In the Netherlands, Dutch labor law stipulates minimum notice periods for both employers and employees during employment termination. These periods are outlined in the Dutch Civil Code Article 7:671.

Employee Notice Period

The statutory notice period for an employee in the Netherlands is one month. This means an employee must give their employer written notification of their intent to resign at least one month before their desired last day of employment. The employment contract may specify a different notice period, either longer or shorter than the statutory minimum. However, the employee's notice period cannot exceed six months.

Employer Notice Period

The employer's required notice period depends on the employee's length of service with the company:

• Less than five years: One month
• Five to 10 years: Two months
• 10 to 15 years: Three months
• More than 15 years: Four months

The employment contract can specify a different notice period, but it must be at least double the length of the employee's notice period. There is a maximum limit of six months for the employer's notice period as well.

Collective Bargaining Agreements (CAOs)

Collective Bargaining Agreements (CAOs) may also influence notice periods. A CAO is a legally binding agreement between a trade union and one or more employers' organizations. If a CAO applies to a specific workplace, it may dictate a different notice period than the statutory minimum.

Consequences of Failure to Provide Proper Notice

If an employer fails to provide the legally required notice period, they may be liable to pay compensation to the employee. This compensation is typically equal to the wages the employee would have earned during the omitted notice period.

In the Netherlands, employees are generally entitled to severance pay, also known as a "transition payment" (transitievergoeding), under certain conditions. The primary legal document governing severance pay rights is the Work and Security Act (Wet Werk en Zekerheid).

Eligibility for Severance Pay

An employee is entitled to severance pay if their employment contract is terminated through a dismissal procedure via the Employee Insurance Agency (UWV) or by the subdistrict court (kantonrechter). Additionally, if their fixed-term employment contract expires and is not renewed by the employer, they are also eligible for severance pay. However, severance pay is generally not required if an employee resigns of their own accord or in cases of termination due to the employee's serious misconduct.

Calculation of Severance Pay

The standard compensation is calculated as 1/3 of the gross monthly salary per year of service. This calculation is pro-rated to include partial years of employment. There is a maximum severance amount, which is revised annually. For 2024, the cap is €89,000 gross or the employee's annual salary, whichever is higher.

Additional Severance Pay Entitlements

Employees may be entitled to higher severance pay in certain situations. In a mutual termination agreement, the employer often offers severance pay exceeding the statutory minimum. Additionally, an employee can claim additional compensation through the courts if the employer's actions during termination caused unnecessary harm to the employee.

Terminating an employee's contract in the Netherlands must adhere to a specific process regulated by the Dutch Civil Code and labor laws like the Work and Security Act. The termination paths can be broadly categorized into termination by mutual consent, dismissal by the employer, termination during a probationary period, and summary dismissal.

Termination by Mutual Consent

In this scenario, the employer and employee agree to end the employment relationship amicably. The terms of termination must be recorded in a written settlement agreement. Employees must be given a 14-day 'cooling-off' period, where they have the right to revoke their consent.

Dismissal by the Employer

The employer must obtain approval for termination through one of the following routes:

• Employee Insurance Agency (UWV) Approval: The employer submits a dismissal application to the UWV due to economic reasons (e.g., redundancy) or the employee's long-term inability to work (due to illness).
• Subdistrict Court Permission: The employer files a termination request with the subdistrict court outlining reasons such as unsatisfactory performance, frequent misconduct, or a damaged working relationship.

The employer must provide a valid, documented reason for the dismissal request that aligns with the strict grounds for termination under Dutch law.

Termination During a Probationary Period

Employers can typically terminate an employment contract during the probationary period with shorter notice. Terms for this should be clearly stated in the employment contract.

Summary Dismissal

This is reserved for instances of serious misconduct by the employee (e.g., violence, theft). The employer must act immediately, providing a clear and well-documented reason for the dismissal.

It's strongly advised to seek legal counsel before initiating or responding to any termination process.