In 2014, workers in the Netherlands are entitled to a state pension (AOW) at the age of 65 years and two months. The courts have decided that an employment contract for an indefinite period of time does not terminate legally solely because the employee has reached the state pension age, unless the facts or circumstances show that the parties intended to terminate the employment contract at that time. Labour contracts and collective labour agreements stipulating that the work contract terminates when pensionable age is reached are still common and valid.
The previous mandatory retirement age of 65 in the public sector was abolished in 2008. In practice, however, that provision will have no effect before 2015, since those born in 1950 and before are entitled to benefits from previous early retirement schemes. The benefits from these schemes are lost if they are not withdrawn before age 65, and so far is de facto a barrier to continuing work.
After the state pension age is reached, labour contracts can be drawn up that differ from the collective agreement. People over that age are no longer
94 – 4. ENCOURAGING EMPLOYERS IN THE NETHERLANDS TO HIRE AND RETAIN OLDER WORKERS
entitled to the minimum wage, but they still have the right to a minimum vacation allowance. In addition, after retirement age the employer is no longer obliged to pay contributions for unemployment, sickness, or disability benefits. This means that the employee is no longer insured for unemployment and disability. In case of sickness the employee is entitled to a benefit paid by the employer, but this is not covered in the Sickness Law.
Ninety-two per cent of open-ended collective labour contracts in fact end when the state pension age is reached. If there is no statement on retirement in the employment contract or collective agreement, the contract can be terminated by mutual agreement, or via the PES or the civil court. The civil court alternative may raise the issue of severance payment.
A bill currently before Parliament aims to remove some of the barriers to working beyond the statutory retirement age. The government believes this step is necessary to stimulate longer work lives. The bill proposes a number of employment changes, creating a “lighter labour law regime” for pension claimants. It also places limitations on the employer’s obligations when employees fall sick (e.g. continuing wage payment during illness and reintegration); broadens the possibilities of having successive temporary contracts; and applies the Minimum Wage Act and Minimum Holiday Allowance Act to AOW beneficiaries (the current age of 65 will be removed from the act).
Increased labour participation in high-quality jobs beyond the standard retirement age may demonstrate that older people are a valuable labour force, and contribute to a better image of older workers. There is, however, a balance between measures to encourage employers to employ older people by allowing less protection, and those to encourage older workers to update their skills and employability by affording them the same treatment as their younger colleagues. There are great individual differences in productivity and employability; age in itself is not the sole or correct indicator when it comes to either gauging productivity or deciding it is time for an employee to retire.
Attitudes toward mandatory retirement are in general negative in the north of Europe and positive in the south (Figure 4.8). The Netherlands is among the countries where the large majority of the population feels negatively toward a compulsory retirement age. Internationally, there seems to be a trend over recent years to abolish mandatory retirement as a reason to terminate a labour contract, or to increase the age limits (OECD, 2013b). For instance, the United Kingdom removed the default retirement age from legislation in 2011. Efforts are put into how employers can manage without age as a reason for retirement (DWP, 2011, 2013).
4. ENCOURAGING EMPLOYERS IN THE NETHERLANDS TO HIRE AND RETAIN OLDER WORKERS – 95
AGEING AND EMPLOYMENT POLICIES: NETHERLANDS 2014 © OECD 2014
Figure 4.8. Attitudes towards a compulsory retirement age, European countries, 2012 Percentages
Note: Data refer to the proportion of people responding to the following question: “Regardless of the
official retirement age, should there be an age when it is compulsory to stop working?”
Source: European Commission (2012), “Special Eurobarometer No. 378, Active Ageing”,
DG Employment, Social Affairs and Inclusion, Brussels.
12http://dx.doi.org/10.1787/888932982578
The reforms proposed in the Netherlands have accentuated the issue. Reform of the occupational schemes means that longer contribution periods are needed to have pensions reach a level similar to what they had accumulated before. In the future, differences in employment protection will have less to do with tenure. It is therefore difficult to see reasons to allow age to be used in collective agreements and labour contracts as a criterion for mandatory contract termination, or to treat older workers less favourably with regard to other parts of the labour law. The connection between age limits and protection legislation is, however, complex – which heightens the need for a concerted approach to reforms of EPL, age limits and wage formation.