Do you run a business in the Netherlands and does an employee reach state pension age (AOW age)? Sometimes you will have to terminate the contract. This depends on the agreements in the employment contract or CAO (Collective Labour Agreement). Employees are allowed to work after reaching state pension age. You must then take into account the conditions of employment for state pensioners.
Your employee will receive an old age pension (AOW) from the day they reach their AOW (state pension) age. Their employment contract can be terminated upon reaching the state pension age. If the contract has expired, but you want to keep employing your employee, you can start a new contract of employment.
Do you want to continue the contract of employment?
Does your employee’s contract expire because they reach AOW age? And do you want to keep employing them? You must agree on a new contract of employment.
If the CAO and contract specify that an employee can continue work after reaching AOW age, the employment contract continues.
You can offer an employee who has reached state pension age at most 6 temporary (fixed-term) contracts during a period of at most 4 years. After 6 contracts or after 4 years, the employment contract will automatically become a permanent contract.
Do you want to continue the employment contract of an employee who has reached the AOW age? Please note that this may have disadvantages. You as an employer will withhold salaries tax, but you will no longer pay contributions for unemployment insurance, sickness benefits, incapacity insurance, and state pension. This means your employee will no longer be insured against unemployment and incapacity for work. The employee will still be entitled to sickness benefit, for which the Employee Insurance Agency (UWV) will charge the employer.
Terms of employment for state pensioners
Do you employ someone who has reached AOW age? The following terms of employment apply:
- you pay the state pensioner at least minimum wage
- in case of illness, you must continue to pay their wages for 6 weeks.
- you have to work with them on their reintegration for at least 6 weeks when they are ill
- you have to take measures that allow your employee to their own or suitable work insofar as possible. You do not have to look for suitable work with another employer or make a back to work action plan.
Do you want to terminate the contract of employment?
In some cases employment contracts automatically expire when employees reach the state pension age. As the employer you do not have to terminate the contract. This will be specified in the CAO or employment contract.
Has nothing been agreed and do you want to end the employment contract when or after your employee reaches the state pension age? You will have to give your employee notice at least one month before they reach the state pension age. You do not have to consult the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV) or a court.
If you dismiss your employee upon reaching state pension age, you do not have to pay transition payment. If you hire an employee after they reach state pension age, the regular dismissal procedures apply.
Dismissal at 65 not allowed
If the collective labour agreement states that the employment contract will be terminated at a specific age such as 65, this is in conflict with the Dutch Equal Treatment in Employment Age Discrimination Act (Wet gelijke behandeling op grond van leeftijd bij de arbeid, WGBLA). Termination of a contract of employment because of the employee's age can be nullified by a court of law at the employee's request.