Netherlands: Dutch Senate Adopts Legislative Proposal On Paid Parental Leave

On 12 October 2021, a legislative proposal on paid parental leave was approved by the Dutch Senate. Consequently, as of 2 August 2022, every parent will be entitled to nine weeks of paid parental leave in the child's first year of life.

Paid Parental Leave Act

The implementation of the Paid Parental Leave Act (de Wet betaald ouderschapsverlof - the Act) will establish a legal right to paid parental leave. As of 2 August 2022, every parent will be entitled to nine weeks of paid parental leave in the child's first year of life. For a more detailed explanation on (i) the conditions for paid parental leave, (ii) the application process and (iii) the manner in which employers may give substance to their employees' paid parental leave in the event of substantial business or service interests, we kindly refer you to our earlier contribution of 9 June 2021. In the current contribution, we focus on a topic that has prompted a serious discussion during the legislative process of the Act: the percentage of continued payment of wages (loondoorbetalingspercentage) that parents will receive during their parental leave. In short, this discussion can be summarized by the following question: will the possibility to go on paid parental leave be sufficiently appealing (in a financial sense) to all parents?

The discussion on the percentage of continued payment of wages

In our earlier contribution from 9 June 2021, we made a remark that it remains to be seen whether the Act will provide parents with sufficient incentive to both go on parental leave (or: for even one of them to go on parental leave at all). Our doubt originates from the percentage of continued payment of wages that will be applied during the leave. For now, the percentage of continued payment of wages is set at (only) 50% of the daily wage (and capped at 50% of the maximum daily wage). This means that a parent who decides to go on paid parental leave, will be confronted with an income reduction of (at least) 50% during the course of this leave. Especially for parents on lower incomes or for single-earner couples, this could potentially create a threshold to go on paid parental leave.

During the course of the legislative process, both the House of Representatives and the Senate criticized the fact that the entitlement to continued payment of wages was set at (only) 50%. While the legislative proposal for the Act was under discussion in the House of Representatives, a proposal was made to amend the Act in such a way that parents would be entitled to 100% of their normal wages during the course of their parental leave. However, this amendment was not supported by the majority of the House of Representatives. While the legislative proposal for the Act was under discussion in the Senate, a motion was tabled that, briefly put, calls on the new government to raise the percentage of continued payment of wages from 50% to 70% before the Act enters into force. The rationale behind this motion is that, if the percentage of continued payment of wages is set at 70% (instead of 50%), this would help achieve the intended objectives of the Act. Entitlement to a higher percentage of wages could contribute to lowering the threshold for parents on lower incomes to both go on parental leave. Further to this, entitlement to a higher percentage of wages could also result in a less traditional division of labour between men and women. Even today, men are still more likely than women to be the principle wage earner in a family. Entitlement to a higher percentage of wages during parental leave might trigger men to actually go on parental leave (which might - indirectly - trigger a more balanced division of care responsibilities). The motion was carried by a majority in the Senate. While this does not necessarily have any legal significance, the motion does carry political significance as it forms a clear appeal for the new government to raise the percentage of continued payment of wages to 70%.

Finally

We will continue to closely monitor the developments regarding paid parental leave and, more specifically, the new government's actions on the topic of the percentage of continued payment of wages.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.