Risks and points to consider for organizations following the enactment of the Balanced Labor Market Act

In the following blog we would like to inform you about the most important facts about the Balanced Labor Market Act (in Dutch: Wet Arbeidsmarkt in Balans, also known as 'WAB'). We hope you enjoy reading it.

What is the Balanced Labor Market Act?

The Balanced Labor Market Act is a new law that became effective in the Netherlands in January 2020 with the aim of reducing the gap between employees with a permanent contract and employees with a flexible contract.

What should organizations pay specific attention to in order to be compliant?

The Balanced Labor Market Act will bring about a fundamental change within your organization. In particular, the financial consequences will have an impact. Being able to make good forecasts is becoming increasingly important. This means being able to assess how many employees you need in which positions in the medium to long term. However, not only that, knowing which qualifications employees must have is equally important. Because this means that you can deploy your employees more flexibly if you have peaks and troughs in various departments within your organization.

A second important point in the Balanced Labor Market Act is that organisations must check that part-time employees do not work more than 30 percent* of their contractual hours as this can lead to serious financial consequences. In that case, all you need is an app with notifications and alerts, so that you can avoid significantly higher costs, or avoid being forced to hire employees that you don’t want to hire under contract.

What other opportunities do organizations fail to take advantage of in the framework of this legislation?

Currently, many organizations are taking action in response to the Balanced Labor Market Act. They do this with an Excel sheet or by creating a specific workaround to deal with critical issues that arise as a result of this legislation. However, most of them still fail to approach the process as a whole, which consists of forecasting, capacity planning, effective planning and time registration. Organizations would really benefit from working with a comprehensive system, enabling them to look ahead and determine much more easily what they really need. In addition, that is where organizations could make life much easier for themselves in terms of responding to this Balanced Labor Market Act.

What risks does the Balanced Labor Market Act entail for organizations?

Many organizations prepared for it, especially at the end of last year, and many contracts were adapted accordingly. However, one of the risks that organizations are currently facing is the fact that they do not understand the consequences of this legislation.

Another major risk is that organizations tend to use a lot of different tools. They have a forecasting tool (often Excel), a planning tool (often also Excel or another software) as well as a time recording tool. But the Balanced Market Labor Act stipulates having an insight into all three factors at all times. And as long as this is not the case, there is a risk of insufficient insight.

How do organizations discover which risks apply to them?

Well, it is important to determine where you currently stand in terms of compliance. As already mentioned, many organizations have already been working on this, but a lot is still set to change in the next few months. To this end, we developed a Risk Analysis at ATOSS, which will tell you where you currently stand, what potentials are still achievable and what the risks are. To get this Risk Analysis, you can contact us. It is just that easy.

* The 30% rule has been suspended until 2021 due to the coronavirus pandemic. Please adapt your systems accordingly and check official government publications.