Dismissal and reorganisation in the event of financial problems
Is your company having financial problems? Perhaps you are thinking about laying off staff or a reorganisation in order to continue your business. Read what you can do to save your company if you have employees.
Your financial problems are temporary
You face temporary difficulties and want to keep your staff until conditions improve. For example, you may have problems because of bad weather or the political situation in the country where you do business. These options will help ensure you do not get into further financial difficulties:
Do you expect to have less work for a maximum of 24 weeks due to a special situation (in Dutch). For example, a fire or a lightning strike? In that case, you can apply for unemployment benefits for your staff under the Working Time Reduction (werktijdverkorting, WTV) scheme. You will then receive a benefit for the hours that your employees are unable to work. With this benefit you can pay their wages.
You can lend (post, second) your employee to another entrepreneur. This is also known as collegial lending. Your employee will temporarily work for another company while remaining in your employment. You draw up a secondment agreement (detacheringsovereenkomst) together with the entrepreneur your staff will be working for. You must also register this business activity as a lender with the Dutch Business Register. This is called the Waadi registration.
Do you continue to have financial problems, even after you have made budget cuts? You can ask your staff to help by agreeing to temporary lower wages. You may only adjust the salary and other terms and conditions of employment if your employee agrees. And you are not allowed to pressure your staff to agree.
You need to change your business permanently
You face ongoing problems and need to change your business to survive. Is this not possible with your current staff? If not, you will need to reorganise. A reorganisation is a change to your organisation. For example, because your business is going to work differently.
Reorganisation plan
Reorganisation often affects (some of) your staff. Your employees may lose their jobs. You need to prepare well for a reorganisation. So, draw up a restructuring plan.
You have various options for dismissing your employees if you have to reorganise:
Talk to each employee about voluntary dismissal (in Dutch). If they agree, you draw up a termination agreement together (vaststellingsovereenkomst). This contains the termination conditions of the employment contract.
In the case of voluntary dismissal, you propose to end the contract. The employee agrees to this. Your employee will then remain entitled to unemployment benefit.
If you are unable to resolve the matter with your employee, you can apply for a dismissal permit (ontslagvergunning) for business economic reasons from the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV). You must be able to demonstrate that:
- dismissal is necessary, due to the poor financial situation of your company
- you are unable to give your employee another, suitable place (in Dutch) in your company, even after training
Are you ending the employment contract without a dismissal permit? And was a permit needed? If so, the dismissal is not valid. The court may then overturn the dismissal. The employment agreement will remain in force, and you will have to pay your employee’s wages.
Do you need to make more than one employee redundant? There are rules governing the order in which you must make staff redundant. This is known as the 'last in first out' principle (in Dutch). In the event of a reorganisation involving 20 or more people, the rules on collective redundancies apply.
Does your business require your employee to work fewer hours? For example, because you have less work. Then get advice on the possibilities. In some cases, for example, you can dismiss your employee and offer a new contract for fewer hours There must then be a business economic reason. It differs per situation whether UWV pays unemployment benefits for the number of hours your employee has been dismissed
Transition payment in the event of dismissal
If you dismiss your employee through a dismissal procedure at UWV, you will pay a transition payment. The amount depends on the gross monthly salary and the number of years that your employee has worked for you. Are you unable to pay the transition payment in one go? Then you may agree to pay the reimbursement in instalments over a maximum of 6 months.
You can no longer pay your employees' salary
Are you in danger of going bankrupt and are you no longer able to pay the salary of your staff? Report your inability to pay, or state of insolvency to the Netherlands Tax Administration as soon as possible. Your employee can then apply for a benefit due to insolvency (uitkering wegens betalingsonmacht) from the UWV.
Do you not pay your wages on time?
From day 4, your employee is entitled to an increase in wages. Your employee can also start a wage claim procedure (loonvorderingsprocedure, in Dutch) against you.
Read more about the possibilities in your situation:
If you request and receive a suspension of payment, the judge will appoint an administrator (bewindvoerder). The administrator is responsible for the salary payments to your staff. Is your company no longer able to pay its staff? Then your employees can apply for a benefit due to insolvency (in Dutch) from UWV.
Is your company being taken over? The new owner will also take over the staff and wage payments that are still due. If your company is taken over after bankruptcy, the new owner does not have to take over the staff.
If you have been declared bankrupt, a trustee (curator) will take over the business operations. The trustee can terminate employment contracts without a dismissal permit from UWV. However, the trustee must request permission from the magistrate before terminating contracts. If the trustee terminates a contract, the employee is still entitled to a salary for a maximum of 6 weeks. UWV takes over the wage payments (in Dutch).
Draw up a social plan
If you need to lay off your employees, you usually need a social plan. A social plan contains agreements that you must adhere to when dismissing or transferring employees. For example, in the event of a relocation. A social plan is not compulsory. It is usually set out in the collective labour agreement (CAO). You do not have a social plan? Then you must tell the works council about the consequences for your staff.