Termination of employment contracts in The Netherlands

Practical Guide

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Netherlands

Is “employment at will” the general principle in the respective country or do you usually need grounds for a termination of an employment contract?

No, it is not. Usually, you will need specific grounds for a termination.

If there is a general concept of “dismissal protection”, is it limited to certain requirements (e.g. size of company/workplace, length of service)?

As a general concept of dismissal protection, a termination under Dutch law requires a so-called prior consent, either of a state authority (UWV), a court or the employee. Exceptions apply in the event of a termination during the probationary period or a termination without notice period based on serious grounds. Furthermore, a termination, in principle requires a specific ground as laid down in the law.

Multiple specific categories of employees are protected against dismissal, for instance, employees who are pregnant. In additional, in most cases, employees who are ill are also protected against dismissal during their illness for a period of up to two years of illness. The risk of an employee reporting ill for strategic reasons when confronted with an intention to terminate the employment should be factored in when a termination of employment of an employee is anticipated by the employer.

If a termination is deemed to be invalid, is “reinstatement (including backpay)” or “payment of damages and/or a severance payment” the general remedy?

Reinstatement, including backpay, would be the typical remedy in the event a court establishes the termination to be invalid. Damages are awarded when a court finds there is a valid reason for termination, terminates the employment with awarding a standard severance payment (as set out under 4.) AND determines the employer has acted “manifestly unreasonable”.

If “payment of damages” is the general concept, what is the basis of its calculation/the maximum amount the employee may receive?

“Payment of damages” is not the general concept. However, any termination of employment, after prior consent of the UWV, by a court dissolution or even during the probationary period or when a fixed term contract is not extended, will trigger the standard severance payment, the so-called transition payment. The transition payment is roughly 1/3 of a monthly salary per service year but should be calculated per day. The salary that you calculate with consists of the base gross salary, 8% holiday allowance, other fixed allowances and an average bonus / variable pay, if applicable.

May the right to terminate in some cases forfeit, (e.g. right to terminate forthwith) if not executed timely? If so, what is the respective timeframe?

Terminations without notice periods based on serious grounds should be given forthwith and thus without delay. This generally means that the company has time to carefully collect and review evidence. It will also allow for obtaining the response or defense of the employees side of the situation and allows for consulting legal advice. No undue delay is allowed. As soon as it is clear that, given all facts and circumstances, an urgent and pressing reason that is required for the instant dismissal, exists in the opinion of the employer, no further delay is allowed. Note that the threshold for urgent and pressing reasons is high, the requirements on evidence and documentation and communication are high and consequences for all are also likely to be considerable.

Has a termination to be delivered in writing or may the delivery of an oral/email/facsimile termination without an original signature be sufficient as well?

Mostly, notice is to be given in writing. In any event, for the reasons of proof of notice and receipt thereof, it is very much advised to send it in writing with proof of receipt. A notice by e-mail with a reply by e-mail will generally suffice. Oftentimes a letter is also sent in addition.

May a termination be successfully rejected due to the lack of a formal proxy of the managing director or may internal authorization generally be sufficient?

It is advisable to avoid any misunderstanding and to have the notice signed by the person or persons that are duly representing the entity of the employer as registered at the public registry of the Chamber of Commerce.

Is the are any general formal procedure with regard to the employee (e.g. obligatory meeting with the employee) before a valid termination may be issued?

Not in addition to the required prior procedures as described below under 4.

Is there any statutory body that needs to be dealt with before a valid termination may be issued? If so, what is the usual timeframe?

A termination can be negotiated and concluded by mutual consent by way of a termination settlement agreement.

Prior consent of the state authority UWV is necessary before notice can be given: 

  • for economic reasons, such possible economic reasons as laid down in laws and regulations 
  • to an employee who has been ill for more than two years.

A procedure before a court is required in the event of other specified grounds for termination, including behavior, performance, character clashes, etc.

The usual initial timeframe for the prior procedures is 4-8 weeks but they may take longer.

Is there -usually- an employee representative body that needs to be dealt with before a termination may be issued? If so, what is the usual timeframe?

Usually not, but this should be checked, as additional agreements might exist.

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