Calming the Troubled Employment Waters: Dutch Employment Law Today

On 30 March  2023, the Pay Transparency Directive (the “Directive”) was adopted in a plenary session of the European Parliament (EP) by 427 votes to 79 against with 76 abstentions.

Adopting the Directive is the first step in making salaries more transparent as the lack of pay transparency has proven to be one of the main obstacles in closing the gender pay gap.

Employers need to make pay policies accessible to their employees. The pay policies need to offer objective and gender-neutral criteria to determine wages and wage increases.

It also ensures jobseekers have access to information on the pay range of positions they apply for and prevents employers from asking about candidates’ previous salaries, thus limiting the possibility of a jobseeker’s pay history influencing the salary offered to the candidate.

Additionally, employees and their representatives shall be able to request information on their pay level and that of other employees doing the same work in order to compare the wages.

If the average pay of male and female employees differs by at least 5% and the employer cannot sufficiently justify the difference ( with objective, gender-neutral criteria) the employers must carry out a joint pay review. If unjustified differences exist, the employer shall have to take corrective measures.

Employers who fail to comply with the “equal pay for equal work” principle risk compensation claims by employees and other judicial measures.

Specific penalties and measures will have to be set up by member states upon implementation of the Directive, which is due within three years, by 2026 at the latest.

Employers may have good grounds to reward someone with less work experience even if they have to do the same work, but this needs to have a good justification. This requires labour transparency, which is difficult and seems overwhelming.

Often, employers do not know exactly where and how to start. Engaging an employment law specialist can help employers to achieve transparency as it is important for both employers and employees that these issues are and remain properly managed.

Which brings us to the other subject covered in this article: properly managed platform work, also known as “gigs”.

The main question these days for the gig economy is whether or not a hired freelancer is in fact just that, a freelancer, or an employee.

Gig-economy giants, Uber and Deliveroo have faced employment law defeats in many countries around the globe. The Netherlands is no different as the most recent ruling by the Dutch Supreme Court finally answers this important question.

On 23 March 2023, after years of legal battle, the Dutch Supreme Court issued the final punch to Deliveroo following the opinion of the Attorney-General (A-G) in which the A-G acknowledged the changing tides and set clear rules on determining whether or not a platform worker is in fact a freelancer or an employee.

Deliveroo argued in cassation, among other things, that the delivery drivers had the freedom to work when they wanted and also to be replaced, therefore were not employed. Which, according to Deliveroo, does not fit with an employment contract.

The Supreme Court, however, upheld the Amsterdam Court of Appeal’s judgment: Deliveroo’s delivery drivers were in fact working on the basis of an employment contract.

Whether a contract should be classified as an employment contract depends on all the circumstances of the case taken together. Among others, the following may be relevant:

It may also be relevant whether the person performing the work behaves or is capable of behaving in the normal course of business as an entrepreneur, conducts or can conduct themselves as an entrepreneur ; for example, in acquiring a reputation, in acquisition, in terms of tax treatment, and in view of the number of clients for whom they work or have worked and the duration for which they usually commits themselves to a particular client.

The weight accorded to a contractual term in answering the question whether a contract should be regarded as an employment contract depends in part on the extent to which that clause has actual significance for the party performing the work.

Particularly interesting, is the decision of the Supreme Court regarding the freedom of the delivery drivers to work when they wanted, and to be replaced. It considered that the facts in appeal pointed in the direction that no employment contracts existed. However, the Court was entitled to rule, based on the other circumstances of the case, that these were nevertheless employment contracts. The practical importance of the substitution option for the delivery drivers was minor leading to the ruling that they had an employment contract with Deliveroo. Even though Deliveroo called them “assignment agreements.”

According to the Supreme Court, the question of whether there is a reason for further general rules or principles to determine whether an agreement is an employment contract, partly to demarcate working as an independent entrepreneur, has the legislature‘s attention so it sees no reason for legal development at the moment.

Of course, in principle, each ruling only applies to a specific case and depends on all the circumstances of the case, but this is an important ruling by the highest Dutch court that also affects all other platform workers, and it will certainly also affect the case pending against Uber at the Amsterdam Court of Appeal!

Uber, next to the employment cases has other labour law issues to deal with as follows from another recent ruling by the Amsterdam Court of Appeal. And this time it is not about the drivers.

A former management assistant at Uber’s Amsterdam headquarters has won a years-long legal battle against her former employer.

The top management of Uber relied on her almost permanently. She worked dozens of overtime hours, not only daily but also on weekends. Uber disputed in court that the former employee worked unreasonably long hours, but could not substantiate this claim with timesheets or other records. These, according to Uber, had been destroyed shortly after the former employee left the company.

The Court of Appeal assumes that Uber allowed her to work a significantly larger number of hours than permitted by law (the Working Hours Act).

Uber did not keep proper records of the hours worked by employee and argued that she was not eligible for compensation because the employee’s salary already included compensation for overtime.

Taking into account the nature of the job and the salary (of EUR4,350 per month), the court found eight overtime hours per week to be reasonable. This leaves 2,646 hours of overtime to be paid! That is the equivalent of 330.75 full working days (approximately 15 months) for someone who had worked only 25 months altogether at Uber.

The Supreme Court ruled that Uber must pay unpaid overtime of EUR64,159.94 and on top of that is liable for the damage she suffered in the performance of her work – the additional amount is still to be determined.

The Dutch cabinet, employers and unions have decided to make the permanent contract a starting point in the labour market – banning zero hours contracts. Workers working through temporary employment agencies will get a secure contract sooner and compulsory disability insurance for self-employed workers will be introduced.

The cabinet wishes to offer more certainty to employees about their income and their schedule – making the rules for temporary contracts stricter. After three consecutive temporary contracts with the same employer, a new contract may only be given after five years (this was previously six months). The government wants to put an end to revolving door constructions, where workers move from one temporary contract to another for a long time.

There is good news for entrepreneurs as well: the possibility, for example, of arranging structural replacement after a year of employee illness and retaining staff in the event of a crisis (such as COVID-19) that falls outside of the scope of standard entrepreneurial risk. Employees can then work elsewhere or work less for a maximum of six months- while retaining their unemployment rights.

Employment law is definitely on the move!