Reorganization in The Netherlands

In The Netherlands it is important to carefully determine which employees can be dismissed in a reorganization, as the selection of the redundant employees is a very important issue. The so-called ‘balance principle’ applies to the process in which the employer determines which employees will be made redundant. Dutch employment lawyer Sander Schouten explains.

The selection of redundant employees

According to the balance principle, the number of people with exchangeable jobs to be dismissed is divided among the various age categories, in such a way that the percentage of representation of each age category in that group of employees with exchangeable jobs remains more or less the same. The employees with the fewest years in service in each age category can be dismissed. Furthermore, the employer must prove that there are no suitable jobs within the company for the employees that will be dismissed.

Social plan

In the event of a dismissal of a considerable number of employees for economic reasons, Dutch employers normally draw up a so-called ‘social plan’. In English this social plan would probably be called a ‘redundancy plan’. In such a social plan, the social and financial consequences of the reorganization for the employees are arranged. At larger companies (50 or more employees) the company usually negotiates with the representatives of her employees (the works council) and the trade unions about the content of the social plan.

Dutch court is bound to social plan

In principle, if the works council and/or the trade unions agree on the content of a social plan, and if the implementation of the social plan does not have evidently unreasonable social and/or financial consequences for the employees involved, the court will be bound to the social plan. This means that the employer can easily terminate the employment contract by requesting the competent court to dissolve the employment contract.

Dutch law firm for labour law

Dutch law firm AMS is based in Amsterdam, The Netherlands. The attorneys have gained a broad experience in advising and litigating for (international) companies and individuals. The attorneys are highly involved with their client’s interests and offer a sharp and transparent fee structure. Should you require more information on Dutch labour law, or should you have any question with respect to litigation in The Netherlands, please feel free to contact our employment lawyer.