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Dutch employment law: dismissal procedure and severance pay

maandag 14 december 2020

Almost every company employs personnel and therefore has to deal with the relatively complex system of Dutch employment law. Hiring and hiring personnel is relatively simple. Dismissal, on the other hand, can be complex and in certain cases impossible or expensive. In many cases, it can therefore be advantageous to agree on termination of employment by mutual consent.

Preventive dismissal test

In the Netherlands there is a preventive dismissal test. This means that the employer - with a few exceptions - requires prior permission to terminate an employee's employment contract. Depending on the reason for the dismissal, the subdistrict court assesses whether the UWV or the employer has reasonable grounds for dismissal and whether the employer has made it plausible that reinstatement (possibly by means of training) is not possible or not reasonable.

Limitative grounds for dismissal

The law contains nine limitative grounds on the basis of which an employer can dismiss an employee. These are:

  • Business economic circumstances;
  • Long-term incapacity for work (after 104 weeks);
  • Regular absenteeism due to illness;
  • Dysfunction;
  • Culpable act or omission;
  • Refusal of employment due to serious conscientious objections;
  • Disrupted employment relationship;
  • Other circumstances;
  • Cumulation of grounds.

It is up to the employer to make this ground sufficiently plausible. It is therefore very important that you build up a file which shows that you cannot be expected to maintain the employment contract.

UWV dismissal procedure

Of the nine limitative grounds for dismissal, two are assessed by the UWV. These are: a) business economic circumstances and b) long-term incapacity for work. An application for dismissal can be submitted to the UWV for these grounds for dismissal. If the employer obtains permission from the UWV, the employment contract can be validly terminated. If permission is refused, it is possible to initiate proceedings before the subdistrict court.

Termination via subdistrict court

The other grounds for dismissal are assessed by the Subdistrict Court. This dissolution procedure is started with a request for termination, after which a hearing is scheduled. The employee can then put forward a defence. If the Subdistrict Court determines that the employment contract is to be dissolved, it also determines the time at which the employment contract would have ended in the event of termination. If the request for dissolution is rejected, an appeal may still be possible.

Termination of employment contract

The employer cannot terminate the employment contract in the event of a ban on termination. For example, there is a termination ban during illness (104 weeks), pregnancy, military service and membership of the Works Council or PVT. In that case, termination is only possible if the request does not relate to the ban on termination. An example is a sick employee who is guilty of theft during reintegration. In that case, the reason for dismissal is not the illness, but (serious) culpability.

Transition compensation

As of 1 January 2020, an employee is entitled to transition compensation as of the first day of the employment contract, if the employment contract ends on the initiative of the employer by notice, dissolution or if the employment contract is not continued after an end by operation of law. An employee may also claim this compensation if it is established that the employer has acted in a seriously culpable manner. A transition allowance is not payable to employees who (i) have reached the AOW or pensionable age, (ii) are younger than eighteen years of age and have worked a maximum of 12 hours per week, (iii) have acted or failed to act in a seriously culpable manner and finally (iv) if the employer is in a state of bankruptcy or has been granted a suspension of payments or the WSNP applies.

Fair compensation in the event of dismissal

Fair compensation is severance pay which may be awarded to an employee by a court. Fair compensation may be awarded to an employee, inter alia, in the event of serious culpable behaviour on the part of the employer, as an alternative to reparation, or if the employer has given notice, for example, in breach of a prohibition on giving notice. The court determines the amount of fair compensation on the basis of the exceptional circumstances of the case, such as the consequences of the dismissal, the duration of the employment contract and the employee's chances on the labour market.

Cumulation allowance

If dissolution is granted on the ground for cumulation, the judge can grant a so-called cumulation compensation. The cumulation allowance (on top of the transition allowance) amounts to a maximum of half of the transition allowance to which the employee is entitled. This compensation serves as compensation for the employee who is confronted with dissolution without the existence of a full ground for dismissal.

Questions for our Dutch employment lawyers?

Do you have any questions regarding the above information, or do you need legal assistance from a lawyer in dismissal proceedings? Feel free to contact us or send us an e-mail.

Lisa Kloot

employment Law and employer representation

+31(0)10 209 27 61
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Peter Verheijden

commercial cooperations, mergers and acquisitions, employment law and employer representation 

+31 (0)10 209 27 55
Lisa Kloot

employment Law and employer representation

+31(0)10 209 27 61

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