Facing redundancy in the Netherlands

Article provided by Russell Advocaten, an IN Amsterdam partner.

Making the best of a tough situation

No one wants to be made redundant, but it can happen to even the most skilled and dedicated employees. Though it’s usually a stressful experience, knowing your rights, and what to do, will help you safeguard your interests and move on to the next step in your career.

Reasons for dismissal

According to Dutch law, an employer can terminate a contract when there are reasonable grounds for dismissal, including the loss of jobs due to a reorganisation within a company or if an employee is found to be unsuitable for their role. Depending on the reason, a procedure must be determined through the Dutch Employee Insurance Agency (UWV) or a subdistrict court judge.

For example, if the dismissal is due to the employer’s financial-economic status, consent of the Dutch Employee Insurance Agency is required. If, on the other hand, the dismissal is based on a personal issue, such as inadequate performance by the employee, the subdistrict court judge decides on the termination.

However, employers and employees often choose to break the contract by reaching a settlement agreement, which usually stipulates a redundancy package, among other things.

Your right to be reassigned

Depending on your situation, there might be new possibilities with your current employer. If other suitable options are available, remember that in the Netherlands, even after training, employers must do their best to reassign employees before dismissing them. So, think about what other opportunities might exist within your organisation and whether they’d be right for you, as an offer might be coming your way.

Receiving compensation from your employer

Generally speaking, employees are entitled to a severance payment when their employer is the one to end the contract, whether or not there is a settlement agreement. Though both parties can work toward an arrangement of their choosing, they usually try to follow the legal system and opt for the typical payment that would be awarded in a proceeding, also known as transition compensation.

Various factors can affect the size of such a payment, including how long you were with the company. Currently, you are entitled to a transition compensation that’s equal to 1/3 of your monthly salary per year of service, starting on the first day of your employment and ending the day of your dismissal. The entitlement exists even if you are dismissed during the probationary period. However, for example, the entitlement does not exist if you reach the Dutch pension age.

Your notice period

If you have a permanent contract, you must always be given notice before your employer lets you go. This is also the case with the termination of fixed-term contracts in between the contractual period. Should your employer want to end your fixed-term contract early, a provision must be set out in the contract, so review yours carefully. Also, if your notice period is longer than one month, the employer’s notice period must be twice as long.

For example, if you are required to give one month’s notice before leaving a job, the employer must give two months’ notice if they want to let you go. The longest notice period for an employee is six months.

Many things can influence the way being made redundant in the Netherlands plays out. Additionally, being made redundant might have an impact on your right to stay in the country. The process can be detailed and complex, so consider asking a trusted legal professional for guidance, like the team at Russell Advocaten, and you’ll know your best interests are being looked after.