New redundancy law will boost mobility and productivity: minister

Plans to reform redundancy law, by making it cheaper to fire older workers and cut out the involvement of the courts, will boost labour productivity and improve worker mobility, social affairs minister Henk Kamp has told MPs.


The cabinet on Monday agreed to back the reforms agreed by the five-party coalition at the beginning of May as part of a package of austerity measures.
If they become law, the reforms would allow companies to sack staff without official permission and workers will then have to go to court to fight their dismissal. Currently, companies have to apply either to the district courts or to the UWV state benefit agency for permission to sack staff with a permanent contract.
Golden handshakes
The plans also include a sharp reduction in compensation payments, which will be fixed at a quarter of a month’s salary per year, to a maximum of six months. In addition, this money will have to be used for retraining and finding new work.
These measures will make it easier for older workers to move jobs, because they will no longer hang on for a large golden handshake, Kamp said.
But unions point out this measure will make it much cheaper for companies to sack older workers, who are currently entitled to more generous financial packages.
In addition, only workers who have money will be prepared to fight their dismissal in court, the CNV union federation said.
Productivity
Employers welcome the changes, saying smaller firms in particular will be spared the hefty costs currently associated with redundancy.
Kamp says the reforms will boost labour productivity by 0.4 percentage point, or €2.5bn a year. He hopes parliament will debate the plans before the summer recess, which will also be submitted to the SER advisory council for its recommendations.
However, it is unlikely legislation will be submitted to parliament before the general election, meaning the make-up of the next parliament will be crucial for the success of the reforms.

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