In March 2006, the age balance principle came into effect regarding collective redundancies. The principle replaces the ‘last in, first out’ seniority-based principle with respect to restructuring. Trade unions are satisfied with the change as this will create more of a balance in cases of collective redundancy. The Social and Economic Council (Sociaal-Economische Raad, SER), which represents the social partners, will issue its recommendation in spring 2006 on the changes in dismissal law. However, the social partners are divided on this issue.
Maintaining mixed age profile
On 1 March 2006, the age balance principle came into effect regarding collective redundancies. The act stipulates that, in cases of restructuring – and, as a result, in potential mass redundancies – age must be taken as the decisive criterion (NL0406101N). Five age categories have defined: 15 to 25 years; 25 to 35 years; 35 to 45 years; 45 to 55 years; and 55 years and older. The number of job losses will be spread across these five categories, so that the existing age profile of the employees is maintained as far as possible. This applies to interchangeable positions. The ‘last in, first out’ principle still applies as the selection mechanism within the respective age categories.
The trade unions are satisfied with the change as this system will help to create more of a balance in cases of collective redundancy. While employers are not in principle opposed to this change, they do acknowledge that there will be practical problems, especially in smaller companies. The age balance principle will lead to difficulties in balancing staff by age group and work tasks within these companies. It also makes the system more complicated to explain to the employees. In the first instance, employees will be unsure regarding their position and will require intensive guidance from the personnel departments or personnel officers.
The system presents another disadvantage in that older employees are disproportionately affected, compared with the previous system. Unions recognise this problem and the Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV) believes that employers will have to go to greater lengths in finding alternative employment for older employees. The redundancy plan must include agreements to this end. CNV suggests that, if employees are kept in service for longer, they will have more opportunities when it comes to finding another job.
The new dismissal system also undermines the government’s administrative measures to assess reasons for redundancies. Previously, Centres for Work and Income (Centra voor Werk en Inkomen, CWIs) were required to examine the economic grounds for restructuring. This procedure has been abolished as employers and the unions will have already reached agreement on the number of dismissals and the redundancy plan.
Employers seek relaxation of dismissal law
Employers are calling for a further relaxation of the law on dismissals, allowing consideration to be paid to quality criteria and lowering redundancy compensation. It is argued that relaxing the law would lead to a more dynamic economy and would encourage employers to look for staff sooner. The trade unions, on the other hand, want no further steps to be taken in this direction, claiming that the Flexibility and Security Act already affords employers sufficient leeway to engage staff quickly for shorter periods.
While the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) is vociferously opposing any changes to, or ‘messing about’ with dismissal law, CNV was initially more open to the changes proposed by employers. However, after consulting with several experts, CNV’s new Chair, René Paas, is far from convinced. A more relaxed dismissal system would not generate more employment opportunities – the peaks and dips would merely be exaggerated. While staff could be engaged at short notice, they could be dismissed at equally short notice.
In comparison with the rest of Europe, the Netherlands is characterised by a high degree of flexibility. The Flexibility and Security Act allows employers to offer employees three consecutive one-year contracts and, in cases where dismissal is well founded, the CWI always grants its approval to employers.
In spring 2006, the social partners will have an opportunity to air their views to the Social and Economic Council (Sociaal Economische Raad, SER), which will be issuing its recommendations with respect to changes in dismissal law. Given the opposing views of the social partners, however, it is expected that the SER will not be able to provide the government with a unanimous recommendation. Employers consider the issue of relaxing dismissal law to be of key importance. The Confederation of Netherlands Industry and Employers (VNO-NCW) has already approached the government, requesting it to prepare a legislative proposal on the dismissal system, in anticipation of the SER failing to arrive at a unanimous recommendation. The Minister of Social Affairs is taking account of this, and has assured the Lower House that he will present the government’s point of view before parliament takes its summer recess.
Marianne Grünell, Hugo Sinzheimer Institute (HSI)