Draft Bill on Employee Retention in Times of Crisis

In mid-2024, the draft bill on employee retention in times of crisis (Wetsvoorstel personeelsbehoud bij crisis, Wpc) was published. With this proposal, the government aims to prevent employers from immediately facing severe difficulties and employees from losing their jobs in exceptional crisis situations. These concern unforeseeable circumstances beyond normal business risk, such as wars, pandemics or natural disasters. The Wpc forms part of the broader labour market package presented by Minister Van Gennip in 2023 and has been open for internet consultation since May 2024. The proposal builds on the experiences with short-time work arrangements (werktijdverkorting) and the temporary NOW schemes during the COVID-19 pandemic. Whereas the short-time work arrangement proved unable to handle the enormous number of applications and the NOW had to be introduced as an emergency measure, the legislator now opts for a structural and executable framework. The aim is to enable faster and more effective responses to crises.

Core of the Proposal

The core of the bill is that companies experiencing an average decrease in work of at least 20% over a two-month period may temporarily (for a maximum of six months) make use of the scheme. They are offered two options:

1. Reassignment: Employees may temporarily be unilaterally reassigned to other suitable work within the company or group, while retaining 100% of their salary. Additional travel time counts as working time, and additional travel expenses must be reimbursed.

2. Salary reduction: Employers may reduce wages by 10% for non-worked hours. In such cases, the employer can apply to the Employee Insurance Agency (UWV) for a subsidy of 65% of the wage costs for those hours, up to the maximum daily wage.

Both instruments may be combined, but not applied simultaneously to the same hours.
These instruments are tied to strict dismissal protection. During the crisis period and the four months thereafter, dismissals for business-economic reasons cannot be requested for the employees concerned. The role of the works council is also adjusted to the crisis context: advice must be issued within two weeks, and any proceedings before the Enterprise Chamber are subject to short deadlines.

Criticism from the Council for the Judiciary

The Council for the Judiciary recognises the added value of a scalable crisis scheme but also points to certain ambiguities. The definition of a crisis is not yet clearly delineated, and there is a risk that employers may face both a UWV procedure and civil proceedings. In addition, it remains unclear how employers should select employees for reassignment or reduction of hours, and how the scheme should apply to personnel companies or employees of pensionable age. Furthermore, questions arise as to whether the sanction for violating the dismissal restriction (only a 10% repayment of the subsidy) provides a sufficient deterrent.

Conclusion

For employers, the Wpc may in the future become a valuable instrument to retain staff in exceptional crises. It offers more certainty than the emergency measures of the past but also requires careful administration, timely involvement of the works council and accurate payroll management. Only under these conditions can the scheme function in practice as intended.