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.


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.