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Law on wage payment during sickness

Country of implementation
The Netherlands
General short description of the innovation
This act extends the period in which employers have to pay wages during long-term sickness from one to two years, thereby further privatizing sickness policy. It is a part of the overall reform of disability/sickness policy, aimed at prevention of long-term sickness and use of disability benefits. (see: WIA and WVP). It includes financial incentives for employers and employees and extends the period during which the employer and employee must invest in re-integration (a pre-condition to be able to apply for disability benefits in a later stage, see: WVP). The financial risk for the employer can be insured with private companies.
Target group
Policy Field
  • employment
Type of Policy
  • public
Duration of the policy
Since 2004 (in 2004 the period of wage payment during sickness was extended to two years)
Scope of innovation
  • Scope: structural
  • Spatial coverage: national
General description of (intended) objectives and strategies
This act further privatises the responsibility for dealing with (costs of) sickness during employment, to prevent long-term sickness and use of disability benefits. Employers have to continue paying wages during two years of sickness instead of one year. They can insure this risk privately. The act gives employers the right to pay less than 100% of wages during sickness, but not lower than 100% of minimum wage during the first year and 70% of minimum wage during the second year. Social partners agreed in 2004 that on average, the wage during two years of sickness amounts to 170% of the regular wage, to introduce a financial stimulus for the employee. Collective agreements were adapted to this agreement, although it depends on the sector/agreement what the exact conditions are.
Nature of the innovation-long-term perspective
structural change of sickness law
Type of innovation
  • new/changed output and/or outcome
  • retrenchment or expansion of an existing/earlier policy
New outputs
  • governance (The financial responsibility of employers for payment of and attention for sick employees has been increased)
  • job guidance, coaching and/or counselling (The act itself does not provide services as such, but stimulates the use of them by employers/employees)
  • regulations of the labour market (New regulations of sickness leave)
  • wages (Act allows to lower wages during sickness)
Intended target group
(long-term) sick employees
Working age population
  • employment situation (mostly sick employees in typical work)
  • main source of income: paid work
Employers-private institutional actors
all employers
Actors involved in policy-making/implementation and/or evaluation
  • agency or national social insurance body (Judges the re-integration plan)
  • central state (Regulation)
  • employers (organised or individual)
  • private for-profit organisations (commercial) (Insurance companies)
Clarification of the role of various actors
Employers can insure the risk of having to pay wages during sickness. The level of wages during sickness are set by the social partners and within collective agreements, taking into account the minimum levels set by the law.
Intended output
  • governance (Larger financial responsibility for employers during period of sickness of employees ; financial incentive for workers to go back to work)
  • job guidance, coaching and counselling (Coaching and/or counseling indirect output, given the incentive to re-integrate back into work)
  • regulation of the labour market (New legislation with respect to extension of the period of wage payment during sickness to two years as well as obligations to invest in re-integration back into work)
  • wages (Lower wages during sickness (dependent on collective agreements))
Did the innovation have any outcome related to job quantity?
the act has contributed to lower sickness rates and lower entry into disability benefits, together with the other reforms of policies in this area. The separate effect of this specific law is hard to determine
Clarification of outcomes in terms of impacting resilience and labour market inclusion
The outcomes of this specific act cannot be assessed separately from other reforms of sickness and disability benefit policy. The act gives employers and employees one more year to re-integrate back into the workplace and introduces financial incentives. As such the act is considered to have contributed positively to lower sickness rates and an decline in claims for disability benefits since its enactment. However, these trends have also been influenced by the new disability benefit law (WIA), the law on gatekeeping (WVP) and the stricter criteria for entering disability law. Effects on wage and earnings have not been evaluated, although the act does allow for reduction of wages during sickness periods.
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