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If you have a company in the Netherlands and you want to dismiss employees, you must have a valid reason, such as refusal to perform work, culpable conduct, excessive sickness absence, reorganisation or company closure. If you dismiss more than 20 employees at once for economic reasons within a 3 month span and within one geographical work area, it is called collective redundancy.
Dismissal by mutual consent
Dismissal by mutual consent means you and your employee agree in mutual consultation to terminate the contract of employment. Your employee, therefore, agrees voluntarily to the dismissal.
Consentual dismissal is only valid by written termination agreement (settlement agreement). An agreement on dismissal compensation or severance pay is also an option.
You do not require the consent of the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV) or need to have the employment contract set aside by a sub-district court.
Your employee may reconsider their consentual dismissal within 14 days. You must clearly state this in your termination agreement. If you fail to include this clause, the reconsideration period will be automatically extended to 21 days.
Precautionary check by UWV or sub-district court
Prior to a dismissal UWV or the sub-district court checks whether a dismissal is fair or not.
When dismissal for economic reasons or long-term incapacity for work of an employee is concerned, without your employee's consent, you must request the dismissal from UWV. This concerns both employment contracts for an indefinite period (a permanent contract) as well as fixed-term contracts (with a notice period). UWV checks if you comply with all the rules regarding dismissal.
For all other reasons for dismissal (performance reasons or conduct) you request the dismissal from the sub-district court. This also applies to fixed-term contracts that cannot be terminated early. The court will check the dismissal against all relevant legal criteria.
Collective Labour Agreement Committee for dismissal for economic reasons
A Collective Labour Agreement (CAO) may provide for an independent and unbiased committee that evaluates a dismissal for economic reasons instead of UWV.
Reducing notice period
Dismissal procedures with UWV or the sub-district court take time. You may subtract some of this time from the applicable notice period. However, in any case there should remain at least a 1 month notice period.
If an employer or employee disagrees with the sub-district court regarding a dismissal, they have the right to appeal.
Prohibitions on termination through protection against dismissal
There are situations where your employee is protected against dismissal, among others during the first 2 years of illness, during maternity leave or because your employee has joined a trade union. In these situations UWV will not give you permission to dismiss your employee, unless a specific protection against dismissal ends within 4 weeks after the permission was granted. If permission was granted, but the employee turned out to be protected against dismissal after all, the permission is void and the employment contract is still valid.
Not only UWV, but also the sub-district court has to take protection against dismissal into account. The court may terminate an employment contract only if the employee is not specifically protected against dismissal. If your employee believes that the dismissal breaches a prohibition on termination, they can request the court within 2 months after their dismissal to declare the dismissal null and void or to order the employer to pay proper compensation.
Dismissal rules in collective labour agreement or contract of employment
If your employee has a fixed-term employment contract of 6 months or longer that will end automatically, you must inform them if their contact will be renewed or not no later than 1 month before the end of the contract. If you fail to do so, your employee is entitled to compensation of 1 month's salary.