Dutch employment law can be challenging for employers unfamiliar with the Dutch system. This is especially so for employers wanting to dismiss employees with a permanent contract.
There are several ways to dismiss employees with a permanent employment contract (a contract for an indefinite period; 'arbeidsovereenkomst voor onbepaalde tijd').
Valid reason for dismissal
The underlying foundation for dismissal must be a 'valid reason' ('redelijke grond'). Valid reasons include refusal to perform work, culpable conduct, excessive sickness absence, reorganisation, or company closure. In some cases, the employer has to look for another suitable position for the employee within the company (group) first before moving on to dismissal.
Dismissing without grounds
A valid ground for dismissal is not necessary in the following cases:
- the employee has reached the retirement age ('AOW gerechtige leeftijd');
- the employee is dismissed during the trial period;
- the (temporary) employment agreement of the employee lapses.
Protection against dismissal
In some situations, protection against dismissal applies. There are so-called prohibition conditions ('opzegverboden'). A prohibition condition applies, for example:
- during the first two years of illness or disability;
- during pregnancy, childbirth, maternity leave, and parental leave.
Dismissing via UWV of court
Depending on which 'valid reason' is used for the employee, there are two dismissal procedures: either via the UWV (the Dutch Employee Insurance Agency) or the subdistrict court ('kantonrechter'). The notice period must be considered in both procedures, and a termination payment ('transitie/ontslagvergoeding') must be paid to the employee.
Dismissal by mutual consent
Another way to dismiss an employee is by mutual consent ('ontslag met wederzijds goedvinden'), in which both parties agree to end the employment, with the employer initiating the dismissal. In this procedure, a settlement agreement ('vaststellingsovereenkomst') is drawn up in which the financial compensation is recorded, along with the notice period, unused vacation days etc. A termination payment is not obliged but is usually part of the employee's overall compensation.
Collective redundancy
Dismissing more than 20 employees for economic reasons within three months and one geographical work area falls under collective redundancy ('collectief ontslag'). It triggers a different procedure in which the employer has to report the intention of dismissal to the trade unions and the UWV.