COUNCIL OF EUROPE
    COMMITTEE OF MINISTERS

    Resolution ResCSS(2003)26
    on the application of the European Code of Social Security
    and its Protocol by the Netherlands
    (Period from 1 July 2001 to 30 June 2002)

    (Adopted by the Committee of Ministers on 17 December 2003
    at the 866th meeting of the Ministers' Deputies)

    The Committee of Ministers,

    In the exercise of the functions conferred upon it by Article 75 of the European Code of Social Security (hereinafter referred to as the “Code”), as modified by the provisions of its Protocol (hereinafter referred to as the “Protocol”), and with a view to supervising the application of these two instruments by the Contracting Parties;

    Whereas the Code and the Protocol, signed on 16 April 1964, entered into force on 17 March 1968 and since that date have been binding on the Netherlands, which ratified them on 16 March 1967;

    Whereas, when ratifying the Code and the Protocol, the Government of the Netherlands stated that it accepted, in addition to the parts which must be applied by every Contracting Party (Parts I, XI, XII, XIII and XIV), the following parts of the Code, as modified by the Protocol:

    – Part II on “medical care”,
    – Part III on “sickness benefit”,
    – Part IV on “unemployment benefit”,
    – Part V on “old-age benefit”,
    – Part VI on “employment injury benefit”,
    – Part VII on “family benefit”,
    – Part VIII on “maternity benefit”,
    – Part IX on “invalidity benefit”,
    – Part X on “survivors' benefit”;

    Whereas, in pursuance of paragraph 1 of Article 74 of the Code, as modified by the Protocol, the Government of the Netherlands submitted, on 3 September 2002, its 35th annual report on the application of the Code, as modified by the Protocol, for the period from 1 July 2001 to 30 June 2002;

    Whereas, in accordance with paragraph 4 of Article 74, that report was examined by the ILO Committee of Experts on the Application of Conventions and Recommendations, at its 73rd session in November to December 2002;

    Recalling Resolution ResCSS(2003)10 on the 34th report submitted by the Government of the Netherlands in pursuance of paragraph 1 of Article 74 of the Code, as modified by the Protocol,

    Notes:

    1. concerning Part III (Sickness benefit) of the Code in relation to Part XII (Common provisions), Articles 70 and 71, that, in its previous conclusions, the Committee of Ministers examined the implementation of the 1996 reform of the Civil Code, under which the responsibility for the payment of sickness benefit in the form of wages for a maximum of fifty-two weeks was transferred from the social security system to enterprises, in the light of the general principles concerning the organisation and management of social security schemes laid down by the Code. Describing the aims of the reform (more recently in its report on the Invalidity, Old-Age and Survivors' Benefits Convention, 1967 (No. 128) supplied in 2001), the government stated that the new law introduced a system of free market forces in respect of the Sickness Benefits Act (ZW), which thus had been privatised to a large extent. Employers could decide whether to bear the risk of paying wages to sick employees themselves or reinsure the risk with private insurance companies. Sickness benefit under the ZW Act was maintained as a safety net in cases where the employer could not be held responsible for the payment of wages to sick employees. In 1998, the Committee of Ministers also noted that the privatisation of the sickness benefit scheme had been followed by similar measures as regards the invalidity benefit scheme introduced in 1998 by the PEMBA Act, which changed the manner of financing employers' contributions under the Disablement Benefits Act (WAO). As explained in the brochure “The Dutch disablement benefits system” (on pages 5 and 7), supplied by the government with its latest report on Convention No. 102, “in Dutch, PEMBA stands for: contribution differentiation and market forces in connection with disablement benefits”. The employer may choose either to pay the differentiated contribution to the social insurance agency, or to bear the risk himself by paying the disablement benefit for the first five years of invalidity of his employee, or else to cover that risk by taking out insurance with a private insurance company; the government's intention here being “to allow market forces to take effect (competition)”. As in the case of the reform of the sickness benefit scheme, the implementation of the PEMBA Act has also been closely followed by the Committee of Ministers in its previous conclusions in view of the similar risks of health becoming a criterion of selection in recruitment and the breach opened in the collective nature of the financing of the invalidity branch. It notes from the government's report that, in 2001, there were still only 3,417 (1,612 in 1999) employers with fewer than fifteen employees and 836 employers (536 in 1999) with at least fifteen employees who had decided to take out a private insurance under the PEMBA Act to cover the risk of invalidity directly.

    The Committee of Ministers recalls that both reforms were intended to encourage employers to prevent and reduce the number of days of absence caused by sickness and disablement of their employees and that, in view of the much greater numbers of workers unavailable for work due to these reasons in the Netherlands than in comparable countries, it was expected that the market forces and competition would prove to be more effective in achieving this goal. At the same time, the government has taken care to maintain the basic social security benefits provided under the ZW and WAO in all cases in which employers and market forces fail to produce the desired effect. Moreover, the entitlements of the persons protected to these benefits have been safeguarded by a number of additional legislative measures reported by the government, which have been gradually put in place to mitigate the negative effects of the market forces, which tend to discriminate against the weak and vulnerable and undermine the basic spirit of solidarity inherent in any social security system. The Committee of Ministers is bound to observe that the resulting reforms of the sickness and disability schemes, which intended to harness the positive effects of privatisation and market forces, while containing their negative effects within the basic social security framework, have no comparison in the history of social security in Europe. It is thus only natural that they pose many new problems of organisation and governance of such mixed social security systems, particularly during the transition period, when the new forms of state supervision of the system, the democratic participation of the persons protected in its management, the redistribution of the risk, financial burden and responsibility in society, and the principles of non-discrimination and solidarity with the most vulnerable groups are consolidated. The Committee of Ministers wishes to recall that, while there is no single right model of social security, all systems should conform to certain basic principles of good governance and social cohesion, the observance of which comes under the general responsibility of the State established in Articles 70, paragraph 3, and 71, paragraph 2, of the Code. Moreover, it is during such periods of reforms and transition that the responsibility of the state takes on particular importance for the future development of social security, including at the international level.

    With regard more particularly to Article 71, paragraph 1, of the Code, which provides for the participation of the representatives of the persons protected or their association in a consultative capacity with the management of the social security system, the Committee of Ministers recalls that, at the national level, workers' organisations participate in the National Institute for Social Insurance (LISV) and in the sectoral councils, as well as in the negotiation of collective agreements regarding sickness benefit; at the company level, employees' councils are fully associated in determining the respective procedures by mutual agreement with the employer; and at the individual level, the persons protected have recourse to an independent medical expert or Arbodienst (occupational health and safety service) and participate in the establishment of plans for their reintegration into active employment. In addition, the government indicates in its report that, as from 1 January 2002, there have been fundamental changes in the implementation of the social insurance schemes for employees, as well as for disabled self-employed persons and young handicapped persons. In particular, the agencies responsible for the administration of employees' insurance schemes have been united into a single central organisation (UWV). In order to guarantee the adequate participation of employees, employers and municipalities, the Board of Work and Income has been created (RWI), which advises the Minister of Social Affairs and Employment on matters related to labour and income and provides subsidies to branches and companies to promote the reintegration of unemployed persons and social security beneficiaries. The Committee of Ministers notes these new developments with interest and would like the government to be asked to supply more details on the role played by the representatives of employees in the newly created bodies, as well as to indicate other measures taken or contemplated to further promote a strong role for workers' organisations and the participation of the representatives of the persons protected at the various levels of management, particularly in relation to private benefit providers.

    With regard to the guarantees intended to prevent the most vulnerable groups of the population from suffering discrimination, which are inherent in the system of the collective financing of risks, as set out in Article 70, paragraph 1, of the Code, it may be recalled that protection for workers with a previous medical history against discrimination in access to employment is afforded by the Medical Examinations Act of 1998, which also prohibits medical examinations and the selection of personnel in connection with the private insurance taken out by employers to cover the financial risks engendered by the sickness of their personnel. With regard to the protection of sick workers in employment and against the loss of their jobs, reference should be made to the obligation of all companies to be affiliated with a certified Arbodienst, to draw up reintegration plans for employees suffering prolonged illness and to have recourse to the assistance of an Arbodienst for the reintegration of such. Under the Reintegration of the Work Disabled Act (REA), which came into force on 1 July 1998, employers do not have to pay the sick employee's wages if the re-employed disabled person falls ill during a subsequent period of five years, during which s/he will receive sickness benefit from the social security agency. The report prepared for the parliament “Efforts to reintegrate the unemployed: an overview”, and supplied by the government with its report on Convention No. 102 describes the increased policy measures adopted in 1999 for the integration into employment of persons in a vulnerable position on the labour market, including persons incapacitated for work. The Committee of Ministers notes in particular the proposed new rules for the exchange of data between the employer, the Arbodienst and social security agencies during the first year of an employee's sickness, the objective of which is the more rapid and effective reintegration of sick unemployed persons and a reduction of the inflow of new beneficiaries under the disability benefit scheme (implementation of the new “gatekeeper model”). In this respect, the government indicates in its report on the Code that the protection of sick workers has been strengthened by the entry into force on 1 January 2002 of the Gatekeeper Improvement Act (Wet Verbetering Poortwachter), which obliges the employer to report cases of employee illness to the Arbodienst and, on the basis of the problem analysis prepared by the Arbodienst in the sixth week of illness, to draw up in writing a reintegration plan in agreement with the employee concerned. The Committee of Ministers further notes from the above parliamentary report (pages 44-45) that the Secretary of State is preparing a legislative proposal to improve sick leave supervision in the first year of sickness and that the evaluation of the achievements under the REA was due in 2000. It hopes that the government will include information on the progress made in this respect in its next report;

    2. concerning Part IX (Invalidity benefit), Article 54, that the level of disability benefits provided under the General Disability Pensions Act (AAW) and under the WAO Act depends on the degree of incapacity. The rules to determine the residual capacity and aptitude of a disabled person under the new definition of the contingency contained in section 18 of the WAO Act are laid down in the “evaluation” decree supplied by the government. According to the brochure “A short survey of social security in the Netherlands, January 2001”, supplied by the government with its report on Convention No. 128, seven classes of incapacity have been established, ranging from 15% incapacity to over 80%;

    3. concerning Articles 57 and 58 (in conjunction with Part XI (Standards to be complied with by periodical payments)), that, in its previous conclusions, the Committee of Ministers asked the government to provide statistical information required under Articles 65 or 66 of the Code on the level of the initial and continuing permanent disability benefits paid under the WAO Act. The Committee of Ministers notes, however, that the calculations given in the government's report do not indicate to which benefit they refer – the initial benefit paid during the first stage, which is limited in duration up to six years, or the continuing benefit paid during the second stage, which can last until retirement age. These calculations simply assume that the benefit amounts to 70% of the reference wage without specifying the degree of incapacity, the age of the beneficiary at the onset of the contingency (workers under 33 years old at the onset of the contingency are not entitled to the initial benefit paid during the first stage) and the qualifying period completed. The Committee of Ministers notes from the brochure “A short survey of social security in the Netherlands, January 2001” that the level of the benefit depends on the degree of incapacity and the age of the beneficiary and that, for incapacity from 55% to 65%, which does not exceed the level of two thirds established by the Protocol, the amount of the initial benefit would constitute 42% of 100/108 of the daily wage, and not of the full reference wage. As regards the continuing benefit paid during the second stage, its monthly amount is calculated on the basis of the minimum wage augmented by 8% of the holiday allowance and divided by 21.75, plus an additional amount of 2% of the difference between the beneficiary's last wage and the minimum wage multiplied by the number of years between the age of 15 and the age of the beneficiary at the onset of the contingency. The percentage of the final benefit also depends on the actual degree of incapacity;

    4. concerning Part X (Survivors' benefit), that the basic assumption of the government is that a widow or widower should be capable of self-support in cases where there are no obstacles such as family responsibilities or incapacity for work. The category born before 1 January 1950 is considered to be a transitional category, and persons born after this date are considered to have a fair chance on the labour market and are provided with the full range of services for their reintegration into the labour market.

    The Committee of Ministers notes that, whereas Article 64 of the Code requires survivors' benefit to be granted throughout the contingency, under the terms of section 16, paragraph 1.c. of the General Surviving Relatives Act (ANW), survivors' benefit comes to an end when the beneficiary reaches the age of 65 years, when he or she is entitled to an old-age pension by virtue of the General Old-Age Pensions Act (AOW). It also notes that, in accordance with section 24.2 of the ANW, the half-orphan allowance payable to a surviving spouse taking care of the child of the deceased also comes to an end when the spouse reaches the age of 65. The Committee of Ministers recalls in this respect that, in accordance with Article 68.c. of the Code, when the survivors' benefit is substituted by the old-age benefit, the person protected shall not suffer a reduction in the amount of the benefit;

    The Committee of Ministers recalls that in cases where the pension contributions have not been paid continuously between the beneficiary's 15th and 65th birthdays, the old-age pension is reduced by 2% for each missing year and may, in fact, be lower than the minimum social income in force in the Netherlands. The government indicates, however, that any widow who has inadequate financial resources to meet her essential living costs is entitled to a benefit under the National Assistance Act (ABW);

    5. concerning Part XI (Standards to be complied with by periodical payments), that, with reference to its previous conclusions, the Committee of Ministers notes the calculations of the level of certain benefits provided by the government in its report. It further notes the complex structure of the family allowances provided during employment and during the contingency, which depend on the age of the child, the size of the family and whether the child was born before or after 1 January 1995. In order to ascertain whether the minimum level of benefits prescribed by the Code is attained for a standard beneficiary with family responsibilities (a man with a wife and two children or a widow with two children) in all cases, the Committee of Ministers asks the government to use in its calculations the lowest amount of the family allowance provided for a dependent child. The Committee of Ministers understands from the government's report that this lowest amount of family allowance is paid with respect of a child under 6 years of age born after 1 January 1995;

    Finds that the law and practice in the Netherlands continue to give full effect to Parts II, IV, V, VII, VIII, IX and X of the Code, as amended by the Protocol, and that they also ensure the application of Part III, subject to the points mentioned below. As regards Part VI of the Code, as amended by the Protocol, the Committee of Ministers notes with interest the government's intention to ratify the revised Code, which offers solutions allowing states whose insurance systems have abandoned the concept of employment injury to meet the required standards of protection through compensatory benefits provided under other branches of social security. The Committee of Ministers refers in this respect to its previous conclusions made under this Part of the Code;

    Decides to invite the Government of the Netherlands:

    1. concerning Part III (Sickness benefit) of the Code in relation to Part XII (Common provisions), Articles 70 and 71:
    a. in order to monitor the spread of the reforms and the redistribution of responsibilities in the private sector, to provide statistics in future reports indicating the number of enterprises which have decided to assume the risk of invalidity or sickness of their employees themselves, as well as the number of enterprises which have decided to take out collective insurance for these risks with private insurance companies, including the total number of employees employed by such enterprises;
    b. to be informed of the regulatory and supervisory measures taken by the State in compliance with Articles 70, paragraph 3, and 71, paragraph 2, of the Code to ensure the financial viability and proper functioning of the private insurance companies providing sickness and disability benefits;
    c. in view of the profound and continuing nature of the social security reforms in the Netherlands and with reference to questions III, IV and V of the report form on the Code, to provide, in its next report, an in-depth explanation of its strategy and reform policies, highlighting the principles on which the new design of the sickness and disability schemes is based, the difficulties encountered in the reform process and the major decisions handed down in this respect by courts of law and other tribunals;

    2. concerning Part IX (Invalidity benefit), Article 54, in view of the highly technical nature of these provisions, to specify how the degree of residual earning capacity is taken into consideration and what degree of incapacity has been prescribed in accordance with Article 54 of the Code, as amended by the Protocol, as corresponding to the contingency of incapacity to engage in any gainful activity, provided that the prescribed extent of such inability shall not exceed two thirds;

    3. concerning Articles 57 and 58 (in conjunction with Part XI (Standards to be complied with by periodical payments)), to take these rules into account in calculating the level both of the initial and continuing disability benefits paid to a standard beneficiary with an incapacity of two-thirds who has completed a qualifying period of fifteen years of contribution or employment between the age of 15 and the age at the onset of the contingency and whose last wage was equal to the reference wage determined in accordance with Article 65 or 66 of the Code, as appropriate, as well as to refer to the conclusions under Part XI below;

    4. concerning Part X (Survivors' benefit):
    a. to be asked to show in its next report, on the basis of comparable statistics given for the same time base, that the standard of living ensured to a widow with two children by the survivors' benefit would not be lowered by its replacement by the old-age benefit;
    b. to take account of this supplementary assistance to pensioners under the ABW in its comparative calculations, where appropriate, and provide the updated text of the ABW with an indication of the relevant provisions;
    c. in view of the fact that survivors' benefit includes the benefit of the surviving spouse, the dependent child allowance, the orphan's benefit and the gross holiday allowance per month, to explain in its next report the manner in which the survivors' benefit is calculated for a standard beneficiary in this branch (a widow with two dependent children);

    5. concerning Part XI (Standards to be complied with by periodical payments):
    a. to confirm this understanding and, if so, to use in the calculation of the level of benefit the corresponding monthly amount of family allowance for two children, instead of the quarterly amount applicable to families with two children between 6 and 11 years of age born before 1 January 1995, as it has done previously;
    b. to specify whether a holiday allowance, to which it refers in the calculation of benefits, is also paid during employment and, if so, if its amount, taken as a certain percentage of the wage, is different from that paid during the contingency in question;
    c. to supply up-to-date statistics on the level of benefits for the period covered by its next report, provided on the same time basis as for the year 2002 and in the manner requested in the report form on the Code, with a clear indication of whether the statistics refer to gross or net amounts.



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