Atypical labour relations face stricter regulation in 2003

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Atypical labour relations came under stricter regulation in 2003. Policy focused increasingly on creating more clarity. The criteria have been tightened for self-employed persons without staff, discerning them from employees. This distinction is significant with respect to gaining access to employed persons insurance schemes. In 2004, the Disability Insurance (Self-employed Persons) Act (Wet op de Arbeidsongeschiktheid van Zelfstandigen - WAZ) will be scrapped. Illegal employment is being clamped down on: policy focuses on stamping out illegal temping agencies and imposing sanctions on employers who hire in illegal workers. After all, temporary employees were taken up in a new collective labour agreement in 2003, clarifying aspects such as salary levels. From now on, temporary employee salaries are on the same level as those paid out by the hiring party; higher salaries were agreed in exchange for flexibility.

Self-employed persons without staff still an anomaly in social legislation

While self-employed persons without staff have formed a relatively constant component of the workforce for many years - around 3% - their status became more of an issue in 2003: entrepreneur or employee. In 2003, the Body Implementing Employee Insurance Schemes (Uitvoeringsinstituut Werkgeversverzekeringen, UWV) and the Tax Authorities (Belastingdienst) twice amended the policy rules for assessing the employer-employee relationship. In 2002 it was established by law that the Tax Authorities reached decisions that must be followed by the UWV. Nonetheless, in numerous cases, self-employed persons recognised as such by the Tax Authorities are treated by the UWV as employees obliged to pay social security contributions. At the same time, self-employed persons are assessed by the Tax Authorities for the unpaid employee insurance contributions, including the employers share (in those cases where the employer could not logically have known that the self-employed person was an employee). The Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV), whose membership swells to include more and more self-employed persons each year, has taken up their cause (see NL9908157F). While the FNV has expressed satisfaction with the amendments affecting policy rules for assessing the employer-employee relationship, it also points out that these same policy rules still do not offer sufficient clarity for the bodies concerned.

The FNV also supports the cabinet decision to scrap the Disability Insurance (Self-employed Persons) Act (Wet Arbeidsongeschiktheid Zelfstandigen - WAZ) in 2003. Despite considering the act sloppy, the FNV has reservations about the amendments. After their first year of illness, the WAZ offered self-employed persons the right to benefits equal to 70% of the minimum wage and also paid out in cases of maternity leave. The intention now is to abolish the WAZ with effect from 1 July 2004. None of the parties involved were pleased with the WAZ: the premiums were too high in relation to the entitlements under the insurance. The FNV is less enthusiastic about the decision not to replace the WAZ with a better statutory scheme, but with a private provision. In the future, self-employed persons will have to take out private occupational disability insurance. The FNV fears that self-employed persons suffering from health problems will end up facing higher premiums, exclusion or the prospect of being unable to take out occupational disability insurance at all. However, the Association of Insurers in the Netherlands (Verbond van Verzekeraars) does not see this progression; within a certain period of time, they will accept everyone obliged to pay WAZ contributions without exclusion or supplementary premiums.

Changing illegal temp workers difficult to regulate

The estimated number of illegal aliens working in the Netherlands will again need to be upwardly adjusted by tens of thousands in spring 2004. For 2002, the Erasmus University arrived at an estimated number of between 112,000 and 163,000; the temping sector assumes a number of at least 300,000 illegal aliens. This serves to fuel the idea that with the further expansion of the European Union in the pipeline the number of illegal aliens has risen in recent years (see NL0212102F). Since 2002, the Labour Inspectorate (Arbeidsinspectie) has been keeping a close check on the number of illegal workers in the agricultural and horticultural and construction sectors. Illegal employees were found at a fifth of the market gardeners and at around half of the construction sites investigated. Most of these illegal workers come from other countries in Europe, especially Poland, which joined the European Union on 1 May 2004. From the periodic study conducted by the Labour Inspectorate it also appears that many of the illegal workers at the companies investigated were introduced via employment finders such as agricultural contracting firms and temping agencies, of which more than two thirds are unregistered.

Together with the Dutch Confederation of Agriculture and Horticulture (Land- en Tuinbouworganisatie Nederland, LTO), the sector organisation, the Ministry of Social Affairs and Employment launched two projects under the banner of Seasonal Employment and Manual Agricultural Contracting Firms. These projects aim to ensure that during peak periods, market gardeners will be able to engage the services of sufficient numbers of legal workers through bona fide, registered contracting firms. The current share of the market occupied by registered contracting firms such as these is around 40%. The LTO believes that in 2003, based on the lower numbers of checks carried out by the Labour Inspectorate, illegal employment has diminished in the market gardening sector. Temping agencies still report that they cope with seasonal peaks in the market gardening and construction sectors using Polish temp workers, most of whom possess German passports making it possible for them to work legally in the Netherlands. Even so, in spring 2004, new structures appeared in the agricultural sector making it possible to exploit illegal employment and circumvent the law. Foreign companies buy the agricultural produce while its still in the ground. The buyers then arrive to harvest their products using their own employees. In the south of the country, based on this practice, some 2,500 illegal Polish workers are currently engaged. The Ministry of Social Affairs and Employment and the Labour Inspectorate have been aware of this practice and such cases have been taken to the courts. In 2004, the Labour Inspectorate also announced that it will take harsher action against employers with illegal employees in service. In addition to agriculture and horticulture and construction, illegal workers can be found in the hotel, restaurant and catering industry and in the meat and fish processing industries, especially through temporary employment agencies. From 2005 onwards, temp agencies that work with illegal employees will facing a fine of EUR 5,000. At present, a first offence could cost temp agencies EUR 1,000. The government has promised the Lower House of the Dutch Cabinet a policy document with tighter restrictions.

Temping sector increasingly 'standardised'

While by definition legislation pertaining to illegal employment practices appears to trail behind the actual situation, this does not apply to temporary employment in the Netherlands. In the Netherlands, where 4% of the workforce is employed on a temporary basis via an agency, there are relatively more temporary employees than anywhere else in Europe and it is a significant and well regulated form of employment governed by its own collective labour agreement. In September 2003, agreement was reached between the Association of Temporary Employment Agencies (Algemene Bond Uitzendondernemingen, ABU) and the three biggest trade unions in the Netherlands (FNV Bondgenoten, CNV Dienstenbond and De Unie) concerning a new collective labour agreement for temporary employees, the so-called ABU-CAO. This collective labour agreement governing temporary employees came into force on 1 April 2004 and will be valid for a five-year period. Perhaps the most striking outcome after months of negotiation is that in the new collective labour agreement, the duration of temp work (phase A) has been extended from 52 weeks to 78 weeks in exchange for more pay. From now on, after having worked for more than 26 weeks at the same company, temp workers will be paid on the same level as the employees of the hiring company. Additionally, the new collective labour agreement specifies that the SMU Foundation (Stichting Meldingsbureau Uitzendbranche, SMU), which carried responsibility for implementing the regulations of the previous collective agreement, will be dissolved, that specific groups of temp workers will be awarded a training budget and that studies into reforming the pension scheme will be rounded off.

The employers organisation, the ABU and all three of the trade unions involved are enthusiastic about the new collective labour agreement. The employers organisation is satisfied because the new regulations will give the sector a better chance of fulfilling its role as an allocating body in the labour market. The new collective labour agreement is simpler and offers greater flexibility. The unions are pleased because the level of commitment and security will increase for temp workers in relation to the amount of time the temp worker is employed by either the temp agency or the hiring company. Security relates especially to the payment of temp workers. The system of payment has also become simpler and more transparent. Additionally, because of the training budget, career opportunities have improved for temp workers. In short, the employers organisations and trade unions believe the agreement is fair.

Nonetheless, some employment finders are attempting to get out of the terms of the ABU-CAO, which has been declared generally binding for the sector by establishing a trade union with its own collective labour agreement. This concerns so-called payroll companies. These companies do not conduct recruitment & selection activities themselves, but list the flexible employees of the client company on their payroll. The respective parties to the ABU-CAO have requested that the Ministry of Social Affairs and Employment take a closer look at the independent status of this group of employment agencies. The Minister of Social Affairs and Employment commissioned a study in which the conclusions of the unions are endorsed. For example, the study shows that in financial terms, these employment agencies are fully dependent on their clients. In addition, they cannot be considered trade unions because they have no access or recourse to strike funds or regulations. The study concludes that these employment agencies are therefore covered by the ABU-CAO.

Commentary

The regulation of atypical labour relations is tightening by the year. Temporary staffing is now accepted and largely regulated. More than before, temporary employees now find their rights and obligations recorded in writing and, with its own collective labour agreement, the temping sector has in fact reached maturity. Concerning self-employed persons without staff, the question of a definition continues to be a thorny issue in terms of legislation and regulation, but it can be seen that unambiguous arrangements have and will appear more frequently in the years ahead. This despite the issue of whether sufficient recognition is given to the fact that one-person businesses cannot always cope with customary business risks. Illegal temporary employment, and consequently abolition, will be far more difficult to resolve on the basis of legislation and regulation. In the knowledge that illegal labour will continue to be part of the picture from time to time, managing to curtail and transform this into legal employment is certainly a challenge.

Monique Aerts, HSI

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