Dutch caretaker government announces several labour reforms

The measures were published alongside the caretaker government’s budget, the ‘Prinsjesdag’, on 17 September, outlining its financial plans for the coming year, including a number of significant reforms affecting employers, the self-employed and the unemployed.

The Dutch cabinet collapsed earlier this year, resulting in a demissionary cabinet, or caretaker government. While it is not unusual for a demissionary cabinet to present the budget, this year’s Prinsjesdag took place just weeks ahead of the country’s general election, which is scheduled for 29 October.

Notable labour reforms in the paper including a new, mandatory disability insurance scheme for the self-employed, aimed at reducing income insecurity and ensuring a basic safety net for all workers. Under the proposed scheme, all self-employed persons would be required to take out insurance, granting them access to basic, long-term disability insurance where premiums will be income-based, with a standard benefit level aligned with the statutory minimum wage. Self-employed individuals who already have comparable private insurance or are covered under the incapacity to work (WIA) scheme may opt out of the new scheme.

A proposed labour market package also pledges to boost flexible working rights, including requiring employers to dispense with zero-hour contracts, restricting the repeated use of ‘revolving’ contracts and imposing stricter licensing requirements for labour supply agencies.

Employers will be required to replace zero-hour contracts with so-called ‘bandwidth’ contracts, which offer a fixed minimum and maximum number of hours – a move which the government says will provide better income security and predictability for employees while allowing employers to retain flexibility in their contracting arrangements.

The current system of allowing employers to repeatedly use temporary contracts with short interruptions will be abolished. Instead, the government proposes introducing a statutory minimum interruption period of five years before a new chain of temporary contracts can begin, unless this is otherwise provided for by a sectoral collective agreement.

Stricter licensing requirements for labour supply agencies will also be introduced under the Act on the Admission of the Provision of Workers (WttA) bill, which is expected to come into force in January 2027, with enforcement commencing from January 2028. This will bring in strict conditions for staffing agencies that assign workers to third parties for temporary employment. The changes will require agencies to obtain a licence to operate with the aim of improving compliance with labour standards and reducing exploitation. Entrepreneurs who hire workers will only be able to do business with approved companies that have the appropriate licences in place.

The government’s paper also says the employment status of self-employed workers will be clarified under its revised version of the former government’s Assessment of Employment Relationships and Legal Presumption Bill (Wet VBAR), which aims to introduce a structured test to determine whether a worker is an employee or self-employed, with a legal presumption of employment for those earning under €36/hour.

The reform package also includes changes affecting the unemployed. The planned reduction of the maximum duration of unemployment benefits from 24 to 18 months has been postponed until 2028 after the original implementation date of 1 January 2027 proved unfeasible for the Dutch Employee Insurance Agency (UWV).

The government also plans to simply the application process for parental leave by merging short-term and long-term care leave into a single informal care leave category – mantelzorgverlof – making the process more accessible and less administratively burdensome.

There are also plans to change policies around long-term illness. From 2028, the UWV will make the company doctor’s medical opinion decisive when assessing reintegration efforts for long-term sick employees. This aims to reduce disputes and provide greater certainty for both employers and employees. In addition, from 1 July 2026, only smaller employers with less than 25 employees will be permitted to take advantage of a government compensation scheme if they have paid a statutory severance payment to an employee whose employment contract has been terminated due to long-term incapacity for work. Larger employers will no longer be able to claim this type of compensation and must bear the full cost themselves.

The government says it is also exploring options to strengthen the collective labour agreement system, including examining how to improve coverage, enforceability and adaptability of sectoral agreements in light of labour market fragmentation and the rise of flexible work arrangements. It is also looking at ways to strengthen the independence of trade unions.

Commenting on the proposals, Amsterdam-based employment law expert Floor Hintzen said: “The proposed Basic Disability Insurance Act for the self-employed and the labour market package reflect a clear policy shift, strengthening protections for vulnerable workers while preserving space for entrepreneurship and flexibility.”

However, Hintzen indicated that the proposed measures are not yet law and that the upcoming elections may influence how they are debated and prioritised in the coming months. The proposals must pass through the lower and upper house of parliament and be published in the government gazette before they can legally take effect.

If passed, Hintzen said the reforms would have significant implications for employers, particularly in relation to flexible staffing models, leave entitlements, and the engagement of self-employed professionals. “The introduction of bandwidth contracts, stricter rules on temporary work, and the VBAR bill’s employment classification test will require many organisations to reassess their current workforce structure,” she said.

The narrowing of the statutory severance compensation scheme and the increased weight given to company doctors in reintegration assessments would also affect HR and legal departments’ strategies around long-term illness and termination.

“As the legislative details become clearer, clients should be prepared to anticipate and respond to these changes,” said Hintzen. “Early awareness will help ensure they can adapt their employment practices in time and remain compliant once the reforms take effect.”