Salary changes in 2020

In the new year there will be several changes in terms of laws and regulations that will affect you and your employees, so we want to inform  you about the most important changes  in 2020.


This document contains more detailed information on the following:


  1. Balanced Labour Market Act (Wet Arbeidsmarkt in Balans, or WAB)
  2. Introduction of Additional Leave Act (Wet Invoering Extra Geboorteverlof, or WIEG)
  3. Obligation to provide information on the expiry period for statutory holiday entitlement
  4. Risk assessment and evaluation (RI&E)
  5. 30% facility
  6. Expense allowance scheme
  7. Provision of bicycles
  8. Additional tax liability for electric cars

We also want to remind you about the regulation relating to identification requirements.

1. Balanced Labour Market Act

A number of changes to the labour law will take effect on 01 January 2020 as a result of the WAB. This document covers the following topics:


  • Amended succession rule
  • Transition payment
  • Oncall contract
  • Unemployment Insurance Act (Werkloosheidswet, or WW)
  • Payrolling

Amended succession rule

With effect from 01 January 2020, employers can only offer employees three fixed-term employment contracts in a three-year period (instead of two years) before the employment contract is legally converted into a indefinite contract.

The period of six months when succession can be broken remains the same. A new succession starts after a period of six months and one day.  Although the WAB does allow this period to be reduced by collective labour agreement to three months, this is only possible for recurring temporary work that can only be carried out up to a maximum of nine months per year.

The succession rule also has an exception for substitute staff in primary education who are used to cover for sickness.


The measures will take effect immediately on 01 January 2020. In practical terms, this means that employment contracts that end on or after 01 January 2020 – even if they started before 01 January 2020 – are subject to a succession rule of three years. Differences are only permitted if varied by collective labour agreement in favour of the employee.


Transition payment – reduction of accrual and entitlement from start of employment

Based on the WAB, both the accrual of and the entitlement to transition payments will change with effect from 01 January 2020.


Firstly, the accrual of transition payments is changing. With effect from 01 January 2020, the accrual will be 1/3 of the monthly salary per year of service.


Secondly, the entitlement to transition payments is also changing. With effect from 01 January 2020, employees will be entitled to transition payments from the very first day of employment, including during their probationary period. In practical terms, this means that the transition payment will be calculated down to the exact day. Below are two sample calculations to illustrate:


The employment contract lasted nine years and four months and the latest gross salary earned was €3,000. In that case, the transition payment is:

9 x (1/3 x €3,000) = €9,000
4 x [(1/3 x €3,000) /12] = €333.33

Total: €9,333.33


The employment contract lasted nine years and five days and the latest gross salary earned was €3,000. The employee earned €800 gross over the last five days (the total number of hours worked multiplied by the gross hourly rate). In that case, the transition payment is:

9 x (1/3 x €3,000) = €9,000

(€800 / 3,000) x [(1/3 x €3,000) /12] = €22.22

Total transition payment: €9,022.22


The new transition payment rule is effective immediately. This means that if the transition payment is due after 01 January 2020, it must be calculated using the new rule. However, this does not apply to dismissal procedures that are initiated before 01 January 2020 in court or with the UWV, or if the employer and employee have agreed to end the employment contract before 01 January 2020. The current law applies in those cases.


On-call contracts becoming less flexible

On-call contracts refer to zero-hours contracts and minimum/maximum contracts. The rules for on-call contracts will be changing.


Firstly, there will be a notification period of four days. Employees are only required to work if they have been given at least four days' notice that they are called. If the request is partially or wholly withdrawn during those four days, then the employee is entitled to continued payment of wages for the period for which they were called.  If the request is partially withdrawn or changed because the employee is required to work different hours, the employee is still entitled to be paid wages for the original hours.


The four-day period can be reduced by collective labour agreement, but can not be less than 24 hours. Obviously, a request can still be sent to an employee within the four-day period; for example, if a colleague is ill. Please note that both the request and any withdrawal must be sent to the employee in writing or electronically.


Secondly, once a on-call contract has lasted for twelve months, the employer must offer the employee a an employment contract with a fixed amount of working hours, which must be based on the average scope of employment in the twelve months prior to the offer. If the employer fails to make an offer, the employee in question is still entitled to a salary for the average scope of employment as intended. This gives the employee more security in cases where the employer fails to make an offer. The employee is not obliged to accept this offer and may opt to retain contract flexibility.


The final point is intended to put the notice period for on-call staff on a par with the on-call period for employers. This involves the four-day period just discussed, unless a deviation has been made from this by collective labour agreement. This enables an employee with a on-call contract to terminate the employment contract quickly.


The rule takes effect immediately. Within one month of the WAB taking effect, in other words before 01 February 2020, employers must offer employees an employment contract with a fixed amount working hours based on the average scope of employment in the twelve months prior to the offer.



  • Employers must offer an employment contract with a fixed amount of working hours to on-call staff before 01 February 2020
  • Employers must update the model on-call contract


We are happy to provide a template letter (with selection form) on request.


WW premium differentiation

The WW premium differentiation is currently carried out based on the various sectors. With effect from 01 January 2020, the WW premium will be differentiated based on the type of contract; i.e. fixed-term or indefinite. The WW premium will become more favourable for employers with indefinite contracts than with fixed-term contracts. The lower premium will apply to indefinite employment contracts, unless they are on-call contracts. The difference is significant, with a low premium of 2.94% compared with 7.94% for the high premium.


The low percentage applies to:

  1. Employment contracts that are agreed as part of an on-the-job training programme in vocational learning (with the aim of encouraging employers to offer training places to trainees in vocational education)
  2. Employees under the age of 21 who do not work more than twelve hours a week, even if this is a temporary contract (with the aim of providing work experience).


An exception is also made for on-call contracts for seasonal work; the low premium will also apply for these contracts provided that the scope of employment is defined per year. 


Provisions to prevent misuse

The low percentage will be reviewed if the contract was actually a indefinite contract (not being an on-call contract) but:

  • employment is terminated within two months after the start;
  • the employee has been paid in one calendar year for more than 30% hours over that wat was contractually agreed for that year (this does not apply if 35 or more working hours per week are agreed in the employment contract);
  • the employee receives a WW benefit due to loss of working hours or income at the employer within one year of starting the employment;
  • the employee actually works on a seasonal basis for the employer.


When the new year starts, every employer is required to specify the type of contract in question on every employee's payslip. If the low WW premium is applied, a copy of the indefinite employment contract must also be retained by payroll administration.



  • Record indefinite employment contracts in writing before 01 April 2020! The written record may be in de form of an addendum, this addendum needs to be signed by both employer and employee.
  • The type of contract (fixed-term or indefinite that is not a on-call contract) must also be stated on the payslip (as must job title)
  • Critically assess the costs and benefits of flex workers.

Are they more favourable in indefinite employment but with long-term risks?


Payrolling is becoming more expensive

Employees who work on a payroll basis must have the same employment conditions as they would have if they had an employment contract with the client. Payrolling is used to reduce the burden on employers; if this is the case, the legislature emphasises that this must remain the case, but this must not result in poorer employment conditions (both primary and secondary) for employees.

To ensure this happens, the Placement of Personnel by Intermediaries Act (Wet Allocatie Arbeidskrachten door Intermediairs, or Waadi) includes the provision for equal treatment in terms of employment conditions. Employees who work for a payroll company must receive the same employment conditions as they would have if they were employed by the client. This relates to both primary and secondary employment conditions. The law states that deviations from this are not permitted, including by collective labour agreement.


All in all, this means that the agency clause can no longer be included in the payroll contract and the more generous succession provision for agency workers also no longer applies.


This rule comes into immediate effect on 01 January 2020. The rule regarding the provision of an adequate pension for payroll employees will not come into effect until 01 January 2021.


Compensation scheme for transition payment

To prevent 'dormant employment contracts', the legislature has created the compensation scheme for transition payment. With effect from 01 April 2020, this new legislation gives employers the opportunity to be compensated for the costs they have incurred for staff who have been unfit for work in the long term (in other words, for more than two years). Although this scheme does not stem from the WAB, it does share common ground with it and is intended to encourage employers not to maintain dormant employment contracts.


It goes without saying that the compensation scheme has a number of conditions; these include the fact that the compensation must not exceed the amount that the employer has actually paid, and that the amount must also not exceed the amount that the employer was owed immediately after the end of the two-year sickness period of the employee. The compensation scheme also covers 'old' terminations (from 01 July 2015). It is important to note the strict application deadlines.


On 08 November 2019, the Dutch Supreme Court gave its verdict on the termination of dormant employment contracts. The Supreme Court has ruled that, based on good employment practice, employers are required to terminate a dormant employment contract if this is requested by the employee. Partly due to the compensation scheme for transition payment, the argument for not terminating the employment contract due to high costs no longer applies.


2. Introduction of Additional Parental Leave Act


Extension of parental leave by three days as of 01 January 2019
Based on the WIEG, parental leave for the mother's partner is extended by three days. This has been in effect since 01 January 2019. The partner must take this leave within four weeks after the birth of the child. The employer is required to continue to pay 100% of the salary for these five days. To clarify; if, for example, the partner works five hours a day, five days a week, then they are entitled to 25 hours of leave. The entitlement is in proportion to the agreed working hours. Employees can take this leave at their own discretion, so the employer should not refuse any spreading out of the leave.


Additional parental leave
Additional parental leave will take effect on 01 July 2020. This regulation allows partners to take up to five weeks of additional leave and they are entitled to be paid 70% of their daily rate. This is paid by the UWV and not by the employer. There are a number of conditions for this:

  • The employee must first take the parental leave of five days, based on the number of working hours per week (as stated above, 100% paid by the employer);
  • The additional parental leave must be taken within six months after the birth.

The leave must be requested through the employer. Although the leave can be spread over a period of more than five weeks following consultation, it can only be requested in full weeks. The full five weeks of additional parental leave do not have to be taken,


No transitional law applies to the additional parental leave. So, if a child is born on or after 01 July 2020, the mother's partner will be entitled to paid additional parental leave.



3. Obligation to provide information on the expiration period of  statutory holidays

Employees are entitled to statutory holiday days; this entitlement is 20 days for a full-time employee. This statutory holiday entitlement expires six months after the calendar year in which the days were accrued. For example, statutory holidays accrued in 2019 will expire on 01 July 2020. Based on recent case law, employers must notify employees in good time about the expiry of this holiday entitlement so that employees are still able to take the holiday. If employer do not inform their employees about this, or do not inform them in time, then the employee is still able to take this statutory holidays, or the statutory holidays not taken must be paid out at the end of the employment contract.


4. Risk assessment and evaluation (RI&E)

The Working Conditions Act (Arbowet) requires employers to have an RI&E. The fine for failing to meet this requirement will increase from €3,000 to €4,500 for companies with 500 or more employees, and from €300 to €450 for companies with fewer than five employees.

The Inspectorate SZW may also impose a fine of €3,000 if there is no action plan.



5. 30% facility

With effect from 01 January 2019, the term for the 30% facility has been reduced from eight to a maximum of five years. A transition period of two years applies for expats who would as a result of the measure lose the 30% facility in 2019 or 2020.

It is advisable to check the salary standard this year as well for the 30% facility. The default salary standard for 2019 is €37,743 on an annual basis. The reduced salary standard is €28,690 on an annual basis.


6. Expense allowance scheme

It is advisable to verify that the allowances and benefits that were awarded to employees in 2019 were processed correctly and, where desired, have been designated as tax deduction at source components for the work-related expenses scheme.


In 2020, the work-related expenses budget will increase to 1.7% over the first €400,000 of the wage bill. The fixed sum for the surplus remains 1.2%.


There will also be a new specific exemption for the certificate of good conduct (Verklaring Omtrent Gedrag, VOG), which can give employers more flexibility in the work-related expenses budget.


7. Provision of bicycles

From 01 january 2020, a fixed additional tax liability of 7 % of the recommended retail price, in other words the original value of the bicycle, applies to the provision of the company bicycle. Accessories on the bicycle that are part of the recommended retail price are covered by the fixed sum; accessories that are not part of the recommended retail price are not covered. The main rule applies here; in other words, the number of kilometres covered for private purposes x the actual price per kilometre -/- any personal contribution from the employee. The degree of private use is not important and commuting between home and work is classed as private use. 


These costs borne by the employee are deducted from the additional tax liability for private use, but this cannot be less than zero. 'Bicycle' also refers to electric bikes, cargo bikes and speed pedelecs (bicycles with electric pedal assistance and registered as mopeds). The recommended retail price is the 'price for the bicycle publicly displayed in the Netherlands by the manufacturer or importer which will be charged to the actual buyer at the point of purchase', according to the article-by-article notes on the Tax greening measures 2019. In most cases, this is specified on the invoice or lease contract, but the RAI Vereniging and BOVAG publish the current recommended retail prices online, including a historical overview.


Simplifying how the additional tax liability is determined for private use of a company bicycle aims to make company bicycles more attractive for both employers and employees.


8. Additional tax liability for electric cars

Currently, cars that emit CO2 incur an additional tax liability rate of 22%, while completely electric cars have a reduced additional tax liability of 4% up to a catalogue price of €50,000. The portion of the purchase price above €50,000 attracts the higher additional tax liability rate of 22%. With effect from 01 January 2020, the lower rate will increase to 8% and this will only apply to the amount of the catalogue price that does not exceed €45,000. The portion of the purchase price above €45,000 will attract the higher additional tax liability rate of 22%. If you are considering purchasing an electric car, it makes sense to ensure that the car is put into service before 01 January 2020, as cars put into service in 2019 will continue to attract the low additional tax liability percentage of 4% over €50,000 of the catalogue value for a further five years. N.B. Special rules apply for other emission-free cars, such as cars that run on hydrogen.


9. Identification requirements

Employers are required to check the identity of their employees, regardless of whether they are Dutch or from abroad. There are three parts to the identification requirements: verification requirement, retention requirement and duty of care. The verification requirement specifies several steps which the employer must follow; a brief discussion of these steps follows.


  1. Verification requirement

The verification requirement must be fulfilled before the employee starts to work. This verification requirement can be broken down into several steps:


  1. 2. Check the identity document

The employer must check that all staff (whether they are Dutch or from abroad) have valid identity documents; this also applies to agency workers, self-employed workers and workers from other companies. This identity document must not be fake, damaged or forged. For details of how to check this, please go to the website of the Ministry of Social Affairs and Employment (SZW).


  1. 3. Check the identity

When checking the identity document, pay attention to:

  • The passport photo: does it match the person standing in front of you?
  • Characteristics: are the actual characteristics approximately accurate, e.g. height and age?
  • Signature: ask the employee to sign something and compare this with the signature on the identity document;
  • Nationality: does the identity document state the nationality?
  • Document validity: is the identity document still valid?


  1. 4. Check if the person is allowed to work for you

Once you have confirmed their identity, you must investigate whether they are allowed to work in the Netherlands. Dutch nationals and people from the EEA plus Switzerland are allowed to work in the Netherlands. If the person holds a different nationality, then they must have a residence document which states whether they are allowed to work in the Netherlands. You can also go to step 3 on the SZW website to check which identity documents and residence documents are required for each nationality. The second link takes you to a list of titles that may be shown on the rear of the residence document, along with the corresponding conditions.


  1. 5. Make a copy of the identity document

The following are valid identity documents and you must make a copy of them:

  • Passport: the copy must include a visible document number, social security number (BSN) and passport photo. If the passport is the 2013 model, you must also copy the page with the social security number (BSN).
  • Dutch identity card: the copy must include a visible document number, social security number (BSN) and passport photo. If the identity card (ID card) is the 2013 model, you must also copy the page with the social security number (BSN).
  • ID card or passport from an EEA country: the copy must have all personal data including the passport photo.
  • Dutch foreigner's identity document (vreemdelingendocument): the copy must have all personal data. Please note that a foreigner's identity document on its own does not allow the holder to work in the Netherlands; the administration must also have a residence document (see point 1.3).

Please note: driving licences are not accepted!




Employed by you

Works for you, but is not employed by you


You must keep a copy of the ID (paper or digital)

You may not keep a copy of the ID. You should register the personal data with administration.

EEA, Switzerland, Turkey

You must keep a copy of the ID (paper or digital)

You may not keep a copy of the ID. You should register the personal data with administration.

Other countries

You must keep a copy of the ID (paper or digital)

You must keep a copy of the ID (paper or digital).


2. Retention requirement

You must retain a copy of the identity document for at least five years after the end of the employee's contract of employment.

If the employee's identity document expires while they are still employed by you, a new copy is not required. On the contrary, it is important that the administration retains the original document that was copied when the employee joined the company.


3. Duty of care

The duty of care requires you as the employer to make your staff aware that they must be able to identify themselves while they are at work. This also applies to staff who are hired in.


Sanctions for failing to fulfil the identification requirements


Anonymous rate

You must use the anonymous rate in the following situations:

- Your employee fails to provide you with the details for payroll tax on time (before the first working day or on the first working day if you accept your employee on this day). Or you do not confirm the identity of your employee.

- Your payroll does not store the details properly.

- You know, or you should have known, that you had received incorrect details from your employee.

- Your employee does not have a valid residence or work permit.

If you pay a beneficiary's salary for previous employment, then you use the anonymous rate if you do not receive the details for payroll tax from the beneficiary before the first pay date for the benefit.


If you use the anonymous rate, you retain 52% payroll tax/social security contributions.


Tax and Customs Administration fines

If the employee's identity is not confirmed, or not confirmed properly, then you may incur a fine up to a maximum of €5,278 (2019 rate) in addition to the anonymous rate being applied. The employee is also required to allow their identity to be confirmed by the employer. If the employee fails to do so, they may also incur a fine up to a maximum of €5,278.


SZW fines

In addition to applying the anonymous rate, the Inspectorate SZW may impose a fine if the personnel administration is not carried out properly for a foreign employee who can be regarded as an 'alien'. This fine is €8,000 (2019 rate) per employee and is imposed if a foreign employee without a work permit is found to be working, or if the requirement to confirm the identity of the employee is not fulfilled. The fine may be increased by 50% if the employer repeats the breach within five years.


For more information about the identification requirements, please visit the websites of the SZW, the Government of the Netherlands and the Tax and Customs Administration:


S.D. (Bas) Peterse In-house legal counsel
S.D. (Bas) Peterse, In-house legal counsel
mr. L. (Lianne) Vermeulen - Boelm Legal counsel
mr. L. (Lianne) Vermeulen - Boelm, Legal counsel
L. (Linda) van der Niet LL.M. Legal counsel
L. (Linda) van der Niet LL.M., Legal counsel
mr. H.W. (Wendy) Boevé Legal counsel
mr. H.W. (Wendy) Boevé, Legal counsel
D. (Daniëlle) van Eeden LL.M. In-house legal counsel
D. (Daniëlle) van Eeden LL.M., In-house legal counsel
mr. S. (Sanne) van Denderen In-house legal counsel
mr. S. (Sanne) van Denderen, In-house legal counsel
E.A.M. (Evi) van Vondelen LL.M. Legal counsel
E.A.M. (Evi) van Vondelen LL.M., Legal counsel
mr. M.E. (Monique) Gronovius Legal counsel
mr. M.E. (Monique) Gronovius, Legal counsel
mr. E. (Ellen) Vijge Legal counsel
mr. E. (Ellen) Vijge, Legal counsel
Tax advice Legal Budget Day special
2021 2020 2019 2018 2017 2016 2015 2014 2013

Related publications