FAQ for foreign employers
Employment contract
What is the difference between fixed term and indefinite term employment contracts?
An employment contract of fixed term ends by operation of law at the agreed-upon end-date, meaning it will end automatically without required action. An employment contract of indefinite term has to be actively ended. For more information concerning fixed term and indefinite term employment contracts, click here.
Can I terminate a fixed term employment contract during its course?
Termination of a fixed term employment contract is only possible if the contract contains a clause stating that termination is possible. If all further requirements for termination are met, termination is possible.
How many employment contracts of fixed term can I conclude with my employee?
In principle, it is possible to conclude three subsequent employment contracts of fixed term with your employee. A fourth subsequent employment contract of fixed term will automatically be converted into an employment contract of indefinite term, unless there is a period of six months or more between the third and the fourth employment contract.
Conversion from fixed term to indefinite term also takes place after three subsequent years of employment, unless there is a break of six months or more.
What is a collective labour agreement (cao)?
A collective labour agreement (in Dutch: cao) is an agreement between employer and employee organizations concerning employment conditions within a branch or company. Under circumstances, you may you to apply the collective labour agreement to your employees. To find out more concerning collective labour agreements and their applicability, click here.
Can I change the terms of employment without permission from my employees?
It is not easy to change the terms of employment if the employee does not agree. Therefore, it is always advisable to try to get permission from the affected employee, before forcing the change via one of the three available routes:
- The right of the employer to give instructions
- A unilateral amendment clause
- Good employeeship
Holidays
My employee requested holiday leave. Can I refuse?
No, in principle refusal is not possible. Only if there are substantial reasons for refusal, can the request be refused within two weeks in writing.
Dutch labour law allows the employer to include a period in the employment contract during which the employer should take a specified number of holidays. Such a period may even be included in the collective labour agreement.
Do I have to allow my employee to go on holiday whilst they are sick?
In principle, yes. A sick employee is entitled to holidays. During their holidays they will not have to perform any reintegration duties.
Any medical objections against the planned holiday can be determined by the company doctor.
Illness
My employee called in sick. Can I ask them what the reason is for their illness?
No, you are not allowed to ask employees for medical information. Any medical concerns are up to the company doctor to judge and relay. If the employee voluntarily provides medical information, it is not allowed to share or record the information. This includes writing the information down.
You are allowed and encouraged to ask whether the cause of illness is work-related.
I think my employee is not actually sick. How can I confirm that they are indeed sick?
You, as the employer, are not allowed to determine whether the employee is sick. If you have doubts concerning their illness, you should contact the company doctor. The company doctor can determine whether the employee is sick, for how long it is expected that they will be sick and what reintegration measures he advises.
Do I have to pay my employee salary during their illness?
In principle, yes. During illness you have to continue paying at least 70% of your employee’s salary for two years. It is common that the collective labour agreement or the employment agreement states that during the first year of illness 100% of the salary is owed. The period of two years can be lengthened by UWV if the reintegration measures taken were not sufficient. There are also circumstances that release the employer from their duty to continue paying salary.
Can I fire my employee during their illness?
In principle, no. During the first two years of illness, Dutch law recognizes a prohibition to terminate during illness. After two years, the employer may terminate the employment contract. During the two years, it is still possible for the employer and employee to agree to end the employment contract. This may be disadvantageous. Under exceptional circumstances, summary dismissal may also be possible.
What do I do if my employee is sick long-term?
An employee is sick long-term if it is expected that they will not fully recover within 4 weeks. The company doctor can determine this expectation. For long-term sickness, in principle the following steps will have to be taken:
- Start of illness:
- Reporting to the company doctor that the employee is sick
- 6 weeks:
- Problem Analysis (in Dutch: Probleemanalyse) by the company doctor
- 8 weeks:
- Action Plan (in Dutch: Plan van Aanpak) by the employer and employee based on the Problem Analysis
- Every 6 weeks: evaluating the Action Plan
- 42 weeks:
- Reporting to the UWV that the employee is sick long-term
- 52 weeks:
- First year evaluation (in Dutch: Eerstejaarsevaluatie)
- 88 weeks:
- WIA-application
- 91 weeks:
- Final evaluation (in Dutch: Eindevaluatie)
- 93 weeks:
- Submitting the re-integration report (in Dutch: Re-integratieverslag) in light of the WIA-application.
- 104 weeks:
- End of the duty to continue paying salary and the prohibition of terminating the sick employee’s employment contract. There are exceptions: salary penalty (in Dutch: loonsanctie), the employee is expected to recover within 26 weeks, other exceptions.
A sick employee wants to quit. Should I agree to this?
An employee is always allowed to quit (taking into account notice periods and such). However, when an employee is sick, the employer may not act like a good employer by agreeing to ending the employment contract. The employer is obligated to inform the employee of the consequences of quitting whilst sick, including the loss of unemployment benefits (in Dutch: Werkloosheidswet-uitkering) and sickness benefits (in Dutch: Ziektewet-uitkering). The employer has to verify that the employee understands these consequences.
Ending the employment contract
What possibilities are there when it comes to ending the employment contract with my employee?
- Operation of law for fixed term contracts
- Termination, requiring either a permit from the UWV or a court decision
- Mutual agreement
- Summary dismissal
For a detailed oversight, click here.
Can I offer my employee a settlement agreement instead of terminating their employment contract?
Yes. In fact, in principle it is advisable to try to offer a settlement agreement before terminating the employment contract. This can save both the employer and the employee money, effort and time.
Do I have to take into account the notice period in a settlement agreement?
No, however, it is advisable to take the notice period into account. After all, the employee is not entitled to unemployment benefits if they agree to a settlement agreement that does not take the notice period into account. Therefore, they will most likely not agree to the offer.
Do I have to pay my employee a severance payment?
That depends. If you terminate the employment agreement (with the exception of termination on the grounds of gross misconduct or negligence) or do not provide a subsequent employment contract after a fixed employment contract comes to an end, a severance payment is owed. A severance payment is not owed in the case of summary dismissal. It is also not owed when the employment contract is ended by mutual agreement via a settlement agreement. However, in this case, the employee will most likely not agree to the settlement agreement without a remuneration equal or higher than the owed severance payment.
Can I fire my employee with immediate effect?
Summary dismissal, termination during a probationary period and mutual agreement can all lead to termination with immediate effect. Please note that summary dismissal is only possible in extraordinary circumstances and that when ending the employment contract with mutual agreement via a settlement agreement, the employee will most likely require the notice period to be respected, as otherwise they will be forfeiting their right to unemployment benefits.
My company is in financial trouble. Can I fire my employees?
When a company is in financial trouble, it may be possible to fire employees. This is called termination due to economic reasons. However, please note that there are strict rules concerning the order in which employees can be fired. The employer may not simply choose who has to leave.
Can I prevent my employee from working for a competitor if they leave?
It is possible to include a non-competition clause in the employment contract, forbidding an employee from working for a competitor after their employment contract ends. The clause may not be too broad, meaning it needs to be limited in space and time. The scope of the required limitations depends on the circumstances.
FAQ for expats
Employment contract
What is the difference between an employment contract of fixed term and of indefinite term?
An employment contract of fixed term ends by operation of law at the agreed-upon end-date, whilst an employment contract of indefinite term has to be actively ended. For more information concerning fixed term and indefinite term employment contracts, click here.
Has my contract of fixed term changed into a contract of indefinite term?
Dutch law has rules concerning the amount and total duration of employment contracts of fixed term. In principle, after either 3 contracts or 3 years, whichever comes first, your employment contract of fixed term will automatically convert into an employment contract of indefinite term. For more information, click here.
When does a collective labour agreement apply to me?
A collective labour agreement (in Dutch: cao) is an agreement between employer and employee organizations concerning employment conditions within a branch or company. A collective labour agreement may apply to your employment contract. To find out more concerning collective labour agreements and when and to whom they apply, click here.
What does it mean when my contract contains a probationary period?
A probationary period is a period during which both parties can terminate the employment contract with immediate effect. To learn more about the probationary period, click here.
Can my employer change the terms of my employment?
In principle, yes, but this is subject to strict rules.
Ending the employment contract
How can my employment agreement be ended?
There are several ways for an employer to end your employment contract. You can find an overview here.
Can my employer terminate my employment contract?
That depends.
If you have an employment contract of fixed term and the contract does not contain a clause that the employment contract can be terminated during its course, your employer cannot terminate your employment contract.
For an employment contract of indefinite term or of fixed term containing a clause that states the employment contract can be terminated, Dutch law has strict rules concerning for what reasons and under what circumstances the employment can be terminated. For more information, click here.
Can my employer fire me with immediate effect?
Yes, however, there are strict rules concerning instant dismissal. For more information, click here.
My employer has offered me a settlement agreement (Dutch: VSO). Should I agree to the proposal?
This depends on your personal circumstances and the content of the offered settlement agreement. For more information on the subjects usually included in a settlement agreement, click here.
At Wessel van der Lans we regularly check and negotiate settlement agreements. For advice or questions concerning the settlement agreement, do not hesitate to contact us.
Am I entitled to a severance payment?
In principle, you are entitled to a severance payment if your employment is terminated or not continued by your employer. You are not owed a severance payment if you agree to a settlement agreement or fired with immediate effect (instant dismissal). For more information, click here.
Am I entitled to fair compensation?
Fair compensation is only granted in exceptional circumstances, namely if your employer’s behaviour or negligence is grossly culpable. For more information check out our blog on fair compensation.
Can I be held to my non-competition / business relation clause after termination?
That depends. A non-competition or business relation clause is not valid if:
- The clause is included in an employment contract of fixed term, without a written motivation explaining that such a clause is necessary due to important business interests;
- The clause has not been agreed upon in writing;
- The clause unfairly disadvantages the employee
Ending the employment contract
Can my employer terminate my employment contract?
That depends.
If you have an employment contract of fixed term and the contract does not contain a clause that the employment contract can be terminated during its course, your employer cannot terminate your employment contract.
For an employment contract of indefinite term or of fixed term containing a clause that states the employment contract can be terminated, Dutch law has strict rules concerning for what reasons and under what circumstances the employment can be terminated.
What is the notice period?
The notice period is a period that has to be taken into account when terminating the employment contract.
Can my employer fire me with immediate effect?
Yes, however, there are strict rules concerning instant dismissal. For more information check out our blog on instant dismissal.
My employer has offered me a settlement agreement (Dutch: VSO). Should I agree to the proposal?
This depends on your personal circumstances and the content of the offered settlement agreement. For more information on the subjects usually included in a settlement agreement, check out our blog on the settlement agreement.
At Wessel van der Lans we regularly check and negotiate settlement agreements. For advice or questions concerning the settlement agreement, do not hesitate to contact us.
Am I entitled to fair compensation?
Fair compensation is only owed in exceptional circumstances, namely if your employer’s behaviour or negligence is grossly culpable. For more information check out our blog on fair compensation.
Holidays
To how many holidays am I entitled?
You are at least entitled to statutory holidays. In hours, this is four times the amount of hours worked per week. For example, if you work 36 hours per week, you are entitled to 144 hours of holiday. This is a total of 4 weeks of holiday.
Your employer or a collective labour agreement can grant additional holidays in your employment contract.
Can my employer refuse my requested holidays?
In principle, you can decide when to take your holidays. Your employer can only refuse your requested holidays in writing and only for substantial reasons. Your employment contract, the collective labour agreement or the law can however determine a period during which you should take your holidays.
Can I save up holidays?
You cannot save up statutory holidays. Statutory holidays have to be taken before the 1st of July in the calendar year following the calendar year in which they were acquired.
Additional holidays (holidays on top of your statutory holidays) can be saved up for five years.
Can I go on holiday if I am sick?
In principle, yes. During your holiday you will have no obligation to reintegrate. If necessary, the company doctor can make a statement concerning whether he has medical objections against your planned holiday.
Ilness
Am I sick?
You are sick if you cannot perform your duties fully, meaning that you are considered to be sick even if there is only a small part of your duties that you cannot execute. The company doctor will confirm whether you are sick or not. It is not up to the employer to determine whether you are sick. You do not have to inform your employer of the details surrounding your illness. These details can be discussed with the company doctor, who has medical confidentiality.
Do I have to inform my employer of the reason for my illness?
No, you do not have to share medical information with your employer. Instead, medical information is discussed with the company doctor, who has medical confidentiality.
Am I entitled to salary if I am sick?
In principle, yes. The employer is obligated to continue to pay your salary for two years of illness. However, there are of course exceptions.
Can I go on holiday if I am sick?
In principle, yes. During your holiday you will not have to perform your reintegration duties. However, the company doctor may have medical objections against your planned holiday.
Can I be fired if I am sick?
In principle, no. For more information, click here.
Can I be forced to reintegrate?
Yes, you are obligated to work towards your reintegration. If you do not, your employer may stop your salary payments or even resort to instant dismissal. Therefore, if you feel that you cannot perform the reintegration duties as requested by the employer or decided upon by the company doctor, you can request an expert opinion from the UWV or a second opinion from another (external) company doctor.
Can I quit my job whilst I am sick?
Yes, but this is not advisable as you forgo your right to a severance payment and potential social security benefits when you terminate your employment or agree to a settlement agreement whilst sick.
Employment contract of fixed or indefinite term?
Dutch employment law distinguishes between two kinds of employment contracts:
- Fixed term
- Indefinite term
Fixed term employment contracts
A fixed or definite term employment contract is an employment contract for a fixed amount of time. Usually such an employment contract contains an end-date, however, it is also possible to agree on a certain circumstance which brings about the ending of the contract, like the completion of a project.
A fixed term employment contract ends by operation of law. This means that it is not necessary to take further action to end the employment contract. Please note that for contracts of 6 months or more it is required for the employer to let the employee know in writing whether they will offer a subsequent contract.
An important note concerning fixed term contracts concerns the possibility of termination. Without a clause stating that termination is possible, the contract cannot be terminated during its course.
Indefinite term employment contracts
An indefinite term employment contract lasts for an undetermined amount of time and ends when it is terminated by either the employer or the employee.
From fixed term to indefinite term
Dutch law does not permit an endless amount of fixed term employment contracts. After either 3 fixed term contracts or after 3 years, whichever comes first, the fixed term contract is automatically converted into a contract of indefinite term. The chain can be broken by a break of 6 months or more. For example:
If an employee has had 3 subsequent contracts of 1 year each and then no contract for 6 months, the next contract will count as the 1st contract of fixed term in a new chain.
Employment contracts from previous employment may also count towards this rule. This is the case if the new employer must be considered a subsequent employer (in Dutch: opvolgend werkgever). This subsequent employer may be part of the same group or concern but may also be an employer completely unrelated to the original employer. What’s determining is whether it concerns more or less the same position, for example when it comes to the required skills and responsibilities.
Deviation from the above-mentioned rule is only possible by collective labour agreement.
Issues for foreign employees or expats
Years worked abroad for the same employer or for another employer to whom the new employer is considered a subsequent employer, can also be considered towards the rule of fixed term contracts becoming indefinite term contracts.
For any questions concerning the differences between fixed term and indefinite term contracts or the conversion of fixed term to indefinite term, please do not hesitate to contact us.
What is the probationary period?
A probationary period is a period at the beginning of an employment contract intended to determine whether the employer, employee and the position are a good fit. During this period, both the employer and the employee can terminate the employment contract with immediate effect, bypassing Dutch employment law’s strict dismissal rules. Therefore, probationary periods are only allowed if the following criteria are met:
- Agreement in writing
The probationary period needs to be agreed upon in writing.
- Maximum length of the probationary period
The maximum permitted duration of the probationary period depends on the duration of the employment contract. If the employment contract lasts for 6 months or less, no probationary period is permitted. If the employment contract lasts between 6 months and 2 years, the maximum permitted probationary period is 1 month. For employment contracts that last for more than 2 years, including those of indefinite term, a probationary period of a maximum of 2 months is allowed.
Deviation from this rule is only possible in a collective labour agreement or by or on behalf of a competent administrative authority.
The length of the probationary period should be equal for both parties.
- Subsequent contracts or employers
In principle, it is only possible to agree upon a probationary period in the first employment contract between the employer and the employee. It is not allowed to add a probationary period in a subsequent contract. There is an exception to this rule, namely, when the subsequent employment demands a vastly different skill-set and different responsibilities from the employee than the contract(s) before. The probationary period can then be used to ‘test’ whether the employees is fit for his new position.
If an employer should be considered a subsequent employer (the employee performs similar work, sometimes even at the same workplace, for the new employer as he did for his old employer) the same principle applies; a probationary period is not allowed unless a vastly different skill-set is required.
What if the probationary period clause does not meet the above-mentioned criteria?
The consequence of not meeting the above-mentioned criteria is very harsh. If any of these criteria is not met, the probationary period clause is void. This means that in court it will be considered to have never existed and neither party can call upon it.
30% ruling for highly skilled migrants
The 30%-ruling (also known as the 30%-benefit) is a tax benefit for highly skilled migrants moving to the Netherlands. When the necessary conditions are met, the employer can pay 30% of the employee's salary free of taxes. This benefit is intended as compensation of the extra costs associated with employees moving to a new country, for example the transport of furniture or the higher costs of living in the Netherlands. In order to be eligble for the 30%-ruling, the following conditions must be met:
Conditions
- Employment relationship
The 30%-benefit only applies to employment relationship. It does not apply to those who are self-employed. It is possible to work around this by setting up a legal entity, for example a Dutch B.V., and hiring oneself as an employee of this company.
- Transferred or recruited from abroad
In order to be eligible for the 30%-ruling, the employee must be either transferred or recruited from abroad. In light of this, the employee needs to prove that they were residing outside of the Netherlands before they began their present employment in the Netherlands. Moreover, the employee cannot have lived within 150 km of the Dutch border for more than 8 months of the last 24 months prior to the start of employment in the Netherlands.
- Specialized expertise
The 30%-ruling only applies to those employees who have a specialized expertise that is scarce on the Dutch employment market. Whether the employee has a specialized expertise depends on several facets, such as:
- Salary
- Age
- Employment history
- Education
- Level of employment
None of the above-mentioned facets are conclusive. At the present, it is assumed that an employee has a specialized expertise if they meet the minimum salary requirements. The gross salary of the highly skilled migrant must surpass a minimum, meaning a minimum annual salary of at least € 39,647 (2022). A minimum of € 30,001 applies for those who have completed a master's degree and are younger than 30 years of age. No minimum salary is required for scientific researchers, employees working in scientific education or doctors in training. Please note that there are restrictions regarding the companies or institutions for which this group of employees can work.
- Awareness of the consequences by both employer and employee
Both the employer and employee should be aware of the implications of applying the 30%-ruling. The employee's gross salary will after all be reduced by 30%, which has potential consequences for potential unemployment or disability benefits. Therefore, the Dutch tax authorities (in Dutch: belastingdienst) requires both the employer and employee to be aware of these consequences. This criterium can be met by a adding a written clause or addendum to the employment contract.
How to apply?
The 30%-ruling can be applied for by a joint request of the employee and employer. If the request is submitted within 4 months of the first day of employment, the 30%-ruling will apply retroactively from the first day of employment. If the request is not submitted within 4 months, the 30%-ruling will apply from the first day of the month following the month in which the request was submitted. The maximum duration of the 30%-ruling is 5 years. This term can be shortened due to previous residence or work in the Netherlands.
A rejection of a request to apply the 30%-ruling can be objected to (in Dutch: bezwaar) and appealed to (in Dutch: beroep). The maximum duration of the 30%-ruling is five years. This term can be shortened due to previous residence or work in the Netherlands.
A new job
If a highly skilled migrant changes jobs, it is possible to transfer the 30%-ruling to his new employer. However, there should be no more than 3 months between ending the old job and starting the new one. The highly skilled migrant should apply for an extension within 4 months after the first day of work at his new employer. This will ensure that the 30%-ruling can be continued without loss of term.
Exemption from work
It is important to realize that the 30%-ruling stops applying from the moment the employee is exempted from work. This is also the moment that the 3-month term starts within which the employee should find new employment to be able to regain the 30%-ruling.
Extra information
As an expat, it may be difficult to figure out everything that needs to be taken into account and taken care of in addition to regular Dutch employment law. If you have any questions or need help figuring out what exactly applies to you, do not hesitate to contact us.
Oversight: the ways in which an employment contract may end
There are several ways an employment contract can end according to Dutch law. This blog will provide an oversight of the possibilities. Further information can be found by following the provided links.
By operation of law
A contract of definite term ends by operation of law after the agreed upon end-date or the fulfilment of the agreed upon circumstances. This means that neither party has to do anything for the contract to come to an end. It is however mandatory for the employer to notify his employee 1 month before the ending in writing whether a next contract will follow and if yes, under which employment conditions. If no such notification takes place, the contract will still end on the agreed up on date, however, the employer owes the employee compensation for the lack or tardiness of the notification.
Termination
Dutch law requires that an employer has (1) a reasonable ground for termination and (2) tried, but failed, to reinstate the employee in another fitting position. On the other hand, an employee can always terminate the employment agreement. Both parties should take into account their respective notice periods when terminating.
Mutual agreement: settlement agreement
An employment agreement may also end by mutual agreement. It is usual for parties to agree upon the terms of the termination in a settlement agreement.
Summary dismissal
Either party can terminate the employment agreement immediately in case of an urgent reason. The other party should be notified of this urgent reason as quickly as possible and in writing. The Dutch court is very strict in accepting summary dismissal.
Termination during a probationary period
During a probationary period both parties can terminate the employment contract with immediate effect without a reason.
Death of the employee
The employment contract ends when the employee dies. The death of the employer does in principle not lead to the ending of the contract.
Termination
According to Dutch law, there are a number of requirements that must be met before an employer can terminate an employment contract. There must be:
- A reasonable ground
- No possibility of reinstatement
- No prohibition to terminate
If these conditions are met, the employment contract can be terminated. When terminating, the employer must take the notice period into account and, subject to exceptions, pay the employee a severance payment as stipulated by law.
In this blog we will first give a short summary of the reasonable grounds provided by law and discuss the possibility of reinstatement and the situations in which it is prohibited to terminate the employment contract. Then we will address the termination route that should be taken; UWV (= Netherlands Employees Insurance Agency) or judge.
Reasonable ground
The law provides an exhaustive list of grounds due to which an employer can terminate an employment contract:
Economic reasons
The first ground for termination is termination due to the necessity to eliminate the job of the employee due to economic reasons. This includes inter alia cessation of the company’s activities, a financially bad situation, reduction of work, restructuring, automation, etcetera.
There are rules concerning the order in which employees can be terminated on this ground. Therefore, it is in principle not possible for the employer to choose the employee or employees whose employment contract will be terminated based on for example how well they perform their jobs.
Dutch law also has additional rules in the case that this ground leads to the termination of a great number of employees within a certain timeframe.
Long-term incapacity for work
When an employee is sick, meaning they are incapacitated for their work, the employer may terminate their employment contract after 2 years (or more if so decided by the UWV) of sickness, if it is not plausible that the employee will recover within the next 26 weeks.
Frequent absence due to illness
In the case that an employee is not long-term incapacitated for work as mentioned above, but is frequently absent due to sickness, the employer can terminate the employment contract. This is only possible if the frequent absence has such a negative impact on the employer’s business that it would be unacceptable to not allow termination.
Lacking performance
When an employee is not performing properly, this may be ground for termination. However, it will be required from the employer to inform the employee of his lacking performance in a timely manner and give him sufficient opportunity to improve his performance. Moreover, the lacking performance may not be the result of insufficient care for training or working conditions from the side of the employer.
(Gross) misconduct
The employer can terminate the employment contract due to (gross) misconduct on the part of the employee. If the employer can prove that the misconduct is also gross misconduct, no severance payment is owed.
Refusal to work due to conscientious objections
This ground is not commonly used. It is meant for situations in which the employee’s religion, lifestyle, morality, etcetera, prevents them from executing their duties. For example, a butcher who adopts a vegan lifestyle and refuses to work with meat.
Disturbed employment relationship
If the relationship between the employee and the employer has been disturbed, this may be ground for termination. The disturbance must be serious and long-lasting.
Remaining category
This ground is used for employees that cannot work or are not allowed to work. Examples are illegal employees or employees who are serving a sentence in prison. It is not meant to supplement any of the other grounds.
Cumulative ground
If none of the circumstances of the situation leads to a complete ground as stated above, the employer may be able to terminate the employment contract based on a combination of the above-mentioned grounds.
Reinstatement
Before resorting to termination, the employer must try to reinstate the employee, with or without training, in another fitting function. Only if reinstatement cannot be reasonable expected from the employer, can the employment contract be terminated. An attempt at reinstatement is not required when the ground for termination is gross misconduct.
Prohibition to terminate
The law lists a number of situations in which it is forbidden for the employer to terminate the employment contract. For example, it is not possible to terminate an employment contract with a sick employee during the first two years of sickness. Termination during pregnancy is also not permitted. Neither is termination during the execution of a conscript for military service or when the employee is a member of the Work Council.
UWV or judge
In case of termination due to economic reasons or long-term incapacity to work, the employer requires a permit from the UWV to terminate. If the permit is not granted, the employer can go to court within 2 months after the UWV decision. If the permit is granted, the employee may also go to court to fight termination. He should do this within 2 months after his employment has ended.
Sometimes a collective labour agreement (in Dutch: cao), states that there is a termination committee (in Dutch: ontslagcommissie) for termination due to economic reasons. In that case, the permission to terminate should be requested from this termination committee.
For termination due to other reasons than the above the employer should go to court.
Issues for foreign employers and expats
For foreign employers and expats especially the ground of economic reasons for termination, may create difficulties and lead to questions. For example, is it possible to terminate employment contracts if the group as a whole is losing money, but the Dutch subsidiary that hired the employee is not? Or how should the order of dismissal be determined if there are also foreign employees that should be taken into account for termination? Should the employer look at the entire group when attempting to reinstate the employee? These are all examples of questions that are prominent in international situations concerning termination due to economic reasons.
For any questions concerning termination, please do not hesitate to contact us.
Settlement agreement
Ending by mutual agreement
An employer and employee can always end their employment contract by mutual agreement. Such an agreement will be reflected in a settlement agreement. This is the most common form of ending an employment contract in the Netherlands. In this blog we will give a list of common subjects included in a settlement agreement:
The reason for ending the employment
The settlement agreement gives the reason that parties have agreed to end the employment contract. It also usually states that the settlement agreement is concluded at the initiative of the employer. This is done to prevent the employee from losing his rights to unemployment benefits.
End-date
The settlement agreement contains the date on which the employment contract will end. It is not necessary to take the notice period into account. However, to prevent that the employee loses his right to unemployment benefits, the notice period is usually taken into account anyway.
Dismissal payment
If the employer terminates the employment agreement, he owes the employee a severance payment. Severance payment is not owed when parties end the employment contract via a settlement agreement. To move the employee to agree to the settlement agreement and save the employer work and time a dismissal payment is offered. This payment is usually equal to or higher than the severance payment.
Final discharge
Usually, a final discharge clause is included in the settlement agreement. Via this clause both parties agree that they have no other claims, rights or duties in respect to each other after signing, other than those agreed upon in the final settlement agreement. When including final discharge it is therefore very important to discuss all pending agreements and claims and include these in the settlement agreement. Anything that falls under the final discharge can no longer be claimed, not even in court.
Post contractual obligations
An employment contract may contain post contractual obligations, like a non-competition clause or a business relation clause. In the settlement agreement the employer can accommodate the employee by agreeing that the employer will not hold the employee to these post contractual obligations. This can make finding new employment easier for the employee.
Exemption from work
Parties often agree that after signing the final settlement the employee will be exempted from work. Exemption from work is not always preferable. Sometimes the employer wishes for the employee to continue working until the end date. In order to motivate the employee to do so, a bonus for continued employment may be offered. The employee is then awarded a bonus after performing his work as usual until the end date.
Sometimes, the employee may prefer to continue working. This is of importance to expats who receive the 30%-benefit. After all, the 30%-benefit ends at the moment the employee is exempted from work. At that moment the employee has 3 months to find new employment and regain the 30%-benefit. By not agreeing to an exemption from work, the employee will postpone the loss of the 30%-benefit until the end date.
Letter of reference
An agreement concerning a letter of reference is often made in the settlement agreement as well. The employer may agree that he will give a positive letter of reference if the employee agrees to the settlement agreement.
Unemployment benefits
The unemployment benefits have already been mentioned. To gain unemployment benefits after the end of the employment contract, the employee must not have become culpably unemployed. In light of this, the notice period should be respected, the ending of the employment should be at the initiative of the employer and the settlement agreement should be worded as such that it is clear that the employee is not to blame for the ending of the employment.
Reflection period
After signing, the employee has fourteen days to change his mind. This should be included in the settlement agreement. If it is not, the employee will have 3 weeks to change his mind.
Legal budget
Often, the employer offers a legal budget for the employee to have his settlement agreement checked by a legal expert before agreeing to it. At Wessel Van der Lans Advocaten we check and negotiate settlement agreements on a regular basis, both from employers' and employees' perspective.
Summary dismissal
What if an employee steals from his employer? Or if he commits fraud? Or comes to work drunk? The employer might wish to get rid of this employee immediately. Such serious offenses may be considered urgent reasons which allow the employer to fire his employee with immediate effect. This is called summary dismissal. But employers need to be careful; the Dutch courts are strict when confronted with the question of whether summary dismissal was indeed permitted.
Urgent reason
The first requirement for summary dismissal is the existence of an urgent reason. Without an urgent reason, summary dismissal is not permitted and the employer will have to resort to regular ways of ending the employment contract like termination or via a settlement agreement.
In order for the employee’s behaviour or negligence to constitute an urgent reason, his behaviour or negligence should represent such a serious offense that the employer cannot reasonably be required to let the employment contract continue. The law provides a few suggestions, including theft or fraud, gross insults towards the employer and those connected to him and gross negligence towards his duties. In the end, whether the behaviour or negligence constitutes an urgent reason, depends on the circumstances of the case. This may for example lead a judge to rule that in the specific circumstances of the case, theft does not constitute an urgent reason.
Questions that the employer can consider to determine whether there is an urgent reason include:
- Has the employee been employed with the employer for a long time?
- Has the employee always performed well before the incident?
- What kind of behaviour is usual for their position? For example, in some positions it is normal to use profanity.
- What kind of impact would summary dismissal have on the personal life of the employee?
- What was the employee’s emotional state at the time of the incident? Were they acting like themselves?
- Has the employee been warned about their behaviour or negligence before?
- Are there any (written) rules concerning the specific behaviour/negligence?
Dismissal without delay
A second requirement is that the employer should fire the employee for the urgent reason without delay. It is permitted and in certain cases even recommended to take some time to research the behaviour or negligence before firing the employee after the urgent reason comes to light. How much time depends on the circumstances of the case. A suspicion of fraud might require more research than the situation in which the employer saw the employee steal something with his own eyes.
Letter of dismissal
The employer has to confirm the reason for summary dismissal via a letter of dismissal to the employee. The employee must be able to use the letter of dismissal to defend against the summary dismissal. If the employee disagrees with summary dismissal and takes the case to court, the judge will use this letter to determine the urgent reason. Therefore, it is important to be very careful with the wording and content of this letter. Everything in it will have to be proven by the employer.
What to do against summary dismissal?
The employee can go to court within two months after the summary dismissal took place to ask the judge to declare the summary dismissal void. If they succeed, the employee’s employment contract never ended and salary is owed over the months that have passed, unless the employer has for example terminated the employment contract in the meantime.
The employee has a second option. If they do not want to remain employed with the employer, they can request fair compensation for unjust summary dismissal. The amount of fair compensation may differ immensely per case.
What is a severance payment?
A severance payment, also known as transition payment (in Dutch: transitievergoeding), is a compensation paid by the employer to the employee for ending the employment contract. It is owed if:
- The employer terminates the employment agreement;
- The employer does not extend an employment agreement of definite time;
- The employee terminates the employment agreement or does not agree to an extension of his definite term employment agreement due to gross misconduct of the employer;
No severance payment is owed in the case of a settlement agreement or summary dismissal. The severance payment is also not owed if the employer terminates or does not extend the employment agreement due to gross culpability of the employee.
What amount of severance payment is owed?
The amount of severance payment depends on the duration of the employment contract. Every year of employment equal a third of a month’s salary. Every month or day the employment has lasted for less than a total year will yield a proportional severance payment.
Issues for foreign employers and expats
It may be difficult to navigate whether a severance payment is owed or not and how much of it is owed. If you have any questions concerning the severance payment, please do not hesitate to contact us.