Paid Parental Leave Act

Recently, the bill “Paid Parental Leave” (Wet betaald ouderschapsverlof) has been approved by the House of Representatives. This bill will amend the Work and Care Act (Wazo), the Flexible Work Act (Wfw) and several other acts. This bill implements European Directive 2019/1158. This Directive contains several measures to enable employees to improve their work and care balance. What exactly does this bill entail?

Current regulations

In the Netherlands, the right to parental leave is regulated in Chapter 6 Wazo. The purpose of the Wazo is to enable employees to improve their work-life balance to make it more attractive for both men and women to work or continue to work after the birth of a child. Under the current provisions of Chapter 6 Wazo, both parents can take parental leave of 26 weekly working hours until the child's eighth birthday. During the leave, there is no legal obligation to continue to pay wages. However, around 25% of employees have rights to partial payment of wages during parental leave on the basis of a collective bargaining agreement.

The bill

It is up to the Member State to determine the level of payment/allowance for the two months' parental leave. The only 'condition' imposed under the Directive is that the level of payment must ease the take-up of parental leave by both parents. The bill provides for an entitlement to continued payment for both parents of 50% of their daily wage during 9 weeks of parental leave. This entitlement is capped at 50% of the maximum daily wage. To encourage parents to take the leave in the first period after birth, a requirement applies that the paid parental leave must be taken in the child's first year of life. If the paid leave is not (fully) taken in the first year, the (remaining) paid leave of 9 weeks will be converted into unpaid leave. This converted parental leave can be taken until the child's eighth birthday. In case of adoption or foster care, the paid parental leave can be taken up to one year after the child's inclusion in the family, provided the child is younger than 8 years.

Children born before the Paid Parental Leave Act enters into effect

Under strict circumstances, parents whose child is born (shortly) before the Paid Parental Leave Act enters into effect (on 2 August 2022) might also be entitled to paid parental leave. On 2 August 2022 (i) the child must be younger than 1 year old, (ii) the parents should be employed (i.e. qualify as employees) and (iii) should not yet have taken up the full entitlement to parental leave (26 times the working hours per week). The following example is given on the site of the Dutch government: a parent who on 2 August 2022 (i) has a 6-month-old child and (ii) has taken 19 weeks of (unpaid) parental leave up to that time, can take 7 weeks of paid parental leave until the child reaches the age of 1.

Application procedure

The parental leave allowance must be applied for by the employer after the parental leave has been taken. The benefit is paid within six weeks after the UWV decision on the entitlement and level of the benefit has been issued. The application can be submitted up to three months after the statutory period, so 15 months after the day of birth or adoption on which the right arose. As the bill does not include transitional law, it has been suggested that parents who take parental leave in the first year of the child's life in the period from 2 May 2021 to 2 August 2022 might be eligible for a payment of the allowance with retroactive effect. However, at this point in time, the manner in which the UWV will deal with such applications is still uncertain. We also note that this situation is not described on the website of the Dutch government. What is more, it seems difficult to reconcile this interpretation with the example that the Dutch Government has provided (as mentioned in the paragraph above).

Change of parental leave scheme for substantial business or service interests

Employers have the opportunity, after consultation with the employee, to change the content of the parental leave up to four weeks prior to the commencement date on the grounds of substantial business or service interests. For example, if an employee cannot be replaced during parental leave. The new bill adds that the postponement should not result in the employee not being able to take nine weeks of parental leave in the first year after the birth. The underlying idea is that the employee should be able to make full use of the paid parental leave. The substantial business or service interests will have to prevail.

The legislator assumes that the employer has sufficient time to take measures in the event of substantial business or service interests, because the parental leave and the desired implementation must be requested by the employee at least two months before the starting date. For that matter, it is already difficult for employers to refuse a request for parental leave. In general, courts consider that if replacement of an employee is not impossible - whether in the short term or not - there is no substantial business interest.

Final remarks

The envisaged date of entry into force of the bill is 2 August 2022. The bill is, however, still pending in the Senate. The introduction of paid leave aims to encourage both parents to take parental leave. However, it remains to be seen whether this will happen. After all, the benefit amounts to (only) 50% of the daily wage and is capped at 50% of the maximum daily wage. Both the House of Representatives and the Senate have responded to this critically. Nevertheless, the latest amendment to the bill does provide for the possibility of increasing the payment percentage from 50% to 70% (and then capped at 70% of the maximum daily wage) before the bill enters into force, without the necessity of a new bill. Therefore, it remains to be seen which benefit percentage will eventually pass the finish line. In any case, employers should be aware that upon receiving a request for paid parental leave, it will be up to the employer to submit the application to the UWV (with all the administrative burdens involved). It will also be (even) more difficult for employers to reject a request for parental leave. We will keep you informed.