Temporary Part-Time Unemployment Benefit Scheme
Background
The Part-Time Unemployment Benefit For Retaining Professional
Staff Decree (Besluit deeltijd WW tot behoud van vakkrachten
("the Decree")) that came into effect in the Netherlands
on 1 April 2009 is the successor of the special reduction of
working hours scheme. In short, the Decree allows the employer to
reduce the working hours of one or more of his employees by a
maximum of 50% under certain conditions. In that case, the employer
only pays the employee for the number of hours actually worked. The
employee may apply for unemployment benefits for the number of
hours not worked.
Conditions Reduction of Working
Hours
In order to be eligible for reduction of working hours a number
of conditions must be met:
- If the reduction of working hours concerns 20 or more
employees, the interested trade unions must agree to the
reduction. If there are no interested trade unions, the
employees' representation must agree to the reduction.
- If the reduction of working hours concerns less than 20
employees, the employees' representation must agree to the
reduction.
- Written agreements must be made with the trade union or
employees' representation concerned about education and
secondment of employees whose working hours are temporarily
reduced. The employer must also set out in writing that he will
continue to pay the wages in full if the employee is not
eligible for unemployment benefits.
- The reduction of working hours must commence before 1
January 2010.
- The part-time unemployment benefit may not coincide with
the earlier scheme of the government concerning reduction of
working hours.
An important condition to be met by the employer is therefore
that the employer must have the approval of the interested trade
unions or the employees' representation (Works Council or
Personnel Representation). For cases in which the employer does not
succeed in reaching agreement with the employees'
representation, Minister Donner recently set up a notification
center for differences of opinion between the employer and
employees' representation in the event of the application for
part-time unemployment benefit. If these differences of opinion
stand in the way of agreements about the substantiation of the
scheme, they may be reported in writing to the Part-Time
Unemployment Benefit Notification Center (Meldpunt deeltijd WW).
Subsequently, the differences of opinion are presented to the
central employers' and employees' organizations within the
Labor Foundation (Stichting van de Arbeid (STAR)). If the minister
establishes that they will not find a solution within two weeks, an
employer may make agreements with individual employees about
part-time unemployment benefits.
Duration and Extension
Starting point is that the reduction of
working hours lasts 13 consecutive weeks. However, the reduction of
working hours may be extended twice with a maximum of 26
consecutive weeks per extension.
- In the event of an extension the employer is obliged to
provide the UWV (the Dutch Employee Insurance Schemes
Implementing Body) with a written report of the agreements
which the employer and the employees' association concerned
have already made and of the way in which the concrete details
of these agreements have been carried out in
practice.
- After the end of the (full) period reduction of working
hours the employer is obliged to allow the employee to once
again work the number of hours that he worked before the
reduction of working hours period.
- The Decree will cease to be effective as from 1 January
2010. After 1 January 2010 the employer may only invoke the
Decree if he has relied on the extension of the reduction of
working hours before 1 January 2010.
Payment of Compensation to UWV
The employer is obliged to sign an employers'
statement in which he agrees to pay a compensation to the UWV in
the situations set out below.
- In the event that in practice the employee has worked less
than the 50% of his original working hours (as agreed) in a
'consecutive period of four weeks'. Since the employer
pays out the salary over the number of hours actually worked
and the UWV pays out unemployment benefits for the hours that
the employee does not work, the employee is in that case
eligible for a higher unemployment benefit amount. Thus, for
example, the employer may not have the employee work 60% less
hours one month and 40% less hours the next as compensation. If
the 50% reduction of working hours over the period of four
weeks is exceeded, the employer must pay a compensation to the
UWV that is equal to 50% of the gross unemployment benefit (and
the employer's shares of the contributions) paid by the UWV
prior to the 'consecutive period of four
weeks'.
- In the event that within 13 weeks after the end of the
reduction of working hours the employee becomes unemployed
still and is eligible for unemployment benefit.
Consequences for the Employee
- The employee who receives a part-time unemployment benefit
uses up his entitlement to unemployment benefit, because the
employee will not accrue any new unemployment benefit
entitlement over the hours not worked. The employee does accrue
new unemployment benefit entitlement over the hours
worked.
- For the part that the employee works the salary will remain
intact. For the part that the employee receives part-time
unemployment benefits he will be confronted with a decline in
his income up to 70% (first two months: 75%) of his last-earned
wages. If an employee earns more than the maximum daily wage
subject to unemployment insurance contributions (which is
€183,15 as of 1 January 2009), his income may even decline to
70% (first two months: 75%) of the maximum daily wage.
- In the event of illness, the unemployment benefit continues
during the first 13 weeks of illness of the employee. If the
illness exceeds this period, the unemployment benefit ends and
the employer must pay the employee the 'normal' salary
during illness.
Conclusion
The Decree offers opportunities to employers to temporarily
reduce the wage costs in the event of a decline in turnover.
Notwithstanding the serious consequences for the employee, he may
also benefit from this scheme, namely if this prevents him from
losing his job. However, the measure is not intended as a simple
alternative for real unemployment. It is only wise for an employer
to temporarily reduce the working hours if there is enough
confidence that there will be sufficient work for the employees
once again in the longer term. Within 13 weeks after the entry into
force of the Decree the scheme will be evaluated. If after the
first 13 weeks it appears that the Decree is used wrongfully, the
scheme will be closed before 1 January 2010.