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Do you have a company in the Netherlands and do you want to dismiss employees? You must follow a dismissal procedure. In some situations, employees are protected against dismissal.
Reason for dismissal
In the Netherlands, you must have a valid reason for dismissing employees. Valid reasons are for example refusal to perform work, culpable conduct, excessive sickness absence, reorganisation or company closure.
Employee agrees with dismissal
If your employee agrees with the dismissal, there are 2 options:
- Dismissal by mutual consent. This mean that you and your employee mutually agree to end the employment contract. You need to record the terms of the dismissal in a written settlement agreement (termination agreement, in Dutch). You do not have to pay a transition payment but do need to reach a final settlement for instance on unused vacation days. An agreement on dismissal compensation or severance pay is an option. You must take into account the notice period.
- Termination with consent. This means you decide to end the employment contract and your employee agrees with this in writing. You have to pay your employee a transition payment.
Dismissal by mutual consent and termination with consent does not need approval by the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV). Nor do you need to have the employment contract terminated by a sub-district court.
Employee reconsideration period
Your employee has 14 days to reconsider the dismissal. During this period, they can revoke their consent without giving a reason. You must clearly state the reconsideration period in your termination agreement. If you fail to do so, the reconsideration period will be automatically extended to 21 days.
Employee does not agree with dismissal
If your employee does not agree with the dismissal, you need the approval of the Employee Insurance Agency or the sub-district court. The grounds for dismissal determine where you need to ask for permission.
Permission for dismissal from the Employee Insurance Agency
You must request permission from the Employee Insurance Agency in cases where the dismissal is:
- for economic reasons, such as bankruptcy or restructuring;
- due to an employee's long-term incapacity to work.
In order to get permission, you need to:
- request a dismissal permit for economic reasons (in Dutch);
- request a dismissal permit due to long-term incapacity to work (in Dutch).
If you do not have permission for dismissal, you cannot dismiss your employee. You will have to turn to the sub-district court for termination of the employment contract.
Your Collective Labour Agreement (CAO) may provide for a (sector) dismissal committee that is independent and unbiased. If so, this committee will evaluate a dismissal for economic reasons rather than the Employee Insurance Agency.
Permission from the sub-district court
You have to apply to the sub-district court if there are other reasons for dismissal (in Dutch), such as unsatisfactory performance or conflict. The court will check whether all the relevant legal criteria have been met.
To receive permission from the sub-district court, you have to send a request for the termination of the employment contract (verzoek tot ontbinding van de arbeidsovereenkomst, in Dutch). Do you disagree with the sub-district court regarding a dismissal? Then you can appeal against the decision.
Do you have several reasons to dismiss an employee that separately are not sufficient ground for dismissal? You can ask the sub-district court for dismissal on cumulative grounds. This is possible if an employee does not perform well for a combination of reasons. The court may tell you to pay your employee an extra sum on top of the transition payment (at most 50% of the transition payment).
Reducing the notice period
As an employer, you need to take the notice period into account. Dismissal procedures take time to go through the Employee Insurance Agency or sub-district court. You may subtract some of this time from the notice period. However, a notice period of at least a 1 month must be observed.
Dismissal of multiple employees (collective redundancy)
Do you want to dismiss more than 20 employees for economic reasons within a 3-month period and within 1 geographical work area? This is called collective redundancy. You have to report a collective redundancy with the Employee Insurance Agency (in Dutch).
Dismissal of ill employees
You may only dismiss an ill employee in specific circumstances, such as during the probationary period or when you are facing bankruptcy. You can dismiss an employee after 2 years of long-term illness. During that time you must have done all you can to ensure they return to work as quickly as possible in a responsible way. If your employee cannot go back to work after 2 years and you have not done enough for their reintegration, the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV) can impose a fine (loonsanctie, in Dutch). You may not dismiss your employee and you must pay their wages for 1 more year.
You must pay your employee a transition payment over the full period of employment. As of 1 April 2020, you can apply for compensation (in Dutch) of the transition payment for ill employees with the Employee Insurance Agency (UWV). You qualify for this (in Dutch) if:
- The employment contract was (partly) terminated because of long-term illness
- At the time of dismissal your employee was still unfit for work
- You have payed your employee a transition payment
Compensation can be claimed for dismissals dating back to 1 July 2015.
Protection against dismissal
There are situations where your employee is protected against dismissal. For example, during the first 2 years of illness or during maternity leave. These are called prohibition conditions (ontslagbescherming, ongeldige redenen voor ontslag). If a prohibition condition applies, the Employee Insurance Agency will not give you permission to dismiss your employee. They can give permission if the prohibition condition concerned is due to end within 4 weeks. If the employee turns out to be protected against dismissal after all, the permission is void and the employment contract is still valid.
The sub-district court also has to take protection against dismissal into account. The court may only terminate an employment contract if the employee is not specifically protected against dismissal.