Updated unemployment insurance premiums in 2020: time to review your contracts

Since the Balanced Labour Market Act (WAB), the level of the unemployment insurance premium depends on the type of contract: for a written contract for an indefinite period, you pay the low premium, while for flexible and temporary contracts, you pay the high premium. The difference amounts to five percentage points – in 2026, this will be 2.74% (low) versus 7.74% (high). If you frequently employ flex workers, this difference adds up significantly. It therefore pays to critically review your employment contracts: with the right, written contracts, you save structurally on employer costs.

What is the unemployment insurance premium and why does the rate vary by contract?

The unemployment insurance premium is the premium that you, as an employer, pay to the General Unemployment Fund (Awf). This fund finances unemployment benefits. Before the WAB, employers paid a sector premium: sectors with many unemployed people paid a higher premium. Since January 1, 2020, that system has been replaced by a transparent distinction between a low and a high rate, independent of the sector in which you operate. Since then, the type of contract determines which rate you pay.

• Low unemployment insurance premium (2.74% in 2026): for employees with a written contract for an indefinite period that is not an on-call contract.
• High unemployment insurance premium (7.74% in 2026): for employees with a temporary contract, a zero-hours contract , or another on-call or flexible contract.

The difference between the two rates is five percentage points. The exact percentages are determined annually, but the system – low for permanent and written contracts, high for flexible contracts – has remained unchanged since 2020. The legislator's intent is clear: to make permanent contracts cheaper and discourage flexible work.

When does the low unemployment insurance premium apply?

You only pay the low premium if all conditions are met. The legislator has deliberately formulated these conditions strictly to prevent disputes:

• This concerns an employment contract for an indefinite period.
• The agreement has in writing .
• It is not an on-call contract: the scope of the work to be performed must be clearly defined.

A permanent zero-hours contract therefore does not count as “permanent” for the low premium, because the scope of work is not fixed. The same applies to verbal agreements: only permanent contracts recorded in writing qualify for the low rate. Do you still have employees working on the basis of verbal agreements? Then now is the time to formalize those agreements in a written employment contract

In addition to this general rule, there are a few specific exceptions where the lower premium always applies, such as for employees under the age of 21 with a limited number of paid hours and for apprentices in the work-based learning pathway (bbl) with a written apprenticeship agreement. In case of doubt, have your situation assessed so that you do not unnecessarily pay the higher rate.

Time to review your flexible contracts

Experience shows that many entrepreneurs use their flex workers so regularly that a permanent contract actually makes more sense. As long as you employ a flex worker structurally at the high rate, it costs you unnecessary money. Moreover, a permanent contract does not have to be a full-time contract – it must be a written contract for an indefinite period with a fixed scope of work.

Calculate the difference for your own organization. With a payroll of, for example, 30,000 euros per employee, a five percentage point already saves around 1,500 euros per year. If you have multiple employees who are eligible for a permanent contract, the savings can add up quickly. At the same time, you provide your employees with more security, which strengthens their bond with your company.

Please note: the premium may be revised retroactively

Simply having a written fixed contract drawn up is not enough to permanently secure the low premium. In a number of situations, you must subsequently adjust the low premium to the higher rate. The most important cases:

• Departure within two months: if a new employee resigns within two months of commencing employment, or if the employment is terminated within that period, the higher premium applies retroactively to the entire period.
• More than 30% overtime: for contracts with an average working time of 30 hours or less per week, you must revise the premium if the employee is remunerated for more than 30% extra hours in a calendar year than contractually agreed. This correction does not apply to contracts of more than 30 hours per week.

Anyone attempting to be creative with seasonal work or probationary arrangements therefore runs the risk of an additional tax assessment. That is why it is worthwhile to seek advice in advance and to have your contract administration in order. Proper documentation prevents surprises during the payroll tax return.

What exactly do you need to do now?

1. Map out which employees work on a flexible or on-call contract and how often you actually deploy them.
2. Assess which flex workers are eligible for a written permanent contract with fixed working hours.
3. Convert verbal agreements into a written employment contract.
4. Check whether you meet the conditions for the low premium and take the revision situations into account.
5. Have your contracts legally reviewed before you sign them, so that you are not faced with an additional tax assessment afterwards.

Frequently asked questions about unemployment insurance contributions and contracts

What is the difference between the high and low unemployment insurance premium?

The low premium applies to employees with a written permanent contract that is not an on-call contract; the high premium applies to flexible and temporary contracts. The difference between the two rates is five percentage points. In 2026, this amounts to 2.74% (low) versus 7.74% (high).

What does the difference between the high and low unemployment insurance premium cost me per employee?

Five percentage points of the total payroll. At a salary of 30,000 euros, that is approximately 1,500 euros per employee per year; at a salary of 50,000 euros, this rises to around 2,500 euros. With multiple employees, the savings from a permanent contract can therefore be substantial.

Does a zero-hours contract qualify for the low unemployment insurance premium?

No. For the low premium, the scope of work must be clearly defined. This is not the case with a zero-hours contract, even if it is entered into for an indefinite period. Therefore, the high premium applies to that.

Does the low unemployment insurance premium also apply to a verbal agreement?

No. Only fixed contracts recorded in writing qualify for the low rate. If you are still working with verbal agreements, record them in a written employment contract to apply the low premium.

Does a temporary contract that you extend count towards the low premium?

No, as long as the contract is for a fixed term, the high premium continues to apply – even upon renewal. Only once you enter into a written contract for an indefinite period without an on-call character can you apply the low rate.

Can the Tax and Customs Administration correct the low premium retroactively?

Yes. Among other things, in the event of departure within two months of commencement of employment and with more than 30% extra remunerated hours (for contracts averaging 30 hours or less per week), the premium must still be revised to the higher rate. Careful record-keeping and administration help prevent this.

Have your employment contracts reviewed by MKB Juristen

Do you want to save on unemployment insurance premiums and ensure that your contracts meet the conditions for the low rate? The employment lawyers at MKB Juristen review your existing contracts and, where necessary, draft new written employment agreements. This way, you avoid unnecessarily high premiums and additional assessments.

Want to know more about our services? View our page on employment law or have an employment contract drafted directly. Do you have another legal question? Then view our options for legal assistance. Schedule a no-obligation intake and we will help you further.