The Netherlands Dismissal Law: termination of employment

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Dismissal and termination of employment in The Netherlands: Dutch lawyer in Amsterdam

The Netherlands Dismissal Law – our Amsterdam lawyers and attorneys have comprehensive experience in Dutch Employment Law, acting for employers, employees and works councils in The Netherlands. We specialize in all areas related to employment contracts, from the recruitment of employees to the release and termination of employment in the Netherlands. Our lawyers offer legal advice and assistance on The Netherlands Dismissal Law, severance payments and termination agreements. Our law firm represents both corporate entities and individuals before the Dutch labor courts.

Dutch employment lawDutch employment law

Dutch employment law has peculiar features and differs greatly from other legal systems. An employer may terminate the employment of an employee in The Netherlands but there is a need to comply with the provisions of the law and contract relating to termination. An employer can not dismiss an employee without permission from a public authority (preventive dismissal assessment): the cantonal court (sub-district court; due to the worker’s conduct or capacity) or UWV (Employment Insurance Agency; in case of economic dismissals or dismissals due to long-time sicknesses). Whether an employer may obtain permission from UWV to give notice or may request the Cantonal Judge to rescind the employment agreement, will depend on the reason(s) for dismissal.

Reasonable grounds to dismiss an employee

An employer needs to have reasonable grounds to dismiss an employee and needs to prove that the employer has tried to move the employee in another role in the company. The routes for termination of an employment agreement do not have to be followed if the employee agrees to dismissal in writing. In practice it is often possible to arrange termination by mutual consent.

Dismissal and termination of employment in The Netherlands: Dutch lawyer in Amsterdam Termination of employment: WWZ

The Netherlands WWZ Law (Wet werk en zekerheid) brought in 2015 a change to the employment law in The Netherlands, related to a.o. the system of consecutive fixed-term contracts, the non-extension notice, grounds for dismissal and severance compensation.

Fixed term contracts

A fixed-term contract will expire automatically and lawfully without a requirement for prior notice. As per 1 July 2015, an employment contract for a definite period is automatically converted into a permanent one if:

  • after 3 consecutive employment contracts, the next consecutive employment contract is entered into and the consecutive employment contracts have not been interrupted for more than 6 months;
  • the total duration multiple temporary employment contracts exceed two years.

This rule is not applicable to:

  • employees under 18 with a average employment of 12 hours or less a week
  • pupils following a work-study program.

Notification fixed-term agreement in The Netherlands

According to the Netherlands Dismissal Law, employers are obliged to notify employees in writing at least one month before expiring of the contract for a definite period,

  • whether the contract is to be extended
  • and, if so, under which conditions.

The penalty for failure is equal to the amount of one gross monthly salary. If the notification is too late, the employer’s penalty is a proportional amount of gross monthly salary.

The employee should claim the notification penalty within 2 months after expiring of the fixed term contract.

Grounds for dismissal in The Netherlands amsterdamGrounds for dismissal in The Netherlands (cantonal court)

The employer should have a fair reason to dismiss employees in The NetherlandsThe ‘reasonable grounds’ for dismissal include (sec. 7:669 (3) (c) – (h) CC):

  • Redundancy due to economic circumstances;
  • Long-term disability or illness (2 years);
  • Frequent absence due to illness or disability which results in unacceptable consequences for business operations;
  • Dysfunctioning for other reasons (i.e. underperformance);
  • Culpably acts and the employer cannot reasonably be required to continue the employment contract;
  • Refusal to perform contractual duties due to conscientious objection;
  • Disturbed working relationship or other grounds due to which the employer cannot be expected to allow to continue the contract.

The Cantonal Court can only terminate the employment agreement if re-employment of the employee into a different suitable position within a reasonable term is not possible.

Consent of the UWV 

An impartial body (UWV, Employment Insurance Agency) must first decide if dismissal on other grounds is allowed. For (business) economic reasons for example, when a reorganisation takes place or a (part of the) company closes down or relocates:

  • enforced redundancy
  • redundancy on grounds of long-term incapacity.

The UWV will assess whether there is a reasonable ground for terminating the employment agreement and whether the employee might be re-employed.

Illnes and dismissal in The Netherlands

During the first two years of illness or disability to work, the employment agreement cannot be terminated, not even with a dismissal permit from UWV, unless there is a valid reason for dismissal, for example when the employee refuses to comply with the legal obligations during illness without good reasons.

Transition compensation (severance pay)

An employer is obliged to pay a transition compensation to the employee:

  • after every employment agreement with a duration of at least 2 years,
  • if the employment agreement will terminate as a result of the employer’s initiative.

Dismissal and termination of employment in The Netherlands: Dutch lawyer in AmsterdamTermination of employment by mutual consent (settlement agreement and termination agreement)

A settlement agreement is a legally binding agreement between employer and employee. The termination of employment relationships by a termination agreement is required to be in written form to be valid. Settlement agreements are offered in The Netherlands to employees when they are being made redundant and in case of involuntarily unemployment. The settlement agreement outlines the terms of the deal. Our Amsterdam Employment Solicitor (attorney) can assist you with your termination agreement to terminate your employment agreement by mutual consent.

Summary dismissal for an urgent cause: instant dismissal

Employment contracts may also be terminate by instant dismissal for ‘an urgent cause’ (serious misconduct). Stealing company property is the most common reason why Dutch bosses sack workers on the spot. Fraud and conflicts about reintegrating workers who have been off sick each account for 12% of instant dismissal cases. In total, 18% of the 194 published court cases about instant dismissal in the previous 12 months revolve around theft.

For a summary dismissal, important reasons are required. A non-exhaustive list of acts which amount to urgent cause is provided in sec. 7:678 CC. Termination can take place immediately without compensation in cases such as fraud or other crimes involving a breach of trust.

Dutch Dismissal Law termination of employment Amsterdam attorney The Netherlands amsterdamCall our Dutch lawyers in Amsterdam for dismissal and all your employment law needs

Our experienced solicitors (lawyers) offer comprehensive legal services to both employers and employees, both inside and outside of court. Our lawyers in Amsterdam will support you in all fields of The Netherlands Dismissal Law (Dutch Labour and Employment law). For further information regarding Dutch Dismissal Law and termination of employment, contact our attorney Employment Law in Amsterdam, P.Chr. Snijders.

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