With the Work and Security Act, which came into effect on January 1, 2020, the government aims to make permanent contracts more attractive for employers compared to flexible contracts. Therefore, since January 1, employers pay a low unemployment insurance premium (2.94%) for employees with a permanent contract and a high unemployment insurance premium (7.94%) for employees with a flexible contract.
Written Employment Contract for an Indefinite Period
The main rule is that the employer pays the low unemployment insurance premium for employees who work on the basis of a permanent contract, meaning a written employment contract for an indefinite period that is not an on-call contract. The requirement that an employment contract is recorded in writing is also satisfied with a digital employment contract.
Employers are required to include a copy of the employment contract for an indefinite period in the payroll administration of those employees for whom they pay the low premium.
Alternative: Agreeing on an Addendum
When there is no (longer) a written employment contract for an indefinite period, there is the possibility to agree on a written ‘addendum’ signed by both parties. This must show that there is an employment contract for an indefinite period. It has since been clarified on January 21, 2020, that this may also be agreed digitally. The written (or digital) confirmation must be kept in the payroll administration.
Transition Period
Employers are offered a transition period until April 1, 2020, so they have time to organize their administration. This means that employers may pay the low unemployment insurance premium until that time, even if the employment contract for an indefinite period (not being an on-call contract) has not yet been recorded in writing, or if the employment contract or addendum has not yet been signed by both parties.
This leniency only applies to employment contracts of employees who entered employment before January 1, 2020.
Tip: Watch out for Overtime!
To prevent small, permanent contracts from being used to mask (for example) full-time on-call work, the rule applies that the high unemployment insurance premium still applies if an employee has 30% or more paid hours in a calendar year than the agreed work scope. The premium is then revised retroactively.
