Immediate termination is the most drastic way to terminate an employment contract. It has major consequences for the employee. For example, the employee loses their job immediately, does not receive a transition payment, and there is a high likelihood that they will not be entitled to unemployment benefits. It should therefore come as no surprise that an employer cannot simply dismiss an employee with immediate effect. In this blog, we explain the conditions that must be met.
When is summary dismissal possible?
Immediate termination is only permitted under exceptional circumstances. The law requires that there be an “urgent reason.” This is a reason so serious that the employer cannot be expected to keep the employee on the job even one day longer. The most common examples of compelling cause include theft, fraud, inappropriate behavior, or a serious refusal to work. Other types of behavior may also constitute grounds for immediate termination. In some cases, multiple instances of minor misconduct may collectively constitute compelling cause.
Whether there is an urgent reason depends on all the circumstances of the case. Not only does the employee’s conduct play a role, but also the severity of that conduct, the employee’s position, the length of employment, and even personal circumstances. A prohibition on termination—for example, due to illness—may also be relevant. However, this does not automatically mean that immediate termination is impossible. The validity of the termination and the circumstances of the case must be carefully assessed.
Terminating Employment Immediately
A second requirement for summary dismissal is that it must be issued without delay. This means that the employer must issue the summary dismissal as soon as possible after identifying the urgent cause. While there is some leeway for investigation and hearing the employee’s side of the story, these steps must also be taken promptly. If too much time has elapsed, the termination will not be valid.
The termination letter
An important aspect of summary dismissal is that the reason and grounds for it must be set forth in a termination letter, which must be sent to the employee as soon as possible. The wording of the termination letter is very important, because the employer is bound by it in any potential legal proceedings. Therefore, no other grounds can be cited later. Furthermore, the employer must also be able to prove the reasons stated in the letter. Legal advice is therefore essential in the case of immediate termination.
What are the consequences for the employee?
In the case of summary dismissal, the employment contract ends immediately. This means that the employee is no longer employed and is not entitled to wages. The employer is therefore not required to observe the notice period and may stop paying wages immediately.
Furthermore, if the employee has committed a serious act of culpable misconduct, they are not entitled to a transition payment. In cases of urgent cause, this is usually (but not always) the case. Furthermore, there is a high probability that the employee will not receive unemployment benefits. The UWV does not grant unemployment benefits if the employee is unemployed through their own fault, and this is usually the case with summary dismissal.
In addition, the employer may demand a fixed amount of compensation from the employee equal to the employee’s wages during the notice period. Normally, the employer has time during the notice period to find a replacement. That time is not available in the case of summary dismissal. This fixed compensation must, however, be claimed shortly after the summary dismissal.
Summary Dismissal in Court
If the employee disagrees with the summary dismissal, he or she may initiate legal proceedings before the small claims court. This must be done within two months of the summary dismissal.
The employee then asks the court to determine whether the summary dismissal was justified. The court then assesses whether there was an urgent reason and whether the dismissal was issued immediately. In these proceedings, the employer may rely only on the reasons stated in the termination letter.
If the court rules that the termination was unjustified, it may annul the summary termination. The employee will then remain employed and is entitled to wages. The employee may also choose to accept the dismissal and instead request fair compensation in addition to the transition payment. Fair compensation for an unjustified summary dismissal can be very high.
Dismissal with a settlement agreement
Sometimes, following a summary dismissal, the employer and employee still try to reach an agreement. These agreements can be set forth in a settlement agreement (VSO). This allows the parties, for example, to resolve a dispute regarding the validity of the dismissal. A settlement agreement can offer a solution in this situation, but it is not suitable for every situation.
Advice on Immediate Dismissal
Immediate termination requires a careful approach. Legal advice is indispensable for both employers and employees in this type of termination, as the (financial) risks are significant.
Our employment law attorneys advise employers and employees on summary dismissal. We are happy to help you assess the options, risks, and next steps, and determine an appropriate strategy.
