Termination of an employment contract in The Netherlands

The Netherlands has quite well established employee protection rights. While in many other countries employers can lay off their employees more easily, in The Netherlands the possibilities for an employer to get rid of an employee are limited. Furthermore, the employee usually is entitled to a redundancy payment. Dutch employment lawyer Sander Schouten explains the possibilities for employers to terminate employment contracts.

Manners to end employment contracts

A Dutch employment contract can end in different ways. The most common are:

• termination by mutual consent;
• expiry of a fixed term contract;
• dismissal by the court;
• termination with permit of the Dutch Dismissal Authority, UWV.

The first two situations are quite straightforward and generally do not cause big issues. Dismissal proceedings are common. Such proceedings are usually started at the request of the employer, since – in contrast to many other (Anglo Saxon) countries – employment contracts can mostly not be terminated by the employee without the approval of a judge or a permit. Dismissal proceedings usually are short and not too complex. Furthermore, dismissal proceedings (usually) are not subject to appeal.

Dismissal with immediate effect: urgent reasons

Under special circumstances, an employer can dismiss an employee with immediate effect and without going to Court first. The requirements for this severe form of dismissal are strict and any failure to meet these criteria by the employer could result in liability. There must be urgent reasons to dismiss the employee (for example a serious form of misconduct like stealing or violence).

Dismissal through the court

In other situations -where a dismissal with immediate effect will not held up- an employer can request the cantonal section of the district courts  to dissolve an employment agreement due to serious reasons. Such a request can be made at any time, even if the employment contract states otherwise or when the employee is still in his probationary period.

Serious cause for termination

In order to get approval from the judge, the employer has to show that there is either serious cause for termination or breach of contract by the employee. Serious cause can lie for example in economic reasons (the need to downsize a company) or when the working relationship between the employee and the employer has been damaged.

Dismissal due to breach of contract

For a dismissal on this ground the conducted breach must be substantially severe to justify the dismissal. To convince the judge of an employee’s (continuing) misconduct it may be necessary to keep track of all (smaller) incidents and breaches to built a record.

Severance payment

If the subdistrict court judge awards the request of the employer and dissolves the labour agreement, usually a severance payment (also: redundancy payment) is granted to the employee. This lump-sum payment is based on the age, length of service and salary of the employee involved. To set the level of the redundancy package a nationally applied guideline called: the Cantonal Court Formula, is used. The severance pay is deducted from the unemployment benefit.

Employment lawyer in the Netherlands

Law firm AMS in Amsterdam has experienced Dutch labour law specialists on board. Our labour law solicitors are to assist employers regarding termination of labour contracts by dismissal litigation or assist employees in redundancy and dismissal cases.