Problems mark implementation of Dutch Flexibility and Security Act

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Approximately 80,000 employees with a flexible employment contract have benefited from the Flexibility and Security Act, which took effect in the Netherlands on 1 January 1999, with the intention of improving job security. However, a survey published in April 1999 has also revealed negative consequences for some 45,000 flexible workers. The Netherlands has the highest percentage of such workers in Europe with nearly 4% of the workforce falling into that category. Negative feedback on the Act in practice from nearly half of the employers surveyed surprised employers' organisations and caused irritation amongst the trade unions involved.

Published in April 1999, the results of a survey conducted on the effects of the Dutch Flexibility and Security Act reveal both positive and negative sides ("Eerste ervaringen met de Wet Flexibiliteit", DH Grijpstra, DJ Klein Hesselink, PM de Klaver, EP Miedema, Research voor Beleid, TNO Arbeid, Leiden (1999)). The Act, which took effect on 1 January 1999 (NL9901117F), seeks to improve job security for employees with a flexible employment contract. "Flexible workers" comprise 4% of the workforce in the Netherlands, giving it the highest percentage of such employees in Europe. Whilst the Act appears to have improved the position of 80,000 flexible workers, some 45,000 indicate they have experienced negative consequences. The representative survey was conducted among 1,300 employers (including employment agencies) and 1,500 flexible employees, of whom 1,000 were employed on a temporary basis.

Positive and negative consequences

Positive effects of the Act include 35,000 "stand-by" employees receiving a permanent contract and 10,000 temporary employees receiving permanent employment. On the negative side, some stand-by employees were no longer called on and some employees dispatched by employment agencies were summarily dismissed before 1 January 1999, when the Act came into effect and should have brought permanent employment offers. In addition, numerous contracts were concluded containing "escape clauses", especially in the healthcare, retail and catering sectors. Stand-by employees sat by silent telephones or were referred to an employment agency (NL9902125N).

One-third of the employers surveyed viewed the Act as positive and 20% had no opinion, whilst nearly half of them (47%) responded unfavourably. The Act is said to be convoluted and to create additional administrative burdens. Additionally, many collective agreements have not yet been sufficiently adapted, which is seen as having a harmful impact on labour relations. Respondents who view the Act as beneficial state that it offers greater clarification, that it can be elaborated in the context of collective agreements, and that awareness concerning personnel has increased since it took effect.

Familiarity with the Act appears stronger among employment agency employers than among other employers, although the latter are reported to possess adequate knowledge. Comprehension is also reasonably high among employees: 64% of temporary employees and 75% of flexible workers report familiarity.

Mixed reactions from social partners

The organisation representing temporary employers (Algemene Bond van Uitzendondernemingen, ABU) does not echo the reactions of the employers surveyed and claims that the survey does not adequately represent the actual situation. In the short term, the Act may hinder employers, but in the long run it will actually increase their opportunities, says ABU. The Start employment agency, which is not affiliated to the ABU, also does not view the Act as negative, but sees interpretation as "a challenge", stating that the legislation is indeed complex and a lack of clarity prevails. This allows for significantly divergent interpretations concerning implementation by the various parties involved, including the government, companies, employment agencies, employees and unions. However, the stage is also seen as being set for identifying inconsistencies and for reaching agreeable solutions through cooperation. The Act offers the chance to include sector-specific arrangements in collective agreements. A good example is the education sector, which was fraught with problems following implementation of the Act. The education agreement now awards substitute employees - who have worked for 180 days since 1 August 1996 - preference when job vacancies arise (NL9902125N).

Start presents an image of strongly supporting increased security for flexible workers and regards the Act as a confirmation of its policy that temporary employees should be "placed and developed" instead of "used and used up". This philosophy is especially relevant in the current environment of labour shortages. Start believes that employment agencies should aspire to earning "good employer" marks based on providing flexible workers with training and supervision. Flexible workers should also play a more active role in becoming truly flexible by investing in their own employability. Start sees its guiding principles reflected in the Act.

At the same time, Start believes that the Flexibility and Security Act should not raise any false hopes; not every flexible worker is automatically eligible for a permanent position offer from an employment agency. The employer decides which employees will be recruited permanently, although this must conform to the most important stipulation of the Act, which states that a permanent contract must be offered after three consecutive contracts in three years. However, Start states that the current process of privatising the social security system will have a definite impact on flexible workers. It believes that a rift threatens to arise between privileged and underprivileged flexible workers, with employment agencies viewing the former as an attractive investment and the latter as feasible only for short-term cyclical work without future prospects, thus again limiting their social security to a minimum.

The Allied Unions (FNV Bondgenoten) was extremely disgruntled by the negative reactions from nearly half the employers surveyed in the TNO research. The union expects to see thousands of workers out of work again as of 1 July 1999, with employers scrambling to evade the Act's clause providing for a permanent employment contract after three consecutive contracts within three years.

The Minister of Social Affairs, Klaas de Vries, sees the survey results as encouraging, taking the view that problems appear limited in practice and give no cause for policy adaptation. Nonetheless, the Minister does believe that developments surrounding the Act must be followed closely. Employers, employees and the government must work together to find solutions in cases where the Act has undesirable repercussions. A new survey will be conducted in a year's time to examine the more structural effects of the Act.

Commentary

In the survey to be conducted in 2000 announced by the Minister, attention must be paid to the impact that the Flexibility and Security Act will have had on dismissals procedures. Even though the employers most deeply involved, namely the employment agencies, view the Act in a positive light, the fact that a number of agencies have been circumventing it is less encouraging. A crucial, related factor brought into the open by the general employers' association (Algemene Werkgeversvereniging VNO-NCW, AWVN) is how the Act is seen to have increased the tangle of red tape surrounding the law on termination of employment, which employers already regarded as restrictive. It seems clear that as long as a company's exit door is figuratively barricaded by legislation, it will not open its front door any more than the absolute minimum required by law. (Marianne Grünell, HSI)

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