The Dutch Act on further remuneration measures for financial undertakings entered into force on 1 January 2023 and should be complied with since that date. However, as you may know, transitional law applies until 1 January 2024 in respect of employees who were already employed prior to 1 January 2023. As the end of this transition period approaches, it is now time for action!
In this contribution we provide a recap of the main changes and show you how we can help you reach compliance prior to the end of the transition period.
Recap of the main changes
The Dutch Act on further remuneration measures for financial undertakings (Wet nadere beloningsmaatregelen financiële ondernemingen, Wnbfo) introduced, amongst others, the following important changes:
- the introduction of a five-year retention period for shares and similar financial instruments which are part of the fixed remuneration;
- a limitation of the possibility to deviate from the bonus cap with respect to non-CLA personnel and the introduction of a reporting obligation for the use of this deviation; and
- the obligation to account for and report on the ratio between remuneration and the social function of the financial undertaking and the manner in which this is established.
These amendments are relevant for financial undertakings with a
registered office in the Netherlands, their subsidiaries, and,
under certain conditions, group companies of Dutch financial
undertakings, as well as Dutch branch offices of financial
undertakings with a registered office outside the
Netherlands.
Please also refer to our earlier contributions on this topic in July 2019, July 2020 and June 2022, in which we have explained the
amendments in more detail.
End of transition period approaches, time for action!
As mentioned above, the Wnfbo should be complied with since 1
January 2023. However, transitional law applies with respect to
employees who were already employed prior to 1 January 2023. With
respect to those employees, the transitional law provides for a
transitional period of one year (i.e. until 1 January
2024) to comply with (i) the retention period for
financial instruments in fixed remuneration, and (ii) the
limitation of the possibility to deviate from the bonus cap.
This transitional period gives employers the opportunity to
carefully review existing remuneration arrangements, consult with
the impacted employees and, where necessary, make any necessary
adjustments in order to comply with the Wnbfo and avoid sanctions.
Currently, financial undertakings still have a little under
6 months left to adjust their remuneration arrangements
with employees who were already employed prior to 1 January 2023
(if necessary).
For completeness' sake, the Wnbfo should already be fully
complied with in respect employees hired on or after 1 January
2023. The transitional period only applies to employees who were
already employed prior thereto.
How can we help you?
As the Wnbfo may require employers to change the existing
remuneration arrangements made with employees who were already
employed prior to 1 January 2023, it is important to identify which
employees and functions are affected and develop a plan on how to
change these arrangements and compensate affected employees in a
way that is in line with both Dutch financial regulatory law and
Dutch employment law.
Loyens & Loeff has a team of experienced employment law and
financial regulatory professionals, who understand the complexities
of the regulatory landscape and are happy to assist and guide you
through the process of implementing the new rules, providing
valuable insights and creating sustainable remuneration practices
that align with your business objectives.
We are of course also happy to assist if your company already made
an assessment internally, but you want to exchange thoughts on some
specific aspects or you could use our help with the next steps.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.