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Welcome to our quarterly employment update. This update contains a selection of the most important employment law developments in the Netherlands, with respect to legislation and case law.
Legislation
Budget day 2025 (Prinsjesdag)
The Dutch government presented the National Budget (Miljoenennota) and the Tax Plan 2026 (Belastingplan) on 16 September 2025. The most relevant (proposed) changes are:
Work-from-home allowance and travel allowance
The Tax Plan 2026 indicates that the tax-free work-from-home allowance is likely to increase from EUR 2.40 in 2025 to EUR 2.45 in 2026. The tax-free travel allowance will remain unchanged.
Shortening of unemployment benefit duration
In the Spring Memorandum 2025, the government announced that the maximum duration of both the unemployment benefit (WW) and the wage-related WGA benefit will be reduced from 24 to 18 months. This measure was initially set to take effect on 1 January 2027. However, as timely implementation by the Employee Insurance Agency (UWV) is not possible, the introduction has been postponed to 1 January 2028.
Expat scheme and reimbursement of extraterritorial costs (ETK scheme)
As of 1 January 2027, the percentage for the fixed tax-free allowance under the expat scheme (formerly the 30% scheme) will be reduced from 30% to 27%.
In addition, the ETK scheme will be tightened. This means that certain costs can no longer be reimbursed tax-free as of 2026. Specifically, this concerns additional living expenses, including the costs of gas, water, electricity, and other utilities, as well as extra telephone expenses for private purposes with the country of origin.
Abolition of reporting obligation work-related mobility for SMEs with up to 250 employees
To reduce the administrative burden for small and medium-sized enterprises (SMEs), the government has decided to abolish the reporting requirement for work-related mobility for all SMEs. This means that, as of 2026, employers with fewer than 250 employees will no longer be required to complete this registration.
RVU threshold exemption
The tax threshold exemption for early retirement schemes (RVUs) up to three years before the state pension age (AOW) will remain in effect from 2026. To make the RVU more accessible for employees with a low income or limited pension, it is proposed to increase the current threshold amount of EUR 2,273 (2025) by EUR 300 gross per month.
In addition, it is proposed that the rate of the pseudo-final levy for RVU payments exceeding the threshold exemption will be increased in stages: 57.7% in 2026, 64% in 2027, and 65% in 2028.
For a comprehensive overview of the changes in the Tax Plan 2026, please refer to our blog post on this topic.
Implementation of the Pay Transparency Directive
The Minister of Social Affairs and Employment has announced that the implementation of the Pay Transparency Directive for men and women will be postponed. The new target date is now 1 January 2027 (instead of 7 June 2026, as stipulated by the directive).
Internet consultations
In our continuous effort to keep you informed on legislative developments, we wish to highlight the current consultation phase for upcoming legislation. This phase is an important step in the legislative process, allowing stakeholders to review and comment on proposed bills.
Decree on Clarifying Assessment of Employment Relationships (Besluit verduidelijking beoordeling arbeidsrelaties): This decree provides further elaboration on the two main elements by which the draft bill Clarification of the Assessment of Employment Relationships and Legal Presumption clarifies the concept of “working under the authority (of an employer).” For more information about this draft bill, please refer to our Quarterly Insights Q2 2025.
Case law
We have made a selection of the most significant recent employment law cases for employers, mainly from the following courts:
The Supreme Court (Hoge Raad)
The Court of Justice of the European Union (CJEU)
Subdistrict courts: changing home working policy is subject to works council's right of consent
During the COVID-19 pandemic, large numbers of employees began working from home. Now, more and more employers are seeking to bring their employees back to the office more frequently. It is generally assumed that the place of work falls under the employer’s right to issue instructions, unless specific agreements have been made with the employees concerned. Under the Dutch Flexible Working Act (Wet flexibel werken), an individual employee is allowed to request permission to work from home. The employer may, after consulting with the employee, deny such a request.
However, when an employer has a home working policy in place, the question arises: does amending or withdrawing that policy fall under the works council’s right of consent? In two recent cases, subdistrict courts held that it does. This is noteworthy, as it is the first time judges have explicitly classified a home working policy as a regulation concerning working conditions within the meaning of Article 27(1)(d) of the Dutch Works Councils Act. Both judges held that working conditions are fundamentally different when employees are allowed to work from home one or more days a week, as opposed to spending the entire week in the office. Working from home directly affects workload (less commuting time, greater flexibility in organizing working hours) and work–life balance, and thus employees’ well-being. Therefore, any changes to the home working policy require the works council’s consent.
Practice note: In our view, there are solid arguments that not all changes to a home working policy are subject to the works council’s right of consent. However, in light of the two rulings mentioned above, it is becoming increasingly difficult to maintain that position. It remains to be seen how the Supreme Court will rule. For now, employers will likely need to seek the works council’s consent when amending or withdrawing the home working policy. Without consent, the works council can nullify the decision. The employer may then apply to the court for alternative approval, which will be granted only if the works council’s refusal is unreasonable or if there are overriding organizational, economic, or social business interests.
Employers must provide employees with any training necessary to perform their duties. This obligation is laid down in Article 7:611a(1) of the Dutch Civil Code. Article 7:611a (2) further provides that, where the employer is required under national or European law to offer training, it must be provided free of charge, counted as working time, and take place during regular working hours. Any study costs repayment clause relating to such mandatory training is null and void.
The Supreme Court recently ruled on whether a study cost clause relating to the professional training for junior lawyers is legally valid. Among other things, the ruling addresses whether all training that falls under the general training obligation of Article 7:611a (1) also falls under paragraph 2, as a result of which it is not possible to validly agree on a study costs repayment clause. The Supreme Court affirmatively answered this question. Law firms must therefore provide junior lawyers’ professional training free of charge, and study costs repayment clauses relating to such training are invalid.
Practice note: Employers should carefully assess which training is necessary for employees to perform their duties. For such training, it is not possible to validly agree on a study costs repayment clause. However, for training aimed at facilitating an employee’s next career step (employability), it is generally permissible to agree on a study costs repayment clause.
Supreme Court: Redeployment test also applies to i-ground for dismissal
Dismissing an employee is subject to strict legal requirements. First and foremost, there must be a reasonable ground for dismissal. These grounds are exhaustively listed in the Dutch Civil Code. Examples include redundancy (a-ground), underperformance (d-ground), misconduct (e-ground), and a disrupted employment relationship (g-ground). In 2020, the cumulative ground (i-ground) was introduced. This allows dismissal where several grounds are partially met, even if none would suffice on its own.
On 18 July 2025, the Dutch Supreme Court issued its first ruling on the cumulative ground. Key takeaways:
Dismissal on the cumulative ground is only permissible if the court finds that redeployment within a reasonable period to another suitable position is not possible or not reasonable.
If the court terminates on this ground, it may award the employee additional compensation of up to 1.5 times the statutory transition payment. The employee need not request this; the court may award it on its own initiative.
If the court intends to terminate on the cumulative ground and award this additional compensation, it must inform the parties and give the employer an opportunity to withdraw its dismissal request. This also applies in appeal proceedings.
Practice note: In this ruling, the Supreme Court provides several important guidelines for dismissal on the cumulative ground. However, case law from lower courts shows that judges are cautious in applying this ground for dismissal. It is therefore important for employers to carefully substantiate why circumstances from different grounds for dismissal should lead to termination.
Central Appeals Tribunal: Transition Payment and Commission/Bonuses (paid “Over” or “In” the Reference Period?)
The transition payment is the statutory severance payment in the Netherlands. Its purpose is twofold: to facilitate the transition to other paid employment and to compensate for dismissal. The amount of the transition payment is one third of the gross monthly salary per year of service. The method for determining the gross salary for the transition payment is set out in the Wage Definition Decree (the Decree) and the Regulation on Pay Components and Working Hours (the Regulation). In practice, there is debate about how variable remuneration components should be included in this calculation.
For commissions, the Decree stipulates that an average must be taken of the commissions due in the twelve months prior to the end of the employment contract. Bonuses are taken into account if they are due in the three calendar years preceding the year in which the employment contract ends. The question is whether this refers to commissions/bonuses that were paid “in” the relevant reference period, or those that were earned “over” the reference period.
The Central Appeals Tribunal (CRvB) recently ruled as follows. The variable components listed in the Regulation, such as bonuses, depend on the employee’s performance, the company’s results, or a combination thereof. Therefore, it makes most sense to look at what was earned “over” the reference period, not what was paid “in” that period, because payment timing can be arbitrary. Moreover, using an “in” approach would mean that some of the bonuses would relate to a period more than three calendar years before termination, weakening the link to the most recently earned monthly wage. Amounts could even be paid in the reference period with no real connection to the work performed for that period. Therefore, bonuses and commissions must be calculated based on what was earned “over” the reference period.
Practice note: This ruling will most likely put an end to the debate about which commissions and bonuses should be included in the transition payment. It is likely that the Supreme Court will follow this ruling as well.
