On 7 November 2018, the Administrative Jurisdiction Division issued a final judgment that was important for the practice of fines imposed under the working conditions legislation. It stipulates that when determining the size of a company or institution, a distinction must be made between full-time and part-time employment. This size is determined on the basis of the total number of employees in a company or institution on the basis of a full-time working week of 38 hours. This means that depending on the number of part-time employees and the duration of their employment, lower working conditions fines will be imposed.
Legal question: how do you calculate the amount of the Working Conditions fine on the basis of the size of a company or institution?
The amount of a fine for violation of the Working Conditions Act is determined on the basis of the penalty policy of the State Secretary of Social Affairs and Employment (State Secretary), among other things, on the basis of the size of a company or institution. The size of the company is determined on the basis of the number of ’employees’. The greater the number of employees, the higher the amount of the fine. The question that arose in this case was whether a distinction should be made between full-time and part-time employment in relation to the size of a company. The fined company in question had a number of part-time employees on its payroll and, if those employees were to be converted into full-time employees, would be fined a lower amount.
Initially, the State Secretary stated that the number of part-time employees was not relevant in determining the size of the company. Because that position was insufficiently substantiated, the Division applied an administrative loop in the interlocutory judgment in which the State Secretary was instructed either to give better reasons for its decision or to take a new decision. The State Secretary decided to give a new statement of reasons in which she revisits her earlier position. In her opinion, the number of part-time employees may be relevant in determining the size of the company. The consequence of this is that the part-time employment contract must be converted into a full-time employment contract. The State Secretary is faced with the question of how many hours a full-time working week amounts to. For the calculation of the total number of employees, the State Secretary assumes an average full-time working week of 35 hours. The State Secretary bases this calculation on the concept of ‘full-time’ used by Statistics Netherlands (CBS).
The Division does not agree with this view. It considers that a 38-hour full-time working week should be assumed for the calculation of the standard amount of the fine for the total number of employees in a company. It is not very clear why this is the case. The CBS figure of 35 hours does not, according to the Division, provide sufficient reason not to assume 38 hours as a full-time working week.
Labour law observations
From an employment law perspective, the judgment of the Division is remarkable.
- In employment law, the question of what constitutes full-time employment is of great importance in determining the applicable statutory minimum wage, among other things. The applicable statutory minimum wage depends on the number of hours that make up the full working week with the employer. A full working week usually consists of 36, 38 or 40 hours. This differs per sector and is usually apparent from the applicable collective bargain agreement or from the employment contracts that the employer concludes with his employees.
- It may very well be the case that the employer did indeed have a 38-hour working week in this case. However, because the Division does not state the reasons on which it bases the 38-hour working week, it remains unclear whether a 38-hour working week will henceforth be used as a standard by the administrative court or whether deviations are possible, depending on the collective agreement or employment contracts.
Conclusion: consequences for practice
The consequence of this ruling is that if an employer is confronted with a fine under the Working Conditions legislation, it may be relevant to examine whether there are also part-time employees. If this is the case, in order to be able to calculate the total number of employees relevant to the fine, a full-time employment contract of 38 hours must be assumed for part-time employees. It is also questionable whether the State Secretary and the administrative court always assume a full-time employment of 38 hours per week in a subsequent case, in view of the employment law observations above. After all, under certain circumstances, another full-time employment contract (i.e. 36 or 40 hours) can also be assumed. We will have to wait and see if there is any clarity about this. In any case, the policy on fines has not yet been clarified on this point since this judgment.
Date: 8 August 2019
Authors: Christien Saris & Phinney Disseldorp