Terminating employment in the Netherlands
If you want to terminate an employee in the Netherlands, you must follow specific rules under Dutch employment law, covering the dismissal procedure (ontslagprocedure), notice periods, severance pay and possible court proceedings. This article provides a practical overview of what employers need to do when terminating an employee.
What Are the Dismissal Requirements Under Dutch Employment Law?
Under Dutch law, an employer may only terminate an employee if a reasonable ground for dismissal (Article 7:669 BW) applies, such as redundancy, long-term illness, unsatisfactory performance, or a disturbed employment relationship (verstoorde arbeidsverhouding). Termination at will is not possible under Dutch employment law.
Employers must follow certain steps during the dismissal process: establish a valid reason and supporting evidence, offer the employee an opportunity to respond, review any counterproposal, and document the grounds for dismissal in writing. Employees who believe their dismissal was based on discriminatory grounds can challenge it under Dutch discrimination law.
What Notice Period and Severance Pay Apply When Terminating an Employee?
Employees must receive proper notice (opzegtermijn) before being terminated. Under Article 7:672 BW, the notice period depends on the length of service and ranges from one month (under 5 years of service) to four months (10 years or more).
A dismissed employee is generally also entitled to a statutory severance payment (transitievergoeding) under Article 7:673 BW. The amount depends primarily on the employee's length of service. Employers should sign a formal termination agreement setting out any outstanding payments owed, and in some cases the employer and employee may prefer to pursue mutual consent termination as an alternative to a unilateral dismissal.
What Is the Procedure to Terminate an Employee Under Dutch Law?
Employers must follow a defined process when terminating an employee: the employer should first discuss the issues with the employee, document all steps taken in writing, and, where the relationship is disturbed, may need to seek mediation before proceeding with the dismissal.
In some cases, such as summary dismissal (ontslag op staande voet), additional legal requirements apply. Depending on the ground for dismissal, the employer may need permission from UWV or a court ruling from the subdistrict court before the employment contract can end.
What Happens in Subdistrict Court Proceedings?
The process of terminating an employee may involve proceedings before the subdistrict court (kantonrechter), which provides recourse for parties involved in disputes regarding dismissal or other termination matters. A terminated employee can file a case against their former employer with the subdistrict court.
Both sides must present all relevant evidence that supports their claims, including employment contracts, performance reviews and correspondence between manager and employee. If there is no valid reason for dismissing the employee, the employer could be held liable for wrongful dismissal and ordered to pay compensation or a higher severance payment. It is also possible for the employee to request reinstatement in their former position.
In determining whether a dismissal was justified, the subdistrict court considers factors such as:
- whether proper warning had been issued prior to termination
- whether appropriate disciplinary action was taken
- whether sufficient opportunity was provided to rectify the behaviour causing concern
- compliance with applicable laws and regulations governing termination.
After considering the evidence, the subdistrict court will typically make a ruling upholding the dismissal, ordering reinstatement, or granting severance payments in favour of the employee. This process can take several months, so alternative dispute resolution methods are often recommended instead.
What Alternative Dispute Resolution Options Exist?
Employers and employees can resolve termination disputes without going to the subdistrict court, through arbitration, mediation, conciliation or an out-of-court settlement. Arbitration produces a binding decision from a neutral arbitrator, while mediation, conciliation and settlement negotiations aim for a mutually agreed outcome.
These methods typically involve shorter timeframes and lower costs than subdistrict court proceedings. Practical steps for employers include referring to the employee handbook for any prior-warning or disciplinary procedures, completing all termination paperwork, and providing a reference letter if requested by the former employee.
Key legal sources
- Article 7:669 BW – reasonable grounds for dismissal
- Article 7:672 BW – statutory notice periods
- Article 7:673 BW – statutory severance payment (transitievergoeding)