Partnerblog
On 23 February, the government introduced a new legislative proposal amending the statutory notice periods. While not the first initiative in a broader wave of labour market reforms, and likely not the last, this proposal has already sparked considerable debate.
The bill provides for a significant change to the notice period applicable during the first six months of employment. When adopted, the new rules would apply to all employment contracts concluded after the act’s entry into force, which is expected in the coming weeks or months.
Standardised One-Week Notice Period During First Six Months
Under the current regime, employees with less than six months of seniority build up a notice period ranging from one to five weeks, depending on their length of service.
The government now proposes to standardise this notice period at one week for the entire first six months of employment. In practice, this would reintroduce a form of probationary period, although without formally reinstating the probation clause that was abolished in 2014. The reintroduction of such a probationary period was included in the coalition agreement of the Arizona coalition.
The measure would apply exclusively to new employment contracts concluded after the act comes into force, expected in the coming months.
Government’s Rationale: Enhancing Labour Market Flexibility
The government justifies the proposal by referring, among other sources, to a 2012 study by the International Monetary Fund (IMF) on Labour Market Flexibility and Unemployment: New Empirical Evidence of Static and Dynamic Effects. According to that rather old study (dating from before the abolition of the probationary period in 2014), easing regulations governing hiring and dismissal may lead to a statistically significant reduction in unemployment, particularly among young people and the long-term unemployed.
By reducing the notice period to one week during the first six months of employment, the government aims to:
- Lower the costs and risks associated with hiring new employees
- Reduce the financial consequences of a potential mismatch
- Encourage employers to recruit more readily
- Promote labour mobility and market dynamism
In the government’s view, this would generate a net positive effect on employment. Employers would benefit from greater flexibility in adjusting their workforce, while employees could transition more swiftly to new opportunities.
Opinion of the Council of State: Standstill Principle
The Council of State was rather critical in it’s advice on the draft proposal. It expressly refers to the standstill principle, which prohibits the legislator from significantly reducing the level of protection previously granted to individuals without sufficient and reasonable justification.
For employees, the proposed reduction in notice period constitutes a regression compared to the current level of protection. Although the Council acknowledges that the measure may help reduce barriers to recruitment and stimulate labour market dynamism, it raises important concerns.
The Council therefore calls for further differentiation of the notice period based on seniority and for a clearer justification of the policy choice underpinning the reform.
The government has opted not to let these concerns influence the legislative proposal.
Also, the trade unions have expressed criticism, as this reintroduction of the probationary period is not in line with the political compromise of 2014 in the context of the major reform of the statutory notice periods at the time.
