Minimum wages for temporary agency workers, Netherlands

About

Country: 
Netherlands
Target Groups: 
employers/purchasers

On 30 December 2008, a bill was published making employers hiring temporary agency workers liable for paying these workers the legal minimum wage (Inlenersaansprakelijkheid voor minimumloon uitzendkrachten). An exception is made when the employer only hires temporary workers from a certified temporary work agency. The Foundation of Labour has criticised the bill as being insufficient to curtail fraudulent temporary work agencies.

Background

In 1998, with the entry into force of the Law on flexibility and security, the market for temporary work agencies was liberalised in the Netherlands. Since then, temporary work agencies have no longer needed a permit to operate. Over the years, a large number of irregular temporary work agencies have set up in business. This process has been reinforced by both the opening of borders for employees from the new Member States that joined the European Union in 2004 and 2007 and the tight Dutch labour market. In 2008, the Association of Temporary Work Agencies (Algemene Bond Uitzendondernemingen, ABU), which organises the major temporary work agencies in the Netherlands, put forward several proposals to curb the activities of fraudulent temporary work agencies. One of the proposals entailed a liability for employers making use of temporary agencies. An exception is made when the employer only hires temporary workers from a certified temporary work agency.

On 30 December 2008, the Ministry of Social Affairs and Employment (Ministerie van Sociale Zaken en Werkgelegenheid, SZW) published a bill to that end (NL0902029I).

Objectives

The new legislation aims to curtail the activities of both Dutch and foreign fraudulent temporary work agencies and to guarantee that temporary workers will receive at least the legal minimum wage.

Specific measures

Employers using the services of temporary work agencies will in principle be held liable – alongside the temporary agency itself – for paying the temporary workers the legal minimum wage and minimum holiday allowance. They will not be held liable, however, when they only use the services of certified temporary work agencies. A certification procedure issued by the National Standardisation Institute (Nederlands centrum van normalisatie, NEN) will be developed for both Dutch and foreign temporary work agencies: NEN 4400-1 and NEN 4400-2 respectively.

Evaluation and outcome

Achievement of objectives

It is too early to comment on the achievement of the objectives or on any lessons learnt.

Obstacles and problems

The Foundation of Labour (Stichting van de Arbeid, STAR), the bipartite body for trade unions and employer organisations, has criticised the bill as being insufficient. STAR has requested a change in the bill so that employers making use of the services of certified temporary work agencies are also exempted from their present liability for taxes and social security contributions for temporary workers. According to STAR, only then will employers really be encouraged to use the services of certified temporary work agencies exclusively.

Impact indicators

The market for temporary agency work in the Netherlands is sizeable, amounting to some 10% of the total proportion of employees. The government has made no estimates on costs and the administrative burden; it is only obliged to do so if the government itself is involved. In this instance, this is not the case as private parties conduct the certification procedure.

No quantitative estimates are available on the benefits.

Transferability

In principle, a system of certification – as a possible alternative to a permit system – can be transferred to other countries. Care should be taken, just as with a permit system, not to infringe on the principles of freedom of establishment or freedom to provide services in the EU.

Contacts

  • Association of Temporary Work Agencies (Algemene Bond Uitzondernemingen, ABU)
  • Ministry of Social Affairs and Employment (Ministerie van Sociale Zaken en Werkgelegenheid, SZW)
  • Foundation of Labour (Stichting van de Arbeid, STAR)

Bibliography

Foundation of Labour, Letters to the parliament on the issue, 11 December 2008 and 6 February 2009, available online (in Dutch) at:

http://www.stvda.nl/~/media/Files/Stvda/Nota/2000_2009/2008/20081211.ashx and http://www.stvda.nl/~/media/Files/Stvda/Nota/2000_2009/2009/20090206.ashx.

Ministry of Social Affairs and Employment, Wijziging van titel 7.10 (arbeidsovereenkomst) van het Burgerlijk Wetboek in verband met de totstandbrenging van een inlenersaansprakelijkheid met betrekking tot de voldoening van het toepasselijke minimumloon en de toepasselijke minimumvakantiebijslag (Bill and explanatory memorandum), 30 December 2008, available online (in Dutch) at: http://docs.minszw.nl/pdf/34/2008/34_2008_3_12662.pdf.

Robbert van het Kaar, Hugo Sinzheimer Institute (HSI)

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