05 NOV 2019

The WAB and the future of the payroll business, part 1

At the beginning of 2020 a new legislation will be implemented by the Dutch government, the WAB (Wet Arbeidsmarkt in Balance)


With this introduction the government hopes to streamline and balance the jobs market by restricting third party payrolling business in the flexibility of their services to the recruitment industry and end clients. 

The payroll business has long been regarded as being of limited value to the jobs market by the authorities, at times also being seen as exploiting temporary workers by minimising their take-home pay and maximising the profit margins of the recruitment companies or end clients. 

This may be true for some sectors such as construction, agriculture and service industry but definitely incorrect when looking at the banking and IT industries. 

The WAB legislation aims to combine search and selection (recruitment) with payroll services, to discourage independent third party payroll companies from being included in the contractual chain, hereby classifying the payroller as a back-office services provider to the recruitment companies.  Under the legislation only the combined business are able to apply the conditions of the Dutch staffing industry collective labour agreements to temporary placements. 

This move would restrict the flexibility not only of the payroll companies, but also the end clients who may struggle to find suitable combination companies to handle both their recruitment needs as well as payroll requirements of their temporary contractors who are in turn used to being able to select from a large pool of independent third party payrollers to assist them. 

The independent payroll businesses are left with limited (and potentially unsuitable) options of service provision under the new legislation. 

The inability to apply the staffing industry collective labour agreements restricts the length of contracting possibilities and the requirement to apply end client labour conditions encumbers the payroll process immensely. 


The question now is how will the payroll business adapt to the changes and is a combination of recruitment and payrolling the answer to the government’s objectives. Will the WAB actually encourage end clients to employ directly and permanently or backfire into a recruitment halt?