Employment law changes in 2024

Employment law changes 2024

With the new year approaching, a number of things will change in the field of Dutch employment law. We will review the most important upcoming changes in this article so that you can enter 2024 well-informed.

Increase in minimum wage

As of 1 January 2024 the statury minimum wage will increase by 3.75%. Also, from 1 January 2024 a minimum hourly wage will be set at an amount of € 13,27 per hour. This applies to workers aged 21 and older.

Until now, only a minimum monthly wage was established by law. As a result, the minimum wage for an employee working 40 hours on a full-time basis was lower than the minimum wage for an employee working 36 hours on a full-time basis.

Mandatory CO2-registration for employers

One of the main commitments of the Paris Agreement is to reduce CO2-emissions by 49% by 2030, compared to CO2-emissions in 1990. Reducing CO2-emissions also includes CO2-emissions from employees' business and home-to-work travel. Employers with 100 or more employees are therefore required to report on their employees' business and home-to-work travel from 1 July 2024.

Work-related costs scheme back to usual rate

Through the Work Cost Scheme (Werkkostenregeling), an employer can provide untaxed allowances to employees. The total amount of untaxed allowances must remain within the free space (vrije ruimte) allocated by the Work Cost Scheme. The free space in the Work Cost Scheme was temporarily increased to 3% on the first €400.000 of taxable payroll in 2023. From 1 January 1 2024 the standard percentage of 1.92% will be reinstated.

The model agreements of the Dutch Tax Administration will expire

As of 1 January 2024, the model agreements from the Tax Administration (Belastingdienst) based on free replacement will expire. The well-known Deliveroo ruling is the reason for this decision.

This model agreement specifies that the contractor has the freedom to be substituted, thus negating the presence of an employment contract. Based on this agreement, clients can engage with self-employed individuals without withholding payroll taxes.

If you are using the model agreement based on free replacement, you must reassess and, if necessary, modify the employment relationship before 1 January 2024. The remaining model agreements without free replacement provisions can still be used.

Increase in tax-free travel allowance

Starting from 1 January 1 2024, the tax-free travel allowance for employees will increase from €0,21 to €0,23 per kilometer. The tax-free travel allowance cannot be provided to employees who already have a company car or bicycle, as no travel expenses will be incurred.

Increase in maximum transitional compensation

In 2024, the maximum statutory transitional compensation increases. In 2023 this amount was € 89.000 and in 2024 it is expected to rise to € 94.000. The exact amount has yet to be determined. If the annual salary is higher than the maximum of € 94.000, the annual salary will apply as the legal maximum of the transitional compensation.

Increase retirement age for state pension to 67 years

The retirement age for state pension benefits (AOW-leeftijd) will rise from 66 years and 10 months to 67 years on 1 January 2024. For the years 2025 through 2027, the state pension age will remain at 67.

Limitation of the 30% tax ruling

The 30% tax ruling applies to foreign employees working temporarily in the Netherlands. If they meet the specified conditions, they are exempt from taxes on a maximum of 30% of their salary. As of 1 January 2024, a 'limitation' to the 30% tax ruling (aftoppingsmaatregel) will be implemented. This measure restricts the application of the 30% tax ruling to income governed by the Top Income Norming Act (the so-called ‘WNT-norm’), which pertains to top incomes in the public sector. The WNT-norm for the year 2024 is set at €233.000 annually. Consequently, employers can provide untaxed salary up to €69.000 per year in 2024. However, for employees who were granted the 30% tax ruling in December 2023 or earlier, this limitation will only take effect from 1 January 2026. Additionally, the 30% tax ruling will be gradually reduced to 10% over the next few years.

End of the STAP-budget

On 15 November 2023 workers or job seekers had the opportunity, for the last time, to apply for the STAP-budget from the Netherlands Employees Insurance Agency (UWV) for training and development, amounting to € 1.000 per year. This subsidy will be discontinued as of 1 January 2024. The elimination of this budget is part of a set of economic measures outlined in the 2023 Spring Memorandum issued by the Dutch government (de Voorjaarsnota).

Do you have any questions about the upcoming changes? Please let us know!

Written by Loes Kokhuis