Dutch employment termination laws

Termination of Employment Contract in the Netherlands - When is it possible? What are your rights?

There can be various reasons why an employer seeks to terminate an employment contract. For example, the company may have encountered financial difficulties, or the employee may not be performing well. It is important to know that as an employee, you (almost) always have the opportunity to defend yourself against a potential termination of the employment contract. It is crucial to make the best use of this opportunity. Of course, our legal experts can assist you if termination of the employment contract is looming.
In the following, we will briefly discuss when and how the termination of an employment contract can take place.

a. Probationary Period

During the agreed probationary period, either party can unilaterally terminate the employment contract without cause and with immediate effect. If a probationary period is agreed upon, the employment contract can also be terminated by either party before the actual commencement of work. For this termination of the employment contract, no permission from the UWV (Employee Insurance Agency) or the labor court is required.

b. Fixed-term Employment Contract

A fixed-term employment contract expires automatically when the agreed-upon time period has elapsed unless termination is prescribed by a collective labor agreement (CAO) or individual agreement (click for more information on: terminating a fixed-term employment contract). The extended fixed-term contract also expires automatically. The contract can be extended twice, provided that the total contract duration does not exceed three years. However, in the case of a third extension or if the total duration exceeds three years, the employment contract is automatically converted into an indefinite-term contract.

c. Retirement Age

Reaching the retirement age means the end of an indefinite-term employment contract if agreed upon. If not agreed upon, the employer is allowed to terminate the employment contract without permission, either on or after the day of reaching the retirement age.

d. Immediate Dismissal

If a compelling reason arises, the employment contract can be unilaterally terminated with immediate effect without following the notice period. This is known as immediate dismissal. For a valid immediate dismissal, the reason must be immediately communicated to the employee, and the dismissal must follow promptly thereafter.
However, the "compelling reason" must also meet the strict scrutiny of the court. In other words, the employee must have committed a severe misconduct for the court to uphold an immediate dismissal. Examples include theft or violence in the workplace. A lightly given immediate dismissal will not result in the termination of the employment contract. In the event this happens to you, inform your employer by registered letter that you dispute the validity of the immediate dismissal and, therefore, the termination of the employment contract, and that you are available for work. If the employer does not withdraw the dismissal, you can initiate a wage claim procedure with the help of our legal experts and challenge the termination of the employment contract.

e. Termination of Employment Contract by Mutual Agreement

If the employer and employee explicitly agree to terminate the employment contract and both desire it, it is considered a termination of the employment contract by mutual consent. Usually, parties enter into a written termination agreement or settlement agreement for this purpose. With such an agreement, you, as the former employee, are entitled to unemployment benefits (WW-uitkering), provided it is drafted in a WW-compliant manner. Therefore, it is essential to have the agreement reviewed before giving your actual consent to termination of the employment contract.
Another way to terminate by mutual agreement is through the employee's written consent to termination by the employer.
After concluding a termination agreement/settlement agreement or providing written consent to termination, the employee has 14 days to reconsider and revoke the agreement or consent without specifying reasons.

Procedures for Termination of Employment Contract

In principle, either party can terminate the employment contract by giving notice.
The employer can only terminate with a valid reason, and if reassignment of the employee to another suitable position is not possible. The law provides a non-exhaustive list of valid reasons, which, in brief, include: a) economic reasons; b) prolonged illness; c) frequent absenteeism due to illness; d) poor performance; e) blameworthy conduct by the employee; f) conscientious objection by the employee to the work; g) disrupted working relationship; h) other circumstances.

UWV Procedure

For a valid termination by the employer without the employee's consent, the employer needs a dismissal permit from the UWV if the grounds for termination are based on economic reasons or prolonged illness exceeding 2 years. After obtaining the permit, which is valid for 4 weeks, termination is possible. The applicable notice period must be observed, and the time taken for the procedure can be deducted from it. Failure to observe the notice period does not invalidate the termination but may lead to damages.
The employer applies for the dismissal permit at the UWV Employee Insurance Agency. The UWV has developed specific forms for this purpose, allowing the employer to substantiate the dismissal request. In the case of economic reasons, the dismissal request must comply with the "reflection principle." In essence, it means that, among employees within a certain age category and the same job position, the one with the shortest tenure is the first to be considered for dismissal.

It goes without saying that the employee should carefully examine the permit applications to assess defense options. Our legal experts can assist you with this and, if necessary, represent you in your defense.

If the UWV Employee Insurance Agency does not grant the dismissal permit, the termination of the employment contract is not allowed, and the employment contract remains in effect.

The employee is entitled to a severance payment (transitievergoeding) if the employer terminates the employment contract with the UWV's permission.

Termination Procedure at the Subdistrict Court (kantonrechter)

If the employer wishes to terminate an employment contract based on the circumstances mentioned under c to h and the employee does not consent to termination, the employer must apply to the subdistrict court (kantonrechter) to request the termination of the employment contract: dissolution of the employment contract (see also termination procedures). If the subdistrict court grants the requested dissolution, the employee is entitled to a severance payment (transitievergoeding). Only in exceptional cases, if there is serious culpable conduct or omission by the employer towards the employee, can the court grant additional compensation (not in cases of "ordinary" culpable conduct).

The employee can also file a request for dissolution of the employment contract with the subdistrict court if circumstances are such that the employment contract should be terminated promptly or shortly, in the interest of fairness. In this case, the employee is not entitled to a severance payment. In exceptional cases, if there is serious culpable conduct or omission by the employer towards the employee, the court may grant compensation based on fairness.

Get immediate assistance from an employment termination specialist; avoid costly mistakes!

In the case of employment contract termination, the stakes are high. Therefore, it is wise to consult our employment termination specialists.
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