Who doesn’t want to earn free money? In the past, you sometimes found money on the street. But now that there is less and less contact cash in circulation, the chance of finding money on the street has also decreased.
Nevertheless, companies still leave money lying around sometimes. A good example is the lower WW-premium that applies to employees with a permanent contract.
How it often works in practice
Despite the shortage on the labour market, there are many employers who do not immediately give a new employee a permanent contract. Often, the choice is made to first give a fixed-term contract, with the possible intention to enter into a permanent contract after the first contract.
What can happen
Suppose the employer first gives the employee a 12-month contract, so that the employer and employee can get used to each other during this period. During this period, in principle, the following three situations may occur.
- Situation 1: During the 12 months, the employer is convinced that the employee would be better off pursuing a ‘position elsewhere’. Therefore, no permanent contract follows.
- Situation 2: The employer is not fully convinced during the 12 months, but still wants to continue with the employee and offers the employee a second fixed-term contract.
- Situation 3: The employer is convinced during the 12 months and offers the employee a contract for an indefinite period.
In situation 3, it may be that the employer is already sure after 6 months that it wants to continue with the employee and wants to reward the employee with a contract for an indefinite period of time. At that moment, the employer can already offer the employee a contract for an indefinite period of time and have this start on the first day after the fixed-term contract ends..
However, the employer can also offer the employee a permanent contract that takes effect immediately. In addition to the extra appreciation you show to your employee, this also has a financial advantage.
From the moment the employee works on the basis of a permanent contract (and the employer complies with a number of conditions), the unemployment contribution for this employee drops by no less than 5% of the gross salary. As it is the employer who pays the unemployment insurance contribution, this can quickly amount to several hundred euros per month in employer costs.
Conditions for lower WW-premium
There are 3 conditions which the employer must meet in order to be allowed to apply the lower WW-premium. These are:
- There must be a written employment contract for an indefinite period of time.
- The employment contract must include a fixed number of working hours. 3.
- A copy of the (signed) employment contract must be kept in the employer’s administration.
- The WW-premium is calculated over the gross salary with a maximum of the SV-wage (social insurance wage). This social security wage amounts to € 58,311 in 2021. The maximum savings per year can therefore be more than € 2,900. It would be a shame not to take advantage of this.
Questions?
Do you have questions or are you unsure whether to give your employee a permanent contract? Please feel free to contact our advisers via 015-2158815 or info@aame.nl.