Key Developments in Dutch Employment Law for 2025
Edith Nordmann of ACG provides an analytical overview of recent developments in employment law in the Netherlands, emphasising their legal and practical implications.
Edith Nordmann
Contact authorAs we approach 2025, the Dutch labour market faces a series of legislative changes that aim to balance workforce flexibility, employee rights, and employer responsibilities. From the revised unemployment insurance premium system to the end of the enforcement moratorium on false self-employment, these changes have far-reaching implications for employment relationships and labour market dynamics.
Changes to the WW Premium System and overtime rules
The differentiated unemployment insurance premium (WW-premie) incentivises employers to offer permanent contracts by imposing lower premiums for such contracts compared to flexible contracts. Starting on 1 January 2025, several amendments will reshape this system.
- Overtime thresholds – employees under fixed-term contracts can work up to 30% additional hours beyond their contracted hours without triggering a higher premium rate. Exceeding this threshold retroactively applies the higher rate for the entire year.
- Broader exemptions for large contracts – previously, contracts averaging 35 hours per week were exempt from these overtime rules. This exemption will now extend to contracts averaging 30 hours per week or more.
Legal and economic considerations
The amendments aim to balance workforce flexibility with stability, encouraging the use of permanent contracts while preventing excessive reliance on overtime. Employers must carefully manage work hours to avoid retroactive penalties, a requirement that underscores the need for precise payroll and compliance mechanisms.
These adjustments reflect the Dutch government’s broader strategy to reduce labour market segmentation, a recurring theme in labour policy debates.
End of the enforcement moratorium on false self-employment
From the 1 January 2025, lifting of the enforcement moratorium on false self-employment marks a pivotal shift in regulatory enforcement. The Dutch Tax Authority will now actively target cases of disguised employment, where workers are classified as independent contractors despite meeting the criteria for employment.
Key provisions:
- Retroactive corrections and penalties will apply to arrangements deemed as false self-employment.
- The Tax Authority has outlined criteria to distinguish between employment and freelance relationships, focusing on factors such as subordination, economic dependence, and the nature of the working relationship.
Transition period
A one-year transition period allows businesses to adjust their practices. During this period, penalties for non-compliance will be waived if employers demonstrate efforts to rectify misclassification issues.
Legal precedents
This shift builds on the principles established in landmark cases like the Deliveroo Ruling, where courts invalidated contractual terms that misclassified employees as freelancers.
These developments underscore the importance of clarity in contract drafting, particularly in sectors with high reliance on flexible labour arrangements, such as gig work and freelancing.
Increase in transition compensation
Effective from 1 January 2025, the statutory cap on transition compensation will increase, reflecting annual wage growth adjustments. In 2024, this cap stood at EUR94,000, and the exact 2025 figure will be determined based on national wage indexation.
Context and application
Transition compensation applies in cases of involuntary termination, barring employee misconduct. It aims to provide financial support for displaced workers, particularly those in long-term employment.
This adjustment aligns with broader trends in European labour law, where employee protections are incrementally strengthened to address the challenges of economic restructuring and job displacement.
CO₂ emissions reporting obligations
Employers with more than 100 employees must continue to report work-related CO₂ emissions, including commuting and business travel. Data for the 2024 reporting period must be submitted to the Netherlands Enterprise Agency (RVO) by 30 June 2025.
Regulatory framework
The requirement concerning CO₂ emissions reflects the Dutch government’s commitment to its environmental agenda, integrating sustainability into labour policies. Employers failing to comply, face administrative penalties, emphasising the importance of accurate data collection and reporting.
Broader implications
The integration of environmental considerations into labour law highlights the expanding scope of employer responsibilities, extending beyond traditional employment matters to include corporate sustainability.
Proposed labour market reforms
Revisions to the 30% Expat Tax Ruling
The Dutch government plans to reduce the expat tax-free allowance from 30% to 27% starting in 2027, while raising the salary threshold to EUR50,436.
This change reflects ongoing efforts to balance fiscal sustainability with the Netherlands’ attractiveness to foreign talent.
Ban on zero-hour contracts and fixed-term reforms
Legislation is underway to replace zero-hour contracts with minimum-hours agreements and reform fixed-term contract rules.
- Automatic conversion to permanent employment after three fixed-term contracts or three years of continuous employment.
- Extension of the cooling-off period for temporary contracts from six months to five years.
These measures aim to enhance job security while reducing labour market segmentation.
Clarification of employment relationships
A legislative proposal under consideration introduces a civil presumption of employment for freelancers earning less than EUR33/hour (reference date: 2024). This presumption will shift the burden of proof to employers, requiring them to justify non-employment classifications.
While implementation is unlikely before 2026, this proposal reflects a broader trend toward greater scrutiny of flexible labour arrangements across Europe.
Conclusion
The developments outlined above reflect a strategic recalibration of Dutch labour law to address workforce stability, environmental sustainability, and equitable labour practices. These changes align with broader European trends, emphasising the interplay between employee protection, economic restructuring, and corporate accountability.
As these changes take effect, they will undoubtedly influence employment relationships and organisational strategies. Legal professionals must stay abreast of these developments to provide informed guidance and mitigate potential risks in an increasingly complex regulatory landscape.
