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Important legal changes for employee and employer

On December 28, 2016 by WePayPeople

The new year is almost upon us, and the turn of the year often coincides with changes in legislation. For example, the minimum wage is adjusted twice each year, on 1 January and 1 July, and any reductions or increases are usually implemented at the turn of the year. Below is a preliminary overview of the changes that you as an employee and/or employer will be faced with next year.

Retirement age

The Dutch retirement scheme (AOW) is becoming more and more complex; budget cuts are continually being implemented, causing the retirement age to shift. As of 1 January 2017, the retirement age will go up three months, to 65 years and 9 months. The retirement age will continue to be increased gradually; in 2018, it will once again go up three months, to 66.

Minimum wage

The minimum wage is adjusted twice a year, on 1 January and 1 July. On 1 January 2017, it will go up 1.11%, resulting in a minimum wage for full-time employees aged 23 of €1,524.60 gross per month. In addition you can read our blog about the new minimum wage as of January 2017 to find out more about the rise of the minimum wage and how it will affect each individual age group.

Full minimum wage starting at 21 years of age
In 2017, the first steps will be taken towards lowering the age limit for the minimum youth wage. The legal minimum youth wage now applies to everyone under the age of 23, so this age limit will gradually be lowered. The full minimum wage will eventually apply to everyone aged 21 and up. “Adults deserve to be compensated like adults,” said Mr Asscher, Minister of Social Affairs and Employment. And by abolishing the minimum youth wage for people between the ages of 21 and 23, the Dutch system will be more in line with what is customary internationally. Currently, the full minimum wage only applies to employees aged 23 and up. Youths under the age of 23 are given a fixed percentage of this minimum wage, known as the minimum youth wage. In addition to gradually lowering the age limit for the full minimum wage to 21, Minister Asscher will also be gradually raising the minimum youth wage for employees aged 18, 19 and 20.

Lowering the age limit must not negatively affect youth employment opportunities
Lowering the age limit for the full minimum wage may not lead to considerable negative effects on youth employment opportunities. Such an increase in wages could result in negative effects of the sort. However, in order to ensure that this will not be the case, the age limit will be lowered gradually. If the first lowering has no negative effects on youth employment opportunities, the age will be lowered a second time. The first lowering will take place in July 2017, after which the authorities will examine whether a second lowering may be implemented in July 2018. The prospected annual changes are listed in the table below:

Legal minimum wage 2017 in percentages

AgeCurrent minimum youth wage (%)Minimum youth wage (%), July 2017 Minimum youth wage (%), July 2018
15 years30%30%30%
16 years34,5%34,5%34,5%
17 years39,5%39,5%39,5%
18 years45,5%47,5%50%
19 years52,5%55%60%
20 years61,5%70%80%
21 years72,5%85%100%
22 years85%100%100%
23 years and older100%100%100%

Traineeships are the exception to this rule
There is one exception to the increase of the minimum wage: traineeships. Traineeships that are part of the on-the-job training track of Dutch senior vocational secondary education are not included in this scheme. Employers can decide for themselves whether they want to make use of this exception. Naturally, increasing the minimum wage will make these kinds of traineeships a lot more expensive for employers.

As of 1 January 2017, employers can also be eligible for low-income benefits for employees aged 21 and 22 as well. This helps limit the labour costs for these employers and ensures that those costs are not solely borne by the employers.

Deductions for employees with disabilities
Apart from the fact that employers may deduct from the minimum wage for housing costs or health insurance costs, provided that the employees have given their permission, employers may also deduct from employees with disabilities to account for utilities, sewerage levies and water authority taxes. Again, the employees in question must grant written permission to the employer. The reasoning behind this scheme has to do with unburdening these employees and limiting their risk of accumulating debts. Via this scheme, the main fixed costs that the employee has to deal with are covered by their employer instead.

Annual returns for 2016

The annual returns for 2016 will be made available as a download in the portal as soon as possible, by 1 April 2017 at the latest.

Dutch Sickness Benefits Act (ZW) for 2017

As of 2017, WePayPeople will no longer outsource the implementation of the Dutch Sickness Benefits Act for our own employees to Acture; instead, the UWV (Employee Insurance Agency) will take care of this.

Additional taxable benefits categories

As of 2017, there will be only two remaining additional taxable benefits categories: 4% for zero-emission vehicles and the standard 22% for all other cars whose first authorisation is dated 1 January 2017 or after. An additional benefits rate of 25% currently applies for regular cars – to be lowered to 22% as of 2017, as mentioned. And on the other hand, a higher additional benefits rate will apply for all zero-emission or near zero-emission vehicles as of 1 January 2017.

Questions?

If you have any further questions about the above, please contact WePayPeople at +31 (0) 20 820 15 60.