Terminating an employee in the Netherlands requires careful adherence to Dutch labor laws. Employers must understand notice periods, severance calculations, and the specific grounds and procedures for lawful termination. Failure to comply can result in costly legal challenges and penalties. Navigating these regulations is crucial for businesses operating in the Netherlands, whether they are local or international.
Dutch employment law distinguishes between terminations with cause (urgent reasons) and without cause. Terminations without cause generally require either permission from the UWV (Employee Insurance Agency) or mutual consent. Understanding the nuances of these requirements is essential for ensuring a smooth and legally compliant termination process.
Notice Periods
The notice period depends on the length of employment and whether the employer or employee initiates the termination. The statutory minimum notice periods for employers are:
| Length of Employment | Notice Period (Employer) |
|---|---|
| Less than 5 years | 1 month |
| 5-10 years | 2 months |
| 10-15 years | 3 months |
| 15 years or more | 4 months |
For employees, the standard notice period is one month, although this can be extended to three months in the employment contract. Collective labor agreements (CAOs) may stipulate different notice periods.
Severance Pay (Transition Payment)
Employees are generally entitled to a transition payment (severance pay) upon termination of their employment contract if the employer initiates the termination or if the fixed-term contract is not renewed. As of 2025, the calculation is as follows:
- 1/3 of a monthly salary for each year of employment.
The transition payment is intended to compensate the employee for the loss of their job and to help them find new employment. There are some exceptions, such as termination due to serious misconduct by the employee.
Grounds for Termination
Termination With Cause (Summary Dismissal)
Summary dismissal (termination with cause) is permitted only in cases of urgent cause, such as:
- Theft
- Fraud
- Gross insubordination
- Endangering the safety of others
The employer must be able to prove the urgent cause, and the dismissal must be immediate.
Termination Without Cause
Termination without cause requires either:
- UWV Permission: The employer must apply to the UWV for permission to terminate the employment contract. The UWV assesses whether there is a reasonable ground for termination, such as business economic reasons or long-term illness of the employee.
- Mutual Consent: The employer and employee can agree to terminate the employment contract by mutual consent. This agreement must be in writing and clearly state that the employee agrees to the termination. The employee has a 14-day cooling-off period during which they can revoke their consent.
Procedural Requirements
UWV Route
- Application: The employer submits a request for a dismissal permit to the UWV, providing detailed reasons for the termination.
- Employee Response: The employee has the opportunity to respond to the application.
- UWV Assessment: The UWV assesses the application and the employee's response.
- Decision: The UWV grants or denies the dismissal permit.
- Notice Period: If the permit is granted, the employer must observe the applicable notice period, starting from the date of the UWV decision, minus the duration of the UWV procedure (capped at one month).
Mutual Consent Route
- Negotiation: The employer and employee negotiate the terms of the termination agreement (settlement agreement).
- Written Agreement: The agreement is documented in writing, including details about the termination date, severance pay, and any other relevant arrangements.
- Cooling-Off Period: The employee has 14 days to revoke their consent.
- Finalization: If the employee does not revoke their consent, the termination is finalized.
Employee Protections Against Wrongful Dismissal
Dutch law provides several protections for employees against wrongful dismissal:
- Unfair Dismissal: Employees can challenge their dismissal in court if they believe it was unfair or not based on reasonable grounds.
- Reinstatement: The court can order the employer to reinstate the employee.
- Damages: The court can award damages to the employee for wrongful dismissal.
- Discrimination: Termination based on discriminatory grounds (e.g., race, religion, gender) is illegal.
- Protection During Illness: Employees are generally protected from dismissal during the first two years of illness, unless the illness is not the reason for dismissal.
Employers should carefully document all steps taken during the termination process to demonstrate compliance with Dutch law and to minimize the risk of legal challenges. Seeking legal advice is highly recommended.
