The end of mandatory rules in employment contract law: on ready-made suits, goods made to measure and fashion trends

Ruben Houweling, Lisette Langedijk

Research output: Chapter/Conference proceedingChapterAcademic

Abstract

Labour law is often thought to be the straitjacket of private law. Far-reaching protection of employees is seen as placing the autonomy of the parties in a subordinate role in the realisation, fulfilment and termination of an employment contract. The strong and mandatory character of Dutch labour law is accused of having this effect. As a consequence, labour law,like a ready-made suit, is seen as failing to allow for the need for a made-to-measure product, with the result that there is an insufficient connection with the contemporary dynamics of the labour market and the economy. Mandatory law seems to have been out of fashion for years now. This chapter examines the extent to which this complaint is justified and will address two main EuSoCo principles, namely principle 5 (Needs and Regard: protection of the weaker party and the determination – by law – of the degree of protection) and principle 7 (Collective dimension: the employee can reasonably expect that the collective aspect of their individual interests be safeguarded by the State through the mechanism of collective representation). The complaint that Dutch labour law is too inflexible because of its mandatory character attacks principle 5. The degree of mandatory law is strongly influenced by the degree of employee representation (principle 7). To this end, is the above complaint justified? Firstly, we analyse the rationale behind the granting of mandatory force to a large number of provisions in the implementation of the Dutch Employment Contract Act in 1907. We then consider the extent to which the labour legislation contained in title 7.10 of the Dutch Civil Code, along with certain developments in the field of mandatory and directive law in the labour law title of the Civil Code, contain mandatory rules. We concluded that the drafters of the Employment Contract Act of 1907 presented a timeless design for mandatory provisions. The premise that underlies this design is found in the principle of compensation for inequality. The usually weaker employee needs protection against the much more powerful employer. This design was later strengthened with the introduction of three-quarters mandatory (collective bargaining) and five-eighths mandatory law (working councils), whereby the starting point for the compensation for disparity still plays an important role. The design of various degrees of compulsion turned out not to be a temporary trend, but is still in fashion today. We concluded that the legislator has been very progressive in the design of various degrees of mandatory law, but that its implementation in title 7.10 Civil Code has been left behind in a certain sense. We noted that the mandatory character of the regulatory provisions does not necessarily undermine the desire for more customisation. Often, the open standards of the mandatory provisions simply allow for such customisation. Judges give meaning to these open standards, and thus determine the degree of customisation. If judges remove themselves from reality (ordering a fixed severance payment that is not related to the circumstances of the case) or place too high demands on employers in imposing a specific standard (level of duty of care in cases of accidents at work), the customisation of labour law will remain limited. The way mandatory law has evolved in the context of Dutch employment law, allowing the rationale of EuSoCo principle 5 to be extended and safeguarded, while at the same time contributing to a dynamic and flexible economic market, could serve as an example for other countries. It underlines the fact that the protection of employees does not necessarily mean inefficient and inflexible labour markets. Extending three-quarters mandatory law in areas such as dismissal law would not be wise, or indeed likely, because of the decreasing level of organisation of employees. One might argue that this degree of compulsion is out of fashion. As has been pointed out before, the current regulation and positioning of trade unions in The Netherlands is contrary to Eu-SoCo principle 7. The Dutch legislator has some serious work to do to address this matter. Expanding five-eighths mandatory law and differentiated compulsion, whereby the degree of compulsion varies according to the different categories of employee (based on the extent to which the employee is economically dependent on the employer, the level of compulsion in the provisions may be reduced), and focusing on various partial aspects of labour law (labour law that only guarantees the fundamental rights for and in the exercise of labour), could on the other hand become the new fashion. For this purpose a reconsideration of the overall design is required to ensure that the principle of compensation for inequality is not removed from the drawing board.
Original languageEnglish
Title of host publicationSocial long-term contracts in European Law
EditorsL. Nogler, U. Reifner
Place of PublicationDen Haag
Pages321-350
Number of pages30
Publication statusPublished - 2014

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