An ageing population and ongoing labour shortages are making it increasingly important for employees to remain in the workforce for longer. As a result, employers are more frequently faced with questions about employees who wish to continue working after reaching the Dutch State Pension (AOW) age. But what should employers take into account in these situations? In this blog, we outline the key employment law rules and exceptions that apply to employees who have reached, or are approaching, the Dutch State Pension (AOW) age.
The Dutch government actively encourages employees to continue working after reaching the State Pension (AOW) age. This helps organisations retain valuable knowledge and experience, while continued employment can also be financially beneficial for employees.
To encourage continued employment, employees who have reached the AOW age are subject to a number of different employment law rules. These rules provide employers with greater flexibility and make it more attractive to retain employees after retirement.
Many statutory employment law provisions are linked to the Dutch State Pension (AOW) age. Up to and including 2027, the AOW age is 67. From 2028 onwards, it will increase to 67 years and three months, and is expected to rise further in the future.
In some cases, however, legislation refers not to the statutory AOW age but to the retirement age agreed between the employer and employee, for example in a mandatory retirement clause. While parties may agree on a higher or lower retirement age, employers should exercise caution when setting a lower retirement age, as this may constitute unlawful age discrimination unless there is an objective justification. In practice, such exceptions are rarely accepted. For that reason, we generally recommend aligning a mandatory retirement clause with the statutory AOW age or agreeing on a later retirement age.
Shorter Salary Continuation During Sickness
If an employee becomes ill after reaching the AOW age, the employer is required to continue paying salary for a maximum of six weeks, rather than the standard 104 weeks.
Where an employee was already on sick leave before reaching the AOW age, the shorter six-week period applies from the date on which the employee reaches the AOW age. However, the total salary continuation period may never exceed 104 weeks.
Reduced Reintegration ObligationsUnder Dutch employment law, the Ragetlie rule may apply where a fixed-term employment contract follows an indefinite-term contract. In short, this rule means that a fixed-term contract does not automatically end upon expiry if it follows a permanent contract. Instead, termination may still require approval from the Dutch Employee Insurance Agency (UWV) or dissolution by the district court.
This rule does not apply where the previous permanent employment contract ended because the employee reached the AOW age or another agreed retirement age. As a result, employers have greater flexibility to continue employing retired employees under successive fixed-term contracts.
Employees who have reached the AOW age are also subject to more flexible rules regarding successive fixed-term contracts. Employers may conclude up to six fixed-term contracts (instead of three) over a period of four years (instead of three) before an indefinite-term contract arises by operation of law.
Only employment contracts entered into after the employee has reached the AOW age count towards this chain.
Termination After Reaching the AOW Age
In many cases, employers may terminate an employment contract once an employee reaches the AOW age without relying on a statutory ground for dismissal. Approval from the UWV or dissolution by the district court is generally not required.
This option can usually be exercised only once. If the employer and employee subsequently enter into a new employment contract, the ordinary dismissal rules apply again.
Shorter Notice Period and Reduced Dismissal Protection
Employees who have reached the AOW age are subject to a statutory notice period of one month, regardless of their length of service.
In addition, the statutory prohibition on dismissal during sickness is reduced from 104 weeks to six weeks.
No Statutory Transition Payment
Where an employment contract ends because the employee has reached the AOW age or another agreed retirement age, the employer is generally not required to pay a statutory transition payment.
From an employer's perspective, retaining employees after they have reached the AOW age may also offer financial advantages. Employers are no longer required to pay certain employee insurance contributions, including unemployment (WW) and disability (WIA) contributions. Employees are likewise no longer insured under these schemes.
Employers should nevertheless carefully review the applicable pension arrangements and any supplementary insurance policies. Not all pension or insurance schemes automatically align with the statutory AOW age or another agreed retirement age.
Under the Dutch Flexible Working Act (Wet flexibel werken), employees may request changes to their working hours, working patterns or workplace.
For employees who have reached the AOW age, an exception applies to requests for adjustments to working hours. They cannot rely on the Flexible Working Act for such requests. However, this does not mean employers may simply disregard them. As part of their duty to act as a good employer, employers should still consider and assess such requests carefully.
Dutch employment law offers employers greater flexibility when retaining employees after they have reached the State Pension (AOW) age. Different rules apply in relation to sickness, fixed-term contracts and the termination of employment, making it easier and often more attractive to continue benefiting from the knowledge and experience of older employees.
At the same time, employers should carefully consider the agreements in place and the consequences for pensions, insurance and employment conditions. Doing so helps prevent uncertainty and disputes at a later stage.
Do you have any questions about employing staff after they have reached the State Pension (AOW) age, or about any other employment law matters? Please feel free to contact Ymke Stam, Employment and Co-determination Lawyer, or one of our other employment law specialists.
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