van Beuningen advocaten

Lange Voorhout 29

2514 EB The Hague

tel: +31-70-356.08.50

fax: +31-70-361.50.50

www.vanbeuningenadvocaten.nl

Charles van Beuningen

van Beuningen advocaten

Netherlands