Dismissal Rules in Collective Labour Agreement or Employment Contract
Dutch employment law regulates the legal relationship between employers and employees in the Netherlands, covering key areas such as transition pay, flexible work agreements, and dismissal procedures and protections. In most cases, an employee’s personal employment contract will determine his or her salary and specific conditions of employment in accordance with Dutch labor laws, although deviations from the employment contract may be included in a collective labor agreement. Whether you are a temporary employee, permanent employee, stand-by worker or payroll staff, Dutch employment law applies to you fully or partially, and it is important that you understand the rights and protections you are entitled to under the law, especially with regard to termination of an employment contract or agreement. For more information about dismissal rules in collective labor agreements or employment contracts, consult our skilled Dutch labor and employment law attorneys today.
- The Labor Market in Balance Act
- What is a Collective Labor Agreement?
- What Information is Included in an Employment Contract?
- Dismissal Law in the Netherlands
- Dismissal Procedure
- Transition Payments
- Collective Redundancy
- Protection Against Dismissal
- Period of Notice
- Contact Our Dutch Employment Law Attorneys Today
The Labor Market in Balance Act
The laws governing employment contracts in the Netherlands are many and are subject to change. The year 2020 saw the entry into force of the Labor Market in Balance Act (Wet arbeidsmarkt in balans inDutch, or WAB), which introduced some important reforms affecting various areas of Dutch labor and employment law.
What is a Collective Labor Agreement?
A collective labor agreement (collectieve arbeidsovereenkomst, or CAO) is a written agreement drawn up by one or more employers, one or more employers’ organizations, and one or more employees’ organizations (mainly trade unions). The collective labor agreement contains supplementary rules for all employees regarding wages, working hours, probation period, termination of contracts, payment during illness, and more. The Dutch government is not a party to collective labor agreements.
There are two main types of collective agreements in the Netherlands: the collective labor agreement per company and the collective labor agreement per business sector. Many Dutch companies participate in a collective labor agreement and in most cases, the provisions set forth in a CAO are more favorable than those required by law. If a collective labor agreement is in place, the employer is not permitted to deviate from the agreement unless it benefits his or her employees. If both the employer and employee are bound by the collective labor agreement, or if the agreement is extended, a new collective agreement can modify the employment contract.
What Information is Included in an Employment Contract?
If there is no collective labor agreement, the employer and employee must have an individual agreement about the terms and conditions of employment, known as an employment contract. The contractual relationship between employers and employees in the Netherlands is typically covered by a written agreement, although Dutch law also recognizes verbal agreements. The terms and conditions of employment by which both the employer and employee are bound that are contained in a collective labor agreement are automatically incorporated into the employment contract. Furthermore, an employment contract can only contain clauses that are less favorable to the employee than the applicable collective labor agreement if the collective agreement expressly allows such a thing. The following are some, but not all, of the employment conditions an employment contract should include:
- Job title and job description
- The location of the job
- Contract start date (and end date, if it is a fixed-term contract)
- Trial period, if any
- Number of working hours
- Salary and compensation
- Overtime expectations
- Holiday leave
- Social security contributions
- Pension contributions
- Coverage of additional expenses
- Notice for termination for the employee and employer
There are two main types of employment contracts in the Netherlands: a fixed-term (temporary) contract and an indefinite-term (permanent) contract. It should state in an employee’s contract of employment whether a collective labor agreement is applicable. If the collective labor agreement and employment contradict one another, the conditions set forth in the labor agreement take precedence.
Dismissal Law in the Netherlands
Under the Labor Market in Balance Act, important changes have been made to Dutch dismissal law. The specific regulations that apply to you as a Dutch employee depend on what kind of employment contract you have and what is stated in your collective labor agreement.
If you are a temporary employee, meaning your employment contract has a set end date, the contract will end on the agreed upon date. It can also end during the trial period. In either case, there is no dismissal procedure. If you have an indefinite-term contract, your employer can only dismiss you under the following circumstances:
- He or she has permission from the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen in Dutch, or UWV)
- He or she goes to court to have the employment contract dissolved,
- With your consent (mutual consent), or
- During a trial period.
Under Dutch employment law, there are limited grounds on which an employer can base a request for dismissal. The following grounds are known as grounds “a through h”:
(a) Economic circumstances
(b) Long-term disability or illness
(c) Repeated absence due to illness or disability
(e) Culpable acts on the part of the employee
(f) Conscientious objection
(g) Damaged working relationship
(h) Other circumstances under which continuation of the employment relationship cannot be reasonably expected
The Labor Market in Balance Act introduced a new “cumulative” ground for dismissal (the “i” ground), which allows employers to terminate an employment contract based on a combination of circumstances consisting of two or more grounds for dismissal (c through h only), which are such that the employer cannot be expected to allow the employment contract to continue. If your employment contract is terminated on the basis of the cumulative ground, you may be entitled to a higher transition payment upon dismissal.
Employees in the Netherlands are legally entitled to transition pay if their employment contract is terminated by the employer or dissolved at the employer’s request, or if the employee’s fixed-term contract ends and will not be extended on the initiative of the employer.
If a Dutch employer dismisses at least 20 employees within one geographical work area within a period of three months for economic reasons, this is known as collective redundancy. Before proceeding with a collective redundancy, the employer is required by law to report the intention to the UWV and consult with the trade unions. If the employer fails to comply with the duty to report the collective redundancy, the dismissals may be annulled.
Protection Against Dismissal
Dutch law imposes a number of restrictions on dismissal from employment. For instance, your employer is not permitted to terminate your employment contract while you are on sick leave, unless you have been unable to work for more than 104 weeks (two years) due to long-term illness or disability. If you are dismissed after two years due to an illness or disability, you are entitled to transition pay for your total duration of employment. The WAB introduced changes to this law meant to encourage employers to terminate dormant employment relationships, which allow employers to pursue compensation from the UWV for transition payments made to employees upon termination of employment following long-term incapacity.
Period of Notice
If you are being involuntarily dismissed from employment, your employer is legally required to notify you of the dismissal in advance. This is known as the “period of notice,” and it is often mentioned in the employment contract or collective labor agreement. The standard period of notice in the Netherlands is as follows:
- If you have worked for the employer for less than five years – one month
- If you have worked for the employer for between five and 10 years – two months
- If you have worked for the employer for between 10 and 15 years – three months
- If you have worked for the employer for 15 years or longer – four months
If the employee has a fixed-term contract of six months or longer, the employer is required to give the employee notice about whether or not the contract will be renewed no later than one month before the contract’s end date. If the employer fails to give notice, the employee is entitled to compensation equal to one month’s salary.
Employees also have an obligation to notify their employer if they intend to resign. The standard period of notice in this situation is one month, unless otherwise stated in an employment contract or collective labor agreement. In some cases, an employee and employer may agree that the employee will stop working immediately, which is known as mutual consent.
Contact Our Dutch Employment Law Attorneys Today
Labor law is a complex area of the law that is subject to change and the most recent changes to dismissal law under the Labor Market in Balance Act are significant. Furthermore, a collective labor agreement or employment contract may set forth rules for dismissal that differ from the statutory requirements listed above. If your employment has been terminated in the Netherlands and you believe your dismissal was in violation of a collective labor agreement or employment contract, contact our Dutch labor and employment law attorneys as soon as possible. Dutch labor law is extremely protective of employees and our legal team can help ensure that your rights are protected.