Self-regulation with direct consequences for the temporary staffing and hiring practice
A private-law code of conduct as an extension of statute, the collective agreement and the forthcoming admission system
1. Introduction
The placement of labour migrants — in the sector’s terminology: international employees — has for years been the subject of heightened attention from legislators, regulators and the wider public. The ABU Fair Employment Code for Labour Migrants, effective from 1 January 2023, is the response of the Dutch Federation of Private Employment Agencies (ABU) to that development. The Code expressly builds on existing legislation and on the collective labour agreement for temporary agency workers (the cao), and adds its own layer of obligations aimed specifically at protecting this vulnerable group of workers.
For the owner-director of a company that hires out or hires in international employees, the Code is not an optional quality mark. It constitutes a mandatory membership criterion and directly affects the continuity, the liability position and the market reputation of the business. Moreover, the Code fits within a broader regulatory framework that is hardening rapidly — consider the Act to Combat Sham Arrangements (Wet aanpak schijnconstructies, WAS) and the forthcoming Act on the Admission of the Provision of Labour (Wet toelating terbeschikkingstelling van arbeidskrachten, Wtta). This article sets out the legal significance of the Code and explains what it means in practice for those operating on the supply or hiring side of the chain.
2. The legal status of the Code: self-regulation with sanctions
The Code is not legislation but private-law self-regulation. That does not make it non-binding. As a mandatory membership criterion, the Code forms part of the ABU’s Internal Regulations. A member that places international employees declares, by signing, that it will comply with the Code and that it will be available for monitoring of that compliance. The ABU has the express right to expel members that fail to observe the Code.
This effectively gives the Code an enforcement mechanism that reaches well beyond a gentlemen’s agreement. Expulsion means loss of ABU membership, with the attendant reputational and commercial consequences — hirers increasingly value a demonstrably reliable chain. The obligation to cooperate with monitoring also requires the company to organise its administration, contracts and housing arrangements such that compliance is demonstrable. For the owner-director, the question therefore shifts from “must we do this?” to “can we prove it?”.
Notably, the Code takes an explicit stance against two arrangements common in the market. The use of so-called A1 remuneration — where pay and social security are based on an A1 posting certificate from the country of origin — and of contracting are rejected by the ABU because they conflict with the objectives of the Code: security for the worker, a high quality standard, fair competition and a level playing field. Members are addressed on this point. Anyone whose business model rests in part on such arrangements would do well to reassess it against the Code and against the broader tax and employment-law risks.
3. Recruitment and selection: the ABU Fair Recruitment Charter
The heart of the recruitment process is formed by the accompanying ABU Fair Recruitment Charter, which is based on the General Principles and Operational Guidelines for Fair Recruitment of the International Labour Organization (ILO) and supplemented by the ABU. Members commit to this Charter together with their recruitment agencies. The fact that responsibility is expressly extended to engaged recruitment agencies matters in practice: outsourcing recruitment does not relieve the member of compliance.
In substance, the Charter contains several principles that can be far-reaching for the business. Fees that international employees would themselves have to pay for placement into work — recruitment fees — are prohibited, as are related costs, unless the cao provides otherwise on specific points. In addition, information must be transparent, accurate and verifiable, and must be provided in the worker’s own native language, in good time before departure from the country of origin.
One principle that deserves particular legal and practical attention is the protection of the worker’s freedom of movement. International employees may terminate their contract, leave the country, and change employers without the consent of the employer or recruitment agency. Contracts and identity documents may not be confiscated, destroyed or retained. Withholding passports or raising financial or contractual barriers to departure — sometimes defended as security for recruitment costs incurred — is unequivocally impermissible under the Charter and, moreover, touches on criminal-law notions of coercion and exploitation.
4. Contract and remuneration: separating work and housing
At the contractual level, the Code imposes two concrete requirements. The temporary employment agreement and its accompanying documents must be available both in Dutch and in the native language of the international employee. And — a requirement that applies from 1 April 2023 — where both work and housing are offered, separate agreements must be signed for each: a separate employment agreement and a separate housing agreement.
This separation is more than an administrative formality. By legally decoupling housing from the employment relationship, the worker’s dependence is reduced and it is prevented that the end of the work automatically jeopardises the roof over their head. For the design of the company’s own contract documentation, this means that combined “all-in-one” agreements must be replaced by a two-track structure.
On remuneration, the Code reiterates the principle that international employees and Dutch temporary agency workers receive equal pay for equal work, in accordance with the cao. This aligns with the statutory principle of equal treatment and with the rejection, noted above, of arrangements that suppress wage costs by other means.
5. Housing: SNF, the 25% limit and the transition period
Housing has traditionally been the largest risk area in migrant labour, and the Code accordingly devotes extensive attention to it. Members must actively inform international employees of the option to arrange housing themselves, or to ask the employer to facilitate housing. If the worker opts for the latter, only housing certified by the Foundation for Flexible Housing Standards (Stichting Normering Flexwonen, SNF) may be offered.
To employer-facilitated housing the Code attaches additional requirements. The housing is in principle intended for a maximum period of three years (short- and mid-stay), the worker must be actively informed of the SNF complaints procedure, and the costs charged may not exceed the actual costs. Here the Code touches on mandatory law: under the Act to Combat Sham Arrangements (WAS), a maximum of 25% of the minimum wage may be withheld for housing, and any deduction from wages requires an express request and a written authorisation from the worker. Charging housing costs without request, or in excess, therefore conflicts not only with the Code but also with statute.
The end of the employment relationship deserves particular attention. When the temporary employment agreement ends, a transition period of four weeks applies, within which the agency worker must vacate the housing rented from the employer. The rent during that period remains at most equal to the rent during the employment, and is paid weekly. This arrangement mitigates the most distressing situations — immediate eviction on job loss — but requires the company to operate a well-considered outflow process, not least because the period affects the actual availability of beds for new workers.
6. Fines, damages, income guarantee and registration
The Code limits what may be deducted via the payslip. Deducting fines is permitted only for judicial and administrative fines owed by the worker; deducting fines of any other kind is prohibited. Liability for damage to the employer or landlord exists only in the event of intent or conscious recklessness, and is capped at the actual repair costs. In practice, this means that internal “penalty schemes” for, for example, lateness or non-intentional damage do not hold up legally.
In addition, the Code contains an income guarantee for those coming to the Netherlands for work for the first time and recruited outside the Netherlands: during the first two months, there is at least an entitlement to the full-time minimum (youth) wage, regardless of contract duration and the number of hours worked. This is relevant to the business model, because the recruitment risk — for example where deployment in the first weeks falls short — then lies with the company.
Finally, the Code promotes correct registration. Members must actively inform international employees about the difference between the Registration of Non-Residents (Registratie Niet-Ingezetenen, RNI) and registration as a resident in the Personal Records Database (Basisregistratie Personen, BRP), and point out the possibility of registering as a resident four months after the citizen service number (BSN) has been issued. Although the worker is formally responsible for their own registration, the Code imposes an active duty of information on the company.
7. The Code within the broader regulatory framework
The significance of the Code is reinforced by the direction in which the regulation of the labour-lending sector is moving. Whereas the combating of abuses long proceeded mainly through civil-law liability, fiscal safeguards and private certification, the legislator has, with the Act on the Admission of the Provision of Labour (Wtta), opted for a public-law admission system, under which providers may no longer make labour available without admission. Market access thereby becomes dependent on a prior assessment.
In that light, compliance with the Code is more than an association obligation. The substantive norms of the Code — fair recruitment, the separation of work and housing, certified housing, transparent and correct remuneration — largely run parallel to the norms on which public supervision focuses. A company that already organises its processes to the level of the Code limits not only the risk of expulsion, but also prepares for the heavier assessment that the admission system entails. Conversely, clinging to rejected arrangements such as A1 remuneration and contracting increases vulnerability on several fronts at once: as a matter of association law, tax law, employment law and — soon — access to the market.
This is also relevant for the hirer. Within the chain, the hirer bears its own responsibility and a growing liability and reputational risk where abuses occur in its chain. The Charter emphasises that staffing agencies and hirers must clearly coordinate their respective responsibilities, so that the protection of the international employee is safeguarded. For the owner-director on the hiring side, this means that choosing a demonstrably Code-compliant provider becomes part of careful chain management.
8. Conclusion and practical significance
In legal terms, the ABU Fair Employment Code for Labour Migrants is self-regulation, but in practical terms it is a set of binding conditions that affect the operations of staffing and hiring companies at the level of recruitment, contract documentation, remuneration, housing and administration. The combination of a mandatory membership criterion, the possibility of expulsion and an obligation to cooperate with monitoring means that compliance must be demonstrable — not merely present.
For the owner-director, it comes down to a limited number of concrete action points: ensure bilingual contracts and a separate employment and housing agreement; work only with SNF-certified housing and stay within the statutory deduction limits; clean up internal penalty and set-off schemes; secure the income guarantee and the information and registration obligations in the recruitment process; and contractually bind engaged recruitment agencies to the Fair Recruitment Charter. Anyone who, on top of this, critically reviews the rejected arrangements and aligns their processes now with the forthcoming admission system, not only limits the risk of sanctions but also strengthens their position in a market where reliability is increasingly the price of entry.
This article is based on the ABU Fair Employment Code for Labour Migrants and the ABU Fair Recruitment Charter effective from 1 January 2023. Sector codes are revised periodically; always check the version currently in force before applying it. This contribution is of a general nature and does not constitute legal advice on any specific situation.
