After the Modern Migration Policy Act took effect on June 1, 2013, the revision of the Foreign Nationals Employment Act (“FNEA”) took effect on January 1, 2014. One of the most important amendments concerns the tightening of the current labor market test. Various amendments have also been made to prevent competition on employment conditions. In addition, the amendments relating to the stimulation of the knowledge economy are geared toward attracting highly skilled migrants. Yet, at the same time some measures have been taken to tighten the highly skilled migrant procedure. The revision of the FNEA has resulted in the implementation rules being rewritten. Below we address the main amendments and the most important consequences this will have on employers who engage the services of foreign workers.

Tightening labor market test and recruitment efforts employer

The Cabinet strives to make better use of the current labor supply in the Netherlands, the European Union (with the exception of Croatia), the European Economic Area and Switzerland and to reduce the necessity to issue work permits for workers from outside Europe. Up until now, the UWV assessed whether suitable labor supply was available for a job vacancy. The UWV will now only need to assess whether there are sufficient jobseekers on the labor market who meet the specific requirements of the position. The employer will need to actively recruit from this selected group to fill the vacancy. Under the new legislation a work permit must be refused if there are jobseekers available, or if the employer fails to prove that they have made sufficient efforts to recruit workers.

If a work permit is issued to the employer after a labor market test, it will only be valid for up to one year (previously three years). In order to be eligible for a new work permit, a new test will need to be conducted to check whether there is labor supply available in the Netherlands or in Europe. This emphasizes the temporary nature of labor migration. Another measure is the extension of the period in which the employee must have a work permit; this has been increased from three years to five years.

Preventing competition on employment conditions

Various amendments have also been made to prevent competition on employment conditions. This competition not only has negative consequences for the labor migrants involved, but also results in unfair competition in respect of Dutch workers. One of the measures that aims to reduce the risks of unfair competition is the refusal of a permit if the remuneration is less than is customary for the same or a similar position. The labor conditions, the terms of employment and the employment relationship must, at least, be at the level required by law or at the level customary in the business sector. The full minimum wage or more must be paid for a 23-year-old employee, even if that person works part-time or is not yet 23 years old.

Stimulating the knowledge economy

The Cabinet wishes to stimulate the influx of highly skilled workers and that is why workers in a number of categories are not subject to the restrictive admissions policy and do not require a work permit. As of January 1, 2014, the period during which this employment is permitted in the Netherlands without work permit has also been extended in most cases.

The Foreign Nationals Employment Act Implementation Decree (“FNEAID”) makes a distinction between people who actively contribute to our knowledge economy during their employment and employees who perform activities that do not lead to displacement in the Dutch labor market. The individuals that contribute to the Dutch knowledge economy are mainly teachers and researchers for whom a three-year exemption has now been introduced. For the remaining group, an exemption applies in the following cases.

Exemption for business meetings

One of the important exemptions applies to conducting business meetings. This includes discussions held on the development or the management of the company or organization. However, any activities performed in relation to the primary manufacturing process or the core activities of the company or organization are excluded. Additional activities, such as maintaining contact by phone or email with the company abroad are included.

In revising the FNEA, attempts have been made to further relax the business discussions rule by extending the period to 13 consecutive weeks within a 52-week period. However, this does have an unintended limiting effect, as this will allow employers less flexibility when utilizing the exemption rule. The Ministry of Social Affairs and Employment has given an undertaking to reconsider this limitation. It is expected that, as a temporary measure, the previous provision of four weeks within a 13-week period will apply again.

Exemption for receiving training and education

This has been added to meet the need of many international companies to offer training and educational sessions in the Netherlands to employees of their foreign sister companies or subsidiaries. A work permit will no longer be required for training courses that are limited to observation, familiarization with the company culture and receiving instructions in a clear learning environment under the supervision of a trainer. Meetings for the promotion of the company culture are also included in the new exemption. This exemption applies for a maximum of 12 consecutive weeks within a 36-week period.

Exemption for installation of software

No work permit is required for workers coming to the Netherlands for the purposes of fitting machinery/equipment or installing software or workers who give training sessions to users, provided the activities take no longer than 12 consecutive weeks within a 36-week period. This is subject to the condition that the machinery/software were manufactured or produced in the country of the foreign employer.

Tightening highly skilled migrant procedure

As part of the revision of the FNEA, the FNEAID aims to tighten the highly skilled migrant procedure. This is largely aimed at the salary of the highly skilled migrant and improving the inspection thereof. From now on, a month criterion applies which is aimed at achieving a more uniform payment and increasing certainty that the agreed salary is actually paid. The salary must now also be paid monthly into a bank account held by the highly skilled migrant. The payslips must be made available for inspection upon first request.

The following gross monthly salaries apply as of January 1, 2014*:

Highly skilled migrant of 30 years and older                            EUR 4,048 / EUR 4,371.84

Highly skilled migrant of up to 30 years                                  EUR 2,968 / EUR 3,205.44

Dutch graduates and ‘regulation higher educated migrants’      EUR 2,127 / EUR 2,297.16

(* the first amount excludes 8% vacation allowance, the second amount includes 8% vacation allowance)

The salary must also relate to the usual weekly working hours for the position. For example: this salary cannot be paid for a 70-hour working week. If a person briefly works fewer hours, for example takes unpaid leave for a certain amount of time, the monthly salary norm must still be met and the annual salary is no longer taken into account.

The salary criterion is assessed solely on the salary received in cash, i.e. the fixed contractual gross salary in cash. Non-cash salary payments, and uncertain salary components, such as overtime, tips, and benefit payments, are excluded. Fixed allowances, such as the vacation allowance and 13th month payment or fixed year-end bonus, may be included in the gross salary. As an exception, these allowances do not have to be paid monthly. The IND will now ask what the monthly salary excluding vacation allowance and year-end bonus is, as well as the salary including these allowances.

Rewritten implementation rules

In addition to the FNEA and the FNEAID being drastically amended, the implementation rules have also been rewritten. To a certain extent, this involves only marginal changes or rephrasing. We will list some relevant and interesting changes.

The age limit is now only a lower limit of 18 years. The upper limit of 45 years has been abandoned.

The employer is in future obliged to provide its employee with a copy of the work permit.

When applying for a work permit, proof of a request for a visa or a residence permit no longer needs to be provided. The employer is only obliged to state that this has been done. The UWV can still request proof in case of doubt.

The labor market test does not necessarily have to be applied to workers in the following categories. Depending on the category in question, no assessment is made of the obligatory vacancy notification, the presence of priority jobseekers or the employer’s obligation to prove that they have made sufficient efforts to recruit workers. In some cases, the minimum salary is also not assessed.

The fitting and installation of machinery and equipment supplied by foreign companies.

This makes it possible to request a permit for the fitting and repairing of tools, equipment and machinery, the installation of software or the provision of training sessions to users. As a general rule, the goods must be supplied by the foreign employer, the employee must have been in permanent employment for a year or longer and have specific knowledge, and the cost of labor must be less than the value of the supplied goods. If the conditions are met, a permit may be issued for up to one year.

Inspection in connection with the supply of goods to a foreign company

If a Dutch company supplies goods to a foreign business, it is possible, subject to conditions, to obtain a permit for up to one year for the inspection or assessment of these goods by employees of the customer, or for training in the use of the goods to be provided to the employees of the customer.

Transfer of staff within a group

A permit for up to three years can be issued to group staff without the labor market test being conducted, provided this involves key staff, trainees and specialists. However, there are a few minor changes. For example, a salary condition applies to trainees and specialists: trainees must receive the salary of a highly skilled migrant of up to 30 years and specialists must receive the salary of a highly skilled migrant of 30 years and older.

It will now also be possible to submit a request for group staff under a trade or association agreement. In such cases other assessment conditions apply. KPMG Meijburg & Co Expatriate Services will gladly explain this legislation and the different assessments to you in more detail.

Short stays by highly skilled migrants

This concerns an earlier pilot project whereby official sponsors can request a work permit for their highly skilled migrants provided their stay in the Netherlands does not exceed three months. The pilot project is now a permanent arrangement, be it with changes; the most important being that the salary criterion of the highly skilled migrant procedure applies to migrants of up to 30 years old. The salary criterion of 30 years and older previously applied to all requests, regardless of the age of the migrant.

Highly skilled migrants who work in the Netherlands but live abroad

This is a new procedure, which offers Authorized sponsors the possibility to obtain work permits for highly skilled migrants who do not live in the Netherlands. Naturally they must still meet the salary criterion of the highly skilled migrant procedure and be employed for more than three months. When submitting the request, the employer must also provide proof showing that the employee has a legal residence permit in his home country. It is expected that this procedure will largely benefit employers in the border area.

On the job training

This procedure remains unchanged and applies to people who come to the Netherlands to gain work experience and who will immediately perform these activities at their current employer in their country of origin. A work permit may be granted for up to 24 weeks.

Refusal or withdrawal of the work permit

In line with the goal of preventing competition on labor conditions, other instruments have been included in the FNEA which make it possible to refuse or withdraw permits to employers who have repeatedly violated labor legislation and have been sanctioned for this violation. This could be the case if the employer or manager has faced criminal charges or administrative penalties within a five-year period directly preceding the request. This is not an imperative reason to refuse or withdraw a permit, although the repetitive nature and degree of violation will be taken into consideration. An employer can also be refused a work permit if he has requested the status of official sponsor from the IND and this request has been refused, suspended or withdrawn.

Please contact KPMG Meijburg & Co Expatriate Services for further information on the grounds on which a request may be refused or withdrawn, and on the various changes.

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