Work performed by state pensioners

Do you run a business in the Netherlands and does an employee reach state pension age (AOW age)? Employees are allowed to work after reaching state pension age. You must then take into account the conditions of employment for state pensioners. Sometimes you will have to terminate the contract. This depends on the agreements in the employment contract or CAO (Collective Labour Agreement).

Do you want to continue the contract of employment?

Does your employee’s contract expire because they reach AOW age? And do you want to keep employing them? Then 1 of these situations applies:

• The contract (employment agreement) or the collective labour agreement (CAO) states that the contract ends when your employee reaches the state pension age. You must agree on a new contract to keep the employee employed.
• If the CAO and contract specify that an employee can continue work after reaching AOW age, the employment contract continues.

If you continue the employment contract you must take into account the rules that apply for state pensioners who continue working. You will withhold salaries tax, but you will no longer pay contributions for unemployment insurance, sickness benefits, incapacity insurance, and state pension. This means your employee will no longer be insured against unemployment and incapacity for work. The employee will still be entitled to sickness benefit, for which the Employee Insurance Agency (UWV) will charge you as the employer.

Terms of employment for state pensioners

You can offer an employee who has reached state pension age at most 6 temporary (fixed-term) contracts during a period of at most 4 years. After 6 contracts or after 4 years, the employment contract will automatically become a permanent contract. You are not obligated to increase or decrease the number of working hours if the employee requests it.

You pay the state pensioner at least minimum wage. The notice period for a state pensioner is always 1 month.

Illness and reintegration of state pensioners

In case your employee becomes ill, you:

• must continue to pay their wages for 6 weeks.
• have to work with them on their reintegration for at least 6 weeks when they are ill
• have to take measures that allow your employee to do their own or other suitable work insofar as possible.

You do not have to look for suitable work with another employer or make a back to work action plan.

Do you want to terminate the contract of employment?

Your employee will receive an old age pension (AOW) from the day they reach their AOW (state pension) age. You can then terminate the employment contract:

• Does the employment contract or CAO specify an agreement on the end date? Then the employment contracts automatically expires on that date. As the employer you do not have to terminate the contract.
• Has nothing been agreed and do you want to end the employment contract when or after your employee reaches the state pension age? You will have to give your employee notice at least one month before they reach the state pension age. You do not have to consult the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV) or a court.

If you dismiss your employee upon reaching state pension age, you do not have to pay transition payment.

Dismissal at 65 not allowed

If the collective labour agreement states that the employment contract will be terminated at a specific age such as 65, this is in conflict with the Dutch Equal Treatment in Employment Age Discrimination Act (Wet gelijke behandeling op grond van leeftijd bij de arbeid, WGBLA). Termination of a contract of employment because of the employee's age can be nullified by a court of law at the employee's request.