Termination

In Dutch employment law, the system for dismissing an employee is strictly regulated by statute. The intention when this system was created was to protect employees from being dismissed without due consideration. As a result, the statute only provides very limited options for terminating an employment contract.

By law, an employment contract can only be terminated in the following situations:

1. Summary dismissal

A particularly serious situation, for example involving violence or theft, must have arisen. An application can be made to the courts after the fact for a decision as to whether the summary dismissal was lawful.

2. Rescission of the employment contract by the sub-district court

An application for rescission must be made to the sub-district court. The court will rescind if there are pressing or significant reasons to do so. The court may award severance pay (a golden handshake) on rescission.

3. Notice to terminate the employment contract

In many cases the employer may only lawfully give notice to terminate with the written permission of the Administrative Office for Employed Persons’ Insurance Schemes (Uitvoeringsinstelling werknemersverzekeringen or UWV) Work Company. Such permission is only given if certain conditions are satisfied.

It’s not always necessary to obtain prior permission from the UWV Work Company. Some professions are exempted from this requirement. Prior permission is not required to give notice to terminate an employment contract with a company director either.

The employment contract should be terminated following a notice period. The parties can agree a notice period in the employment contract. Certain restrictions on the notice period are provided by statute. If the parties have not agreed a notice period that is legally valid, the statutory notice period applies.

Termination by notice can be manifestly unfair. For example, if the reasons given are false or if no adequate severance payment is made. In that case, application can be made to the court to order the other party to pay compensation.

4. Settlement agreement (termination by mutual consent)

The parties can jointly decide to terminate the employment contract. They can record this agreement or consent in a written settlement agreement.

5. Retirement

When the employee reaches the age of 65 (or earlier in some professions) the employment contract generally comes to an end. It’s also possible for employees to retire early. Despite this, from a legal perspective termination of employment for this reason is not automatic. For more information on the procedure relating to retirement, click here.

Unemployment benefit

Be aware that dismissal can have an impact on the employee’s right to unemployment benefit. On receipt of an application for benefit, the benefits agency responsible will, for example, check that the employee did not initiate the dismissal and that he was not summarily dismissed. The benefits agency is also entitled to wait until the end of a notional notice period before paying benefit.