Dismissal law

What we do

In some situations, it may be necessary to initiate a dismissal procedure. An employee may be summarily dismissed due to, for example, theft. However, dismissals may also be due to employee poor performance, illness, or economic reasons. Each dismissal is subject to different rules that the employer must adhere to. For instance, in many cases, the employee will receive compensation upon dismissal, and the notice period for the employment contract must be observed. This compensation is also known as the transition payment. In some situations, an employer is not permitted to dismiss an employee. This applies, for example, during the first year of illness or during pregnancy.

It can be beneficial for an employer and an employee to enter into a settlement agreement. The employee and employer then negotiate the terms under which they part ways themselves.

If you need legal advice in a dismissal procedure as an employer or employee, please contact us. We can assist with assessing your legal position, negotiations, and the legal proceedings.

Dismissal law within employment law

Dismissal law is a specialty within the broader field of employment law and governs how an employment contract can be terminated legally. Dutch dismissal law is intentionally closed: an employer may not simply dismiss an employee, but requires reasonable grounds and a correct procedure to do so. This preventive dismissal test makes the system relatively strict and the procedures prone to errors. Whether you are an international corporation implementing a reorganization or the baker on the corner having to let go of a single employee: one missed formality can undermine a dismissal or lead to substantially higher compensation. Our mixed teams of lawyers and in-house counsel understand both the legal technicalities and the business reality behind a dismissal.

The nine reasonable grounds for dismissal

Since the Work and Security Act, the law has a limited list of grounds for dismissal, laid down in Article 7:669 of the Civil Code. An employer can only terminate or dissolve the employment contract if one of these grounds is fully substantiated:

• business economic reasons (the A-ground);
• long-term incapacity for work of at least two years (ground b);
• frequent absenteeism with unacceptable consequences (ground c);
• dysfunction or unsuitability for the position (the d-ground);
• culpable act or omission by the employee (ground e);
• conscientious objections (the f-ground);
• a disrupted employment relationship (the g-ground);
• other circumstances that make continuation impossible (the h-ground);
• the cumulative ground, whereby multiple unsatisfactory grounds together justify a dismissal (the i-ground, introduced with the Balanced Labour Market Act).

Different evidentiary requirements apply to each ground. In the case of poor performance, for example, an improvement plan must have been in place; under the cumulative ground, the judge may award additional compensation of up to half of the transition payment. We assess which ground is likely to succeed and build the case file accordingly.

The three dismissal routes: UWV, subdistrict court, and settlement agreement

The applicable route depends on the grounds for dismissal. In the case of dismissal for economic reasons and long-term incapacity for work, the employer requests permission from the UWV (Article 7:671a of the Dutch Civil Code). For grounds related to the person, such as poor performance or a strained working relationship, the employer submits a request for dissolution to the sub-district court (Article 7:671b of the Dutch Civil Code). The third and most commonly used route is dismissal by mutual consent via a settlement agreement (Article 7:900 of the Dutch Civil Code), whereby the parties determine the terms themselves and recourse to the UWV or court becomes unnecessary. Additionally, there is summary dismissal for urgent cause (Articles 7:677 and 7:678 of the Dutch Civil Code), which takes effect immediately but is subject to very strict scrutiny. We advise employers on the fastest and least risky route and assist employees who are confronted with such a proposal.

Transition payment and equitable compensation

Every employee dismissed at the employer's initiative is, in principle, entitled to a transition payment (Article 7:673 of the Dutch Civil Code). The payment amounts to one-third of a monthly salary per year of service, calculated pro rata from the first working day. In addition, the sub-district court may award equitable compensation if the dismissal is the result of seriously reprehensible conduct or negligence on the part of the employer, for example in the case of a deliberately created strained employment relationship. Unlike the transition payment, equitable compensation does not have a formula: the judge determines the amount based on all the circumstances. In negotiations regarding a settlement agreement, the transition payment usually forms the lower limit and equitable compensation a means of pressure. We calculate the compensation and determine a realistic negotiating margin.

Prohibitions on termination and cooling-off period

In a number of situations, an employer is not permitted to terminate the employment contract. These prohibitions on termination are set out in Article 7:670 of the Dutch Civil Code and apply, among other things, during the first two years of illness, during pregnancy and maternity or childbirth leave, and due to membership of the works council. If an employee nevertheless signs a settlement agreement, a statutory cooling-off period of fourteen days applies (Article 7:670b of the Dutch Civil Code): within that period, the employee may revoke the agreement without giving reasons. If the employer does not point out this right in writing, the cooling-off period is extended to three weeks. We closely monitor these periods to ensure that an agreement does not unintentionally fail or, conversely, become irreversible.

Assistance for both employer and employee

Dismissal cases always have two sides, and MKB Juristen assists both. For employers, we build a watertight case file, choose the right course of action, draft the settlement agreement, and, if necessary, conduct the UWV or dissolution proceedings. For employees, we assess whether the dismissal is justified, whether the correct procedure was followed, and whether the offered compensation is reasonable — and we negotiate better terms. Because our teams combine lawyers and in-house counsel, we switch effortlessly between collective dismissals during major reorganizations and individual dismissals for entrepreneurs with a few employees. See also our pages on Reorganization and Employee Participation, Sickness and Reintegration , and Employment Contracts.

Frequently asked questions about dismissal law

Can I just be fired?

No. An employer needs one of the statutory reasonable grounds under Article 7:669 of the Dutch Civil Code and must follow the correct procedure via the UWV, the subdistrict court, or a settlement agreement. Without a valid ground or in the event of a procedural error, the dismissal often does not stand.

How much severance pay will I receive?

The transition payment amounts to one-third of a monthly salary per year of service, calculated from the first working day and pro rata for parts of a year. In the event of seriously reprehensible conduct by the employer, equitable compensation may be added on top of this.

Do I have to sign a settlement agreement immediately?

No. Have a proposal legally reviewed first. Moreover, after signing, you have a statutory cooling-off period of fourteen days during which you can revoke the agreement.