The election manifesto of the Christian Democratic Alliance includes plans to simplify dismissals legislation. This has prompted a mixed response from the Christian Trade Union Federation (CNV) and the Dutch Trade Union Federation (FNV). The CNV has rejected the plan outright, while the FNV now accepts some of the proposals. The Confederation of Netherlands Industry and Employers, which is in favour of a more flexible dismissals law, has welcomed the FNV’s recent willingness to negotiate.
Dual dismissal system
The Christian Democratic Alliance (Christen Democratisch Appel, CDA) proposes in its election manifesto the relaxation of dismissals legislation. The current Dutch law is based on a dual system, in which an employer can choose one of two procedures for terminating an employment contract (NL0308104F). Dismissal is a contentious issue in the Netherlands: employers and employees, who work together in the Social and Economic Council (Sociaal-Economische Raad, SER), have totally different views on the subject. Nonetheless, both are keen to find a solution (NL0610039I). Over the past 18 months – so far without success – the SER has been attempting to formulate a unanimous proposal; it has now promised that it will respond to the government’s request for a recommendation on the issue of dismissals legislation by no later than December 2006.
In spring 2006, the independent members of the SER, appointed by the crown, stated their view on dismissals. They see no need for prior evaluation of dismissals by the Centre for Work and Income (Centrum voor Werk en Inkomen, CWI) (the CWI determines the reasonableness of any intended dismissal); instead, the SER members maintain that subsequent evaluation by the courts should be sufficient. The trade unions disagree and want prior evaluation by the CWI to be retained. For their part, employers are particularly dissatisfied with what they consider excessively high levels of dismissal compensation.
Dismissals compensation
Currently, an employer must apply in advance to the CWI to have a dismissal sanctioned; the CDA wants this requirement to be cancelled, believing that a subsequent ruling by the subdistrict court should suffice. (An employer will generally opt for the legal route if they and/or the employee want an employment contract to be terminated swiftly – for example, where there is conflict between the parties.)
Each year, around 100,000 people have their contracts terminated; roughly half of these dismissals are sanctioned by the CWI and half by the subdistrict courts. At present, the procedure involving the subdistrict court is often more expensive for employers because the courts set the level of dismissal compensation on the basis of the number of years of service (one month’s salary for each year of service) – an arrangement that favours older employees. In the opinion of the CDA, the level of compensation set by the subdistrict court should be equal to the financial obligation imposed by the CWI to continue paying an employee’s wages. If the CWI application were simplified, employers might opt for this less expensive procedure more often: in 2005, 89% of employees whose dismissal was approved by subdistrict courts were awarded compensation, while the CWI awarded dismissal compensation in only 47% of the cases it assessed.
The CDA is now proposing to equalise dismissals compensation: employers seeking CWI approval for dismissal, therefore, will have to pay three months’ salary over and above the salary for the notice period (one to four months). Even though dismissal through the CWI may be cheaper, the six-week procedure takes longer than through the courts. The proposal tabled by the CDA sets a maximum compensation of six months’ salary for a dismissal, potentially curbing the level of compensation awarded by the courts, which is generally far higher.
CNV opposed to proposals
The trade unions’ initial fears appear to have been confirmed. As the social partners in the SER have failed to reach agreement, opinions will now be articulated in the political arena. The Chairman of the Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV), René Paas, has expressed his organisation’s outrage. He maintains that employers will be financially better off than before, if they choose the court procedure. In Paas’s view, the CDA’s strategy of fining employees and employers who make insufficient efforts in terms of retraining while compensation wages are still being paid is a case of too little too late.
FNV open to change
For the first time, the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) is in agreement with the idea of simplifying and speeding up dismissal procedures for individual employees. The trade union federation is prepared to see the ending of the operation of the dismissals procedure through the CWI. The head of FNV, Wilna Wind, considers it strange that employers can choose one of two different procedures. She feels certain that a single dismissals procedure would result in greater clarity, and believes that, in time, dismissal through the CWI could be abandoned.
However, Ms Wind objects to the CDA’s proposal for limiting dismissals protection to a period of 6.2 months. FNV also insists that, within the process of reorganisation, the unions must retain the authority to reach agreement with employers. It does not wish to see a change in the procedure for collective redundancy, which it considers at present properly regulated. In the case of collective redundancy, CWI tests the underlying economic reasons and the application of the seniority principle (reflecting the age structure of the workforce). CWI also assesses whether employers have made enough efforts to reassign the employees concerned.
The Confederation of Netherlands Industry and Employers (VNO-NCW) has welcomed the recent opportunity for negotiation presented by FNV. This has cleared the way for cancelling the prior testing by CWI. Despite a less than positive response from the trade union confederations, the VNO-NCW continues to insist that dismissal costs must be reduced.
Marianne Grünell, Hugo Sinzheimer Institute (HSI)