Q+A on Dismissal

Q+A on Dismissal

How did dismissal law change in 2020?

Dutch employment law regulates the legal relationship between employers and employees in the Netherlands, and all employees with an employment contract are subject to these laws. When the Dutch Labor and Security Act was introduced in 2015, the Act overhauled employment and dismissal law in the Netherlands for the first time in 70 years. In 2020, with the entry into force of the Labor Market in Balance Act (Wet arbeidsmarkt in balans, WAB), Dutch employment and dismissal law underwent significant changes yet again. The main focus of the Labor Market in Balance Act is to reduce the gap between employees with fixed-term (temporary) contracts and those with indefinite-term (permanent) contracts in terms of rights and legal protections, and make permanent employment contracts more attractive to employers.

What is the Employee Insurance Agency?

The Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen in Dutch, or UWV), is an independent administrative agency commissioned by the Ministry of Social Affairs and Employment. The main objectives of the UWV are to keep Dutch employees employed and ensure that those who become unemployed have access to temporary income. You may encounter the UWV if you are facing dismissal at work or you are unable to work due to illness or disability.

What is transition pay?

Transition pay is a type of compensation available to employees in the Netherlands who have been involuntarily dismissed from employment, either because their permanent employment contract has been terminated or their temporary contract has not been extended on the initiative of the employer. The purpose of transition pay is to compensate employees for a loss of income resulting from a period of involuntary unemployment.

Am I entitled to transition pay if I am dismissed?

In most cases, Dutch employees who become involuntarily unemployed because their employment contract was terminated on the initiative of their employer are entitled to transition pay. The same is true if the employee resigns because of seriously culpable behavior on the part of the employer. A transition payment may not be required if the employment agreement is terminated with mutual consent, although many employers will still offer some kind of compensation in order to provide an incentive for the employee to agree to a settlement.

What are the grounds for dismissal in the Netherlands?

Prior to the Labor Market in Balance Act, there were eight grounds for dismissal, meaning eight reasons on which a Dutch employer could base a request for dismissal from employment. These grounds, known as a-h grounds, include the following:

• Economic reasons,
• Long-term illness,
• Frequent absence from work due to illness,
• Poor performance,
• Culpable acts on the part of the employee,
• Refusal to work due to conscientious objections,
• Damaged working relationship, and
• Other circumstances that are serious enough that an employer cannot be reasonably expected to allow the working relationship to continue.

In 2020, the WAB introduced a new ground, known as the i-ground or the cumulative ground. This new ground makes it possible for Dutch employers to base a dismissal decision on a combination of grounds which would not normally be enough on their own to justify a dismissal. If your employer terminates your employment contract based on the new cumulative ground, you may be entitled to an additional severance payment on top of the statutory transition payment.

Does my transition pay depend on how long I have worked?

Transition pay in the Netherlands is calculated based on two major factors: the employee’s salary and the number of years the employee worked for the employer. The amount of transition pay you are entitled to collect after losing your job in the Netherlands is equal to one-third of your gross monthly salary for each year you worked.

Previously, transition pay was only available to employees who had at least two years of service with their employer. However, under the Labor Market in Balance Act, Dutch employees are now eligible for transition pay from their first day of employment. Before the WAB, there was also a difference between the amount of transition compensation paid out for the first 10 years of service and the amount paid out for any years beyond 10, as well as a special dispensation for employees over the age of 50, but the new transition pay law eliminated those extra arrangements. Transition pay in the Netherlands is currently capped at €83,000, or one year’s salary, whichever amount is greater.

What if I was dismissed due to long-term illness?

Employers in the Netherlands are generally prohibited from dismissing an employee during a sick-leave period. In fact, employers are required to continue paying wages to employees who are on sick leave. After two years have passed, however, if the employee is still not able to work, the employer is legally permitted to submit a request for dismissal to the UWV based on long-term incapacity for work due to illness or disability. If you are dismissed from work due to long-term illness, you are still entitled to transition pay. As of April 1, 2020, Dutch employers can submit a request to the UWV to be reimbursed for transition compensation paid to employees who were dismissed after two or more years of illness.

What if I have a fixed-term employment contract?

If you work in the Netherlands and you have a fixed-term employment contract, you have a contract that has a set end date. This is compared to an indefinite-term contract, which has no specific end date. Dutch employment law states that fixed-term employment contracts can be terminated either during the trial period or on the agreed upon end date. If your fixed-term contract expires and the contract is not renewed on the initiative of your employer, you are entitled to transition pay, so long as the reason for nonrenewal is not related to your conduct.

What if I have an indefinite-term contract?

Dutch employment laws make it difficult for employers to terminate employees with indefinite-term employment contracts. In most cases, if your employer wishes to terminate your employment contract, he or she must either request permission from the UWV or file a request with the court to dissolve the employment agreement. If there is a reasonable ground for dismissal and UWV grants the employer permission to terminate the employment agreement, the employer can proceed, while being sure to observe the requisite notice period.

What is the notice period for dismissal?

If you have a fixed-term employment contract, the duration of which is six months or longer, your employer is required to give you notice in writing about whether the contract will be renewed at least one month before the date the contract is set to end. If your employer gives no notice, you may be able to recover compensation in the amount of one month’s gross salary. If your employer gives late notice, say by two weeks, the amount of compensation you may be entitled to collect is equal to two weeks’ worth of your gross salary.

If you have an indefinite-term contract and you have worked for the employer for less than five years, the required notice period for dismissal is one month. If the duration of employment was between five and 10 years, the notice period is two months. If the duration of employment was between 10 and 15 years, the notice period is three months. And if the duration of employment was 15 years or more, the notice period is four months. Notice may not be required in the case of a summary dismissal due to gross misconduct on the employee’s part, during the employee’s trial period, or in cases where the employee resigns with immediate effect.

Can my employer fire me without cause?

The laws governing employment contracts and dismissal in the Netherlands contain robust protections for Dutch employees. In most cases, employers cannot fire their employees without a valid reason, such as company restructuring or closure. The following are the four ways a Dutch employer can legally terminate an employment contract:

• By mutual consent,
• By summary dismissal for an urgent cause,
• By permission from the UWV, or
• By dissolution of the contract by the court.

What is a collective redundancy?

A collective redundancy, also known as a collective dismissal, occurs when a Dutch employer, for economic (business) reasons, dismisses from employment 20 or more employees from one geographic work area within three months.

How do collective redundancies work?

The laws governing collective redundancies in the Netherlands are strict. Prior to initiating a collective dismissal, the employer must first notify the UWV of his or her intention and consult the works council and employees’ trade unions to discuss the reasons for the proposed redundancy and ways in which the employer can avoid redundancies, keep the number of dismissals to a minimum, and mitigate the consequences for the affected employees. The employer is also obligated to look for alternative employment within the company or with the company’s subsidiaries. Employees who are made redundant in the Netherlands are still entitled to transition pay in most cases.