When an employment contract ends, a notice period often must be observed. But how long is this period, and who is subject to this requirement? And what happens if an employer or employee fails to comply with the notice period? In this blog, we explain the applicable rules and what you need to keep in mind.
What is the notice period?
The notice period is the time between when an employment contract is terminated and the date on which employment ends. This gives the parties time to prepare for the end of the employment relationship. During this period, the employee remains employed and must continue to work in exchange for wages.
The Notice Period for Employers and Employees
If no notice period is specified in the employment contract or collective bargaining agreement, or if these documents refer to the statutory notice period, the notice period for the employee is one month. For the employer, the law stipulates that the length of the notice period depends on how long the employee has been employed:
- Less than 5 years of service: 1 month
- 5 to 10 years of service: 2 months
- 10 to 15 years of service: 3 months
- 15 years or more of service: 4 months
It is possible to make other arrangements. However, in such cases, the employer’s notice period must always be twice as long as the employee’s. For example, it may be agreed that the employee has a one-month notice period and the employer has a two-month notice period, or that the employee has a two-month notice period and the employer has a four-month notice period. Any other arrangements are invalid. In such cases, the law must be applied.
The notice period begins on the first day of the following calendar month. For example, if notice is given on October 16 and the notice period is one month, the notice period begins on November 1, and November 30 is the last workday.
Notice Period for a Temporary Contract
When a temporary contract expires, there is no notice period. However, the so-called“notification requirement” does apply. This is not the same thing. The obligation to provide notice means that the employer must notify the employee at least one month before the contract’s end date whether or not the contract will be renewed. This must be done in writing. If the employer fails to provide notice or does not do so on time, the contract will still expire. The employee may then claim compensation for failure to provide notice.
If the parties wish to terminate the contract before its expiration date, they must take the notice period into account. Please note that the employment contract must specify that it may be terminated early; otherwise, it is not automatically possible to terminate the employment contract before its expiration date.
Notice Period for Dismissal Through the UWV or a Court
In the case of a layoff for business reasons or a termination due to long-term disability, a permit from the UWV is required before the employment contract can be terminated. If the employer receives authorization from the UWV to terminate the employment, the employer must observe the applicable notice period when giving notice. The processing time may be deducted from this period, provided that at least one month of the notice period remains.
A termination due to, for example, poor performance, a strained working relationship, or culpable conduct must be handled through the courts. The notice period also applies in court proceedings. The court will take the notice period into account when determining the termination date of the employment contract. In this case, the duration of the court proceedings may be deducted from the notice period in the same manner, provided that at least one month of the notice period remains.
The court may also be asked to disregard the notice period, for example, if the employee has engaged in serious misconduct. The court will then rule on this matter.
Immediate Dismissal
A summary dismissal is characterized by the immediate effect of the dismissal. In such cases, the notice period is not observed. If a summary dismissal is unjustified, the court may award a fixed amount of compensation because the notice period was not observed.
What happens if the notice period is not observed?
If an employer does not comply with the applicable notice period, the employee may claim fixed compensation.
If the employee resigns, he or she must also comply with the notice period. If the employee fails to do so, the employer may claim compensation.
Settlement Agreement (VSO)
In a settlement agreement, the employer and employee reach their own arrangements regarding the termination of the employment contract. In doing so, they must also agree on an end date. It is possible to choose an end date that is earlier than the date on which the notice period expires. However, this does pose a risk to the employee. This is because the employee will not receive unemployment benefits until the notice period has ended and, in this case, will be without pay and unemployment benefits for a while.
Advice on the notice period
The notice period is a key principle in employment law. Failure to comply with it can have financial consequences, even if the notice period is not mandatory, such as in a VSO. An invalid agreement regarding the duration of the notice period can also lead to complications.
Our employment law attorneys advise employers and employees on the notice period and the termination of employment contracts. We are happy to help you identify the applicable rules and next steps.
