Forced retirement to be scrapped

POSTED: 11/3/14 7:54 PM

THE HAGUE–To prevent experience getting unnecessarily lost, the Cabinet wants to make it easier to continue working after reaching retirement. Therefore they want to bring an end to the mandatory dismissal upon reaching retirement age.

The Cabinet wants to regulate this in the law for working beyond the AOW statutory age. This should come into force on January 1st, 2016. Today the Council of Ministers will discuss the proposal of Minister Asscher (Pvda) of Social Affairs. The intention is that the legislative proposal will then be submitted to the Second Chamber.

The number of working people over 65 has increased significantly in recent years. According to Statistics Netherlands, 110 thousand pensioners were working this spring. There are over 3 million AOW beneficiaries.

Currently most collective agreements and employment contracts state that employees are automatically dismissed when the state pension AOW starts. The employee and employer can do nothing about this. With a permanent job, the contract can continue indefinitely, possibly at lower wages. They may also decide to put an end to the permanent job and employ the employee further on temporary contracts or on-call basis. The employee can also continue working on piece work.

In the new situation the employer and employee can discuss the matter. They may decide together that the employee will continue working after the state pension AOW takes effect. This can be in the form of a permanent job, but also in an endless series of temporary contracts. If the employee wants to continue, but the employer does not, then the final dismissal will be declared. This can be simple because the dismissal is simplified.

Working pensioners are currently much cheaper than regular employees. Most employee insurance does not apply to them, so the retiree and employer do not have to pay any premiums. The pensioner also does not have to pay AOW contribution and the employer doesn’t have to pay unemployment contribution for the pensioner. This means that the pensioner has much more net pay left over from the same gross pay than a young person. They are also much cheaper for the employer.

The pensioner also gets a basic income from the state pension AOW, which means that they can work at lower rates and still receive a decent income. That is a disadvantage for younger employees. The Cabinet wants to make working pensioners more expensive. They should soon get at least the minimum wage.

Working pensioners are currently entitled to illness benefit of up to two years, the same as younger workers. According to the legislative proposal, the illness benefits will be limited to a maximum of 6 weeks.

Many unions are unhappy with this legislative proposal. The FNV points out the danger of unfair competition by pensioners in the battle for work. Employers’ organization VNO-NCW and employers’ adviser to collective bargaining AWVN have “no idea” whether employers have any need for the proposed legislation.

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