Under Dutch employment law, how do you dismiss a company director?
Dismissing a company director in the Netherlands follows a specific legal framework under Dutch employment and company law. The rules differ depending on whether the director is a statutory director (statutair bestuurder) or a non-statutory director (titulair bestuurder).
What Is the Difference Between a Statutory and Non-Statutory Director?
A statutory director (statutair bestuurder) is formally appointed by the general meeting of shareholders and registered with the Trade Register; their dismissal follows both corporate and employment law rules. A non-statutory director (titulair bestuurder) holds a director title but is not formally appointed under the articles of association, and their dismissal follows the same rules as regular employees, including full dismissal protection.
Statutory directors have legal representation and management powers, and are subject to duties such as acting in the best interests of the company and avoiding conflicts of interest.
Does Dismissing a Statutory Director Require Specific Grounds?
A statutory director can be dismissed by the general meeting of shareholders at any time under Article 2:244 of the Dutch Civil Code, and this corporate dismissal itself does not require specific grounds. However, the employment law consequences depend on whether a valid reason existed: without valid grounds, the director may be entitled to fair compensation in addition to the transitional payment.
What Procedure Applies to Dismissing a Statutory Director?
Dismissing a statutory director requires convening a shareholder meeting, providing the director with proper notice of the meeting, and adhering to any additional notice requirements outlined in the company's statuten (articles of association). Shareholders then vote on the dismissal, and the minutes of the meeting should accurately record the discussion and voting results.
These steps differ significantly from the standard dismissal procedures that apply to regular employees.
What Financial Consequences Follow a Director's Dismissal?
When a company dismisses a director, it must pay the statutory transitional payment (transitievergoeding) based on the director's length of service and salary. If the dismissal is found to be unfair, the court may award additional fair compensation (billijke vergoeding), and the company must also observe the applicable notice period or pay compensation in lieu of notice.
The statutory notice period depends on the director's length of service: one month for employment up to five years, two months for five to ten years, three months for ten to fifteen years, and four months for fifteen years or more. The employment contract or articles of association may specify a longer notice period.
Can a Director Challenge Their Dismissal in Court?
A director can challenge their dismissal before the Dutch courts. However, unlike regular employees, a statutory director cannot request reinstatement: under Article 2:244 of the Dutch Civil Code, the court cannot order restoration of the relationship between the company and the director.
The director may instead claim the transitional payment, fair compensation for an unjust dismissal, and damages for failure to observe the correct notice period.
Key legal sources
- Article 2:244 of the Dutch Civil Code - the general meeting's power to dismiss a statutory director at any time, and the bar on court-ordered reinstatement