Temporary work in the Netherlands: from flexible to permanent employment?

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A remarkable number of people work for temporary employment agencies in the Netherlands. As a result of new legislation, approved by Parliament's Lower House in November 1997, the legal status of these workers will improve in proportion to the length of time they work for a particular agency. However, employers in the temporary work sector and trade unions have fundamentally different points of view on the conditions of employment that should apply.

Temporary employment agencies play a larger role in the Dutch economy than they do in any other European nation. In 1983, 5.8% of the Dutch workforce were employed by a temporary employment agency, increasing to 7.6% in 1990, which by 1994 had swollen to 10.9%. Most of the time, this involves short-term assignments: 47.3% last less than two weeks, and only 3% manage to pass the 11-month threshold. It is interesting to note that about a quarter of the job seekers who are successfully placed by temporary employment agencies belong in the "hard-to-place" category. As such, these agencies increasingly fulfil roles traditionally carried out by public employment offices.

Fixed contracts and temporary employment agencies

At present, there remains a sizeable shortage of qualified personnel for certain types of jobs in the Netherlands. This shortage of experienced personnel has been particularly pronounced in the metalworking sector. Temporary employment agencies are also becoming increasingly confronted by a tight labour market, including the market for part-time work. In response to this, the largest temporary employment concern, Randstad, has undertaken several noteworthy steps. One of these was to employ permanently 30 of its temporary workers in July 1997. However, this move covered only those temporary workers who were seen as "best bets" in the labour market.

Before this, in mid-1996, redundant workers in the sugar sector were offered a job at Randstad for a two-year period. If no work could be found for an employee during this period, they would receive a permanent employment contract with Randstad. An important reason for Randstad's decision to take this route was that it provided the company with valuable experience in the area of hiring temporary workers on a permanent basis.

Balance restored through the Flexibility and Security Bill?

The decision of temporary employment agencies to give permanent contracts seems to be a contradiction in terms. Nonetheless, this combination is a key element in the Flexibility and Security Bill which was passed in the Lower House on 18 November 1997 (NL9706116F). Virtually the whole proposal was borrowed from an agreement reached in 1996 between Dutch employers' and employees' organisations represented on the bipartite Labour Foundation (Stichting van de Arbeid). The proposal endeavours to inject additional flexibility into the labour market by relaxing dismissal laws on the one hand, while generating a minimum level of security for employees in flexible jobs on the other.

This Bill has major consequences both for temporary employment agencies and for those who work for them. It provides for a gradual increase in the rights of temporary workers proportionate to the length of time they are employed with a particular agency. The Bill also allows the employers' and employees' organisations involved to iron out the details later in a five-year collective agreement.

Temporary workers employed by a temporary employment agency for one year will receive a three-month contract. During these three months, the employer will be required to continue paying wages - even if there is no work to do - provided that the temporary worker remains available for work. Furthermore, the new regulation also specifies that a workers has the right to an employment contract for an indefinite period after having worked for a temporary employment agency for 18 months at a single employer, or 24 months for multiple employers. In 1994, there were 33,800 people who had worked for two or more years as temporary workers. This figure has since grown.

At the same time as the new law takes effect, the current permit system for temporary employment agencies will also be discontinued, thus ending the distinction made between temporary employment agencies and secondment agencies. This will allow the former to participate in an exciting and growing market.

Additional agreements

The Flexibility and Security Bill does not contain provisions regarding the transition to the new system. This has aroused the fears of the largest employers' organisation in the temporary employment sector, the General Union of Temporary Employment Agencies (Algemene Bond van Uitzendbureaus, ABU). It is afraid that once the new law takes effect, temporary employment agencies will be forced to hire many thousands of temporary workers on a permanent basis. However, in the meantime, the trade unions and employers' organisations involved in the matter have agreed to an arrangement for the transitional period. The employers wanted temporary workers to begin accumulating their rights only after the law came into force, while the trade unions felt that the employment history of these temporary workers should also be taken into account. The final agreement stated that the employment history of a temporary worker would count towards acquiring a permanent contract for a retrospective period of three years. Temporary workers who have worked at least 3,000 hours will receive a permanent contract the next time they are called to work. Temporary workers who have worked 2,000 hours will be eligible for a temporary contract, and those with 1,000 hours will be granted the right to training and building up a pension. It was also agreed that temporary contracts currently in force will continue under the old regulations.

Disputes over applicable collective agreements

These agreements did not clear up all the problems, however. Some sectors still have difficulty with regard to the type of collective agreement to be applied to temporary workers: which applies, the collective agreement for the sector of the user company, or that for temporary workers? The employers (as represented by ABU) feel that it makes perfect sense to apply the temporary employment collective agreement, as the disparity of employment conditions in the various sectors would lead to inconsistencies for temporary workers. The trade unions, on the other hand, aim to have the collective agreement of the user company apply to the temporary worker wherever possible, hoping that this may quell the demand for temporary workers somewhat.

One sector that applies its "own" collective agreement to temporary workers is the construction sector. Hence certain categories of workers from temporary agencies do not fall under the less expensive temporary employment collective agreement, but that of the construction sector. Experienced temporary workers will immediately be covered by this agreement, while newcomers will remain under the terms of the temporary employment collective agreement for an initial period. For their part, temporary employment agencies will continue to contribute towards professional training in the construction sector, as well as complying with the "winter stop" arrangement (NL9703107N).

If the negotiations between ABU and the trade unions do not result in a solution to the collective agreement issue, ABU intends to ask the cabinet to proclaim legally that the temporary employment collective agreement receives priority above that of the contracting party.

Commentary

The burgeoning of flexible labour in the Netherlands, and more specifically, work through temporary employment agencies, is often mentioned in connection with the country's relatively strict dismissal regulations. The Netherlands is the only country in the European Union with a "preventative dismissal evaluation", which requires employers to apply for a dismissal permit from the Director of the Regional Employment Services Authority.

Partially due to the Flexibility and Security Bill, the extent of external flexibility now seems to have reached a limit. As a result, large companies in particular are turning their sights inwards. To increase internal flexibility, labour pools are being set up as well as internal temporary employment agencies. Examples of these include Stork (NL9707122N) and Philips (NL9710142N). An important motivating factor for the trade unions to cooperate with these new internal schemes is that they may arrest, or even curb, external flexibility. (Robbert van het Kaar, HSI)

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