RULING HIGHLIGHTED
TEMPORARY EMPLOYMENT CLAUSE UNFAIRLY APPLIED
That the differences between payroll and staffing are not always clear in practice was recently demonstrated by the Amsterdam court. The case revolves around a company that wrongfully applied the elements of the temporary employment contract in a payroll agreement. It shows how important a reliable payroll partner is.
PAYROLL WITH TEMP CLAUSE?
Background
Equal working conditions
The Balanced Labor Market Act (WAB) changed the rules around employment contracts and dismissal on Jan. 1, 2020, including for payroll employees. Employees who enter into a payroll agreement since Jan. 1, 2020, must receive at least the same employment terms and the same legal status as employees employed by the company.
Agency clause
One consequence of this is that an agency clause may not be included in a payroll contract, as it may not be included in a regular employment contract either. The agency clause is now reserved only for the temporary employment contract and ensures that a temporary worker and the hirer can leave the partnership relatively quickly.
Or is it?
But what if a payroll agreement still includes the agency clause? The court made an interesting ruling on that on July 14, 2020.
What is the case about?
Job application at restaurant
In response to a job announcement, a woman applies directly to a restaurant. She is then offered a fixed-term employment contract.
Only then does the restaurant inform her that formal employment will be outsourced to a payroll company. An agency clause is included in the employment contract.
Employee calls in sick
After about 7 months, the woman reports sick. The payroll company then terminates the employment contract 2 days later and invokes the agency clause.
The woman contests this and argues that the agency clause is invalid, as it may no longer be legally included in payroll contracts under the WAB.
Defense of payroll company
The payroll company defends this by arguing that it is an employment agency, since it performs an allocation function and does not make its workers available to a single client.
Judgment of court
Appeal denied
Amsterdam court rejects appeal of agency clause. The reason? According to the court, the employment contract is a payroll contract and not a temporary employment contract.
First of all, the court notes that the payroll company did not mediate in the placement of the employee (the so-called "allocation function"), which is a requirement for an agency contract.
Exclusivity
It also follows from the employment contract that the woman was hired exclusively for the restaurant.
The court considers this decisive for its ruling that there is no temporary employment contract, because temporary workers may not be made available exclusively to clients.
Paying out wages
Moreover, the employment contract explicitly spoke of a payroll agreement. Since this was a payroll agreement, the agency clause contained therein was not legally valid.
Among other things, the payroll company had to pay the wrongfully withheld wages to the woman.
Conclusion
Compliant partner
Applying the temporary employment contract and the payroll contract has become a lot more complex with the Balanced Labor Market Act (WAB).
As a client, always choose a compliant payroll partner who is experienced in the proper application of the agency and payroll agreement.
With great thanks to:
Hendrikx Advocaten, for highlighting this lawsuit.
