The Dutch government last week proposed a bill to the House of Representatives that would introduce a licensing system for temporary employment agencies.

The bill, called the ‘Act on the Authorisation of the Supply of Labour,’ introduces a public admission system for employment agencies and other companies that provide workers. Under the new system, agencies may only operate in the market if they are permitted to do so. They must meet certain criteria including submitting a Declaration of Good Conduct (VOG), transfer a deposit of €100,000, and prove that they pay the correct wages and pay their taxes. 

Furthermore, periodic checks will be carried out to ensure that employment agencies continue to adhere to the rules. 

Companies that use employment agencies may only do business with employment agencies that are admitted to the market. The Dutch Labour Inspectorate will monitor the obligations for hirers and agencies. Firms that do business with agencies that do not have a licence risk a fine. There will also be a register with admitted agencies, according to the bill.

The goal of the new law is to improve the position and provide additional protection for temporary workers — especially migrant workers, who face issues such as housing problems.

ABU, the association which represents the interests of the staffing industry in the Netherlands, supports the introduction of the admission system though have stressed the importance of effective enforcement and feasibility to make the law a success in practice. ABU is also pleased with the minister's commitment to give social (temporary) partners a major advisory role in the further development of the system.

Jurriën Koops, director of ABU: “The admission system should lead to a better position of temporary workers, more quality and a more level playing field in the industry. I applaud that. We will remain critical of the development of the system and pay close attention to affordability, feasibility and legal certainty. The elaboration must be done carefully, that takes time and we must take that time. We want a workable and effective system.”

According to law firm Osborne Clarke, the bill also aims to address the problems and abuses that have been identified in the temporary work sector such as underpayment, exploitation, fraud and unfair competition. It introduces a system of government-controlled admission for providers of temporary workers, which means that they need to obtain a permit from a public authority before they can operate in the Dutch labour market.

 “The issue of licensing can be controversial,” said Fiona Coombe, SIA’s director of legal and regulatory research. “While many support it as a way to stamp out bad behaviour, there are others who would argue that it merely adds an administrative burden to agencies that generally operate fairly and that the real issue is the failure to enforce existing laws against those who don’t.”

Minister of Social Affairs and Employment of the Netherlands Karien van Gennip presented the bill to the House of Representatives and wants to move the bill quickly, stating that tackling abuses against migrant workers is urgent.

To expedite the new legislation, the bill contains transitional law to encourage agencies, in the run-up to the entry into force of the admission obligation on 1 January 2026, to apply for an authorisation before 1 July 2025 and, in the run-up to this, to voluntarily be certified by the Labour Standards Foundation.

According to Accountancy.nl, a new organisation will be established this year to issue certificates, which should be operational in the summer of 2024. Employment agencies are encouraged to apply for a certificate before 1 August 2024.

Osborne Clarke noted, “The bill is expected to come into force as soon as possible after its approval by the Dutch parliament, except for the provision that makes the violation of the admission system a punishable offence, which will enter into force one year later.”

There are currently about 15,000 staffing agencies in the Netherlands that could be impacted by the new law.