Netherlands – Prinsjesdag – Labour Law Plans for 2025

On Prinsjesdag (or ‘Budget Day’), the Dutch government announced its plans for the upcoming year. The plans include a number of key labour law changes due to come into effect between 1 January 2025 and 1 July 2026.

 What’s new?

• Unemployment benefits for overtime: From 1 January 2025, employers will no longer be required to pay additional unemployment benefits for overtime worked by permanent employees on a 30+ hour-per-week contract. Currently, permanent employees can work up to 30% more than their regular hours and their employer is not required to pay a higher rate of extra unemployment benefit. Under the new plans, the 30% threshold will be removed for 30+-hour-per-week permanent contracts.
• Transition payment: Currently, employers are required to pay a transition payment to dismiss an employee after two years’ sick leave, and in some cases, employers may be able to request compensation for the payment. However, from 1 July 2026 (and subject to parliamentary approval), only employers with fewer than 25 workers will qualify for compensation.
• Labour costs compensation – Age (subject to parliamentary approval):
  • From 1 January 2025, the maximum labour costs compensation (LKV) for employees aged 56+ will be reduced from €6,000 per-year to €2,600 per-year; and
  • From 1 January 2026, employers will be unable to apply for LKV for employees aged 56+ if the employee started work for that employer on or after 1 January 2024. LKV will continue to apply as normal for employees aged 56+ that started before 1 January 2024.
• Labour costs compensation – Occupational disability (subject to parliamentary approval):
  • Currently, employers with 25+ employees are eligible for LKV for employees with an occupational disability for up to 3 years. Under the new plans, from 1 January 2025, LKV will cover the entire period of employment with the employer.
  • Effective from a future date (not yet specified), employers that exceed their quota of employees with an occupational disability will receive increased LKV as a bonus.

What should employers do now?

Employers should review these changes and their impact, including monitoring the progress through parliament, as applicable. For further information on the upcoming changes and/or if you require any related support, please get in touch with a member of the MDR ONE team.