Dismissal procedures in The Netherlands due to economic reasons

Dismissal procedures in The Netherlands due to economic reasons lawyer  Amsterdam

If you have a company in the Netherlands and you want to dismiss employees, you must follow a Dutch dismissal procedure. The Dutch dismissal rules are complicated and offer a lot of protection to the employee. Therefore, contact our Amsterdam lawyers, who are specialized in Dutch dismissal law and deal with dismissals on a daily basis. Our specialists are happy to give you legal advice and assist you in all dismissal procedures.

We also specialize in settlement agreements. An employer must request permission from the Employee Insurance Agency (UWV Uitvoeringsinstituut Werknemersverzekeringen) in cases where the dismissal is:

  • for economic reasons, such as bankruptcy or restructuring;
  • due to an employee’s long-term incapacity to work.

Call our employment lawyers: 0031 20 – 522 1999 

Permit Dutch UWV for dismissal based on economic reasons

If a lawyer would file a request to UWV in order to obtain a permit for dismissal based on economic reasons you must prove that there is no suitable position within the organization for the employee. 

The Dutch UWV Implementing Rules on dismissal for business economic reasons are very extensive. 

Reasonable ground for dismissal in The Netherlands

The circumstances in a company may be a reason to apply for an employee’s dismissal (dismissal for business economic reasons). An employer may request permission to terminate the employment contract if there are reasonable grounds for doing so. A reasonable ground for dismissal may be business economic circumstances that lead to the loss of jobs (article 7:669 paragraph 3 subsection a Dutch Civil Code; BW). 

No possibility of reassigning the employee to another suitable position in the company

According to the existing rules, a legally valid business dismissal requires a structural loss of jobs. In addition, there must be no possibility of reassigning the employee to another suitable position within a reasonable period of time, with or without the help of training.

Efficient business operations

A structural decline of jobs means the (expected) loss of jobs over a future period of 26 weeks. The employer will also have to demonstrate that the decision underlying the loss of jobs is necessary in the interest of efficient business operations. The employer will have to make it plausible that the work cannot be performed to a substantial degree, and that a different arrangement of the work, as a result of which dismissal can be prevented, is not possible. 

Poor financial situation, work reduction, organizational changes, technological changes or termination of business activities.

On the other hand, the employer must also be able to set up his company in such a way that its continued existence is also assured in the longer term. This is not only in his own interest but also in the interest of maintaining employment in a more general sense. Business reasons may therefore be: poor financial situation, work reduction, organizational changes, technological changes or termination of business activities.

UWV checks whether what is submitted sufficiently supports the request for a dismissal permit.

Refusal of permission for dismissal will (also) be considered, if employees are proposed for dismissal because the employer deems it necessary to save costs while the work at the employer does not change at all according to its nature and scope. This situation occurs, for example, where an employer wants to dismiss employees and replace them with cheaper (flexible or otherwise) workers. The reason for rejection is then that there is in fact no question of the loss of jobs.

Reduction in work

For the assessment it is first of all necessary that the employer explains the cause of the reduction in work. In the case of organizational or technological changes, the employer must make it plausible that taking measures that lead to the structural loss of jobs (i.e., viewed over a future period of 26 weeks) is necessary for efficient business operations. 

The employer will have to explain that the intended changes are necessary for an efficient company management.

Principle of reflection in Dutch dismissal law

In all this, the principle of reflection applies: the employer must first nominate the employee with the shortest employment contract for dismissal. The employer therefore first nominates hired personnel such as temporary workers and freelancers. Further, the following employees are nominated: AOW beneficiaries; on-call workers; employees working on a temporary employment contract that is still for a maximum of 26 weeks.
Then, the remaining employees are nominate taking into account the reflection principle.

In the reflection principle, employees with similar (“interchangeable”) jobs are divided into age groups. Within each age group it is examined who was last hired. These employees are then fired first. It concerns the following age groups: 15 to 25 years; 25 to 35 years; 35 to 45 years; 45 to 55 years; 55 years and older.

The reflection principle does not need to be used by the employer as (a.o.):

-the company or business establishment is going to close down 100%;

-a unique function will cease to exist. This is a function that is only filled by 1 employee;-a category of interchangeable functions in its entirety will lapse.

In a number of special situations, the employer may deviate from the reflection principle. Employers may invoke the hardship clause if they allow employees to work under the supervision and direction of a third party.

The hardship clause gives the possibility to deviate from the reflection principle.

Settlement agreement instead of dismissal

If you do not have permission for dismissal, you cannot dismiss your employee. For this reason, many employers prefer a settlement agreement. The laborious procedure at the UWV is no longer necessary and parties can quickly conclude a termination agreement by mutual consent.

Unfairly laid off

If you believe you have been unfairly laid off, you should contact WS Lawyers in Amsterdam. WS Advocaten in Amsterdam specializes in dismissals and settlement agreements

Dismissal procedures in The Netherlands due to economic reasons lawyer  Amsterdam

We are happy to inform you about Dutch employment and dismissal law. Would you like us to draw up a settlement agreement, please contact one of our experienced Amsterdam dismissal lawyers. We also assist employers in procedures before the UWV due to economic circumstances.


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