Protection under Dutch law against dismissal
Protection against dismissal is a key principle of Dutch employment law. Under Dutch law, employees have strong legal rights that employers must respect. If employers fail to follow the correct dismissal procedures, they face significant financial penalties. This article provides a full overview of these protections and explains how they help both employers and employees.
The Netherlands has one of the most advanced systems of labour regulation in Europe. Dutch law protects workers from arbitrary dismissals (onrechtmatig ontslag) and makes it difficult for employers to terminate contracts without valid cause. As a result, even if an employee has been laid off due to economic factors, he or she still retains certain rights under the law.
In addition to protecting employees from unjustified terminations, Dutch employment law also provides safeguards against discrimination based on sex, race, religion or other characteristics. All individuals must be treated equally with regard to hiring decisions and job security, regardless of background or personal beliefs.
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What Is Dismissal?
Dismissal (ontslag) is the end of an employment contract between an employer and employee, whether described as a layoff, termination, firing or discharge. It occurs when an employer takes action to end the working relationship for reasons outlined in Dutch employment law, and must be carried out in accordance with the rules governing termination of an employment contract.
An employee may be dismissed due to reorganisation, performance issues or other circumstances stipulated by law. Dismissals are not always final, and various legal avenues are available for employees who feel they have been wrongfully terminated. Both employers and employees should know the applicable dismissal procedures and their rights and responsibilities, so that any disputes can be resolved quickly and fairly.
What Are the Types of Dismissal under Dutch Law?
Dutch employment law distinguishes several types of dismissal, including redundancy dismissal (bedrijfseconomisch ontslag), dismissal linked to long-term illness, and disciplinary dismissal (ontslag wegens verwijtbaar handelen) for misconduct. Dutch law does not recognise a separate dismissal type for situations where an employer makes working conditions so difficult that an employee feels forced to leave, often called constructive dismissal in English; instead, the employee can ask the subdistrict court to dissolve the contract on the basis of the employer's culpable conduct.
Additional protections exist for employees who are unable to work due to health issues, as the rules governing the dismissal of ill employees impose strict limitations on employers. See our dedicated article on constructive dismissal under Dutch law for the applicable requirements and evidence.
Disciplinary dismissals occur when an employee fails to comply with company policies or behaves inappropriately at work. This could range from minor breaches to gross misconduct and may result in summary dismissal (ontslag op staande voet) depending on the severity of the issue.
What Are the Employer's Obligations When Dismissing an Employee?
Employers must act in good faith (goed werkgeverschap) when dismissing an employee, follow the correct legal procedure, give proper notice (opzegtermijn) or pay severance in lieu, and provide the statutory transition payment (transitievergoeding) for the employee's loss of employment. Failure to meet these requirements can result in significant financial consequences for the employer.
Disputes arising from a dismissal are usually handled by giving both parties the opportunity to present evidence before the kantonrechter or another qualified body. Employees who believe they were wrongfully dismissed can pursue justice through the courts or other avenues provided under Dutch law.
Notice periods and severance payments are among the main tools protecting employees against dismissal. Employers must also give proper warning before taking action and provide reasons for the termination, so that employees are not treated unfairly during the dismissal process.
What Are Employee Rights under Dutch Law Regarding Dismissal?
Employees in the Netherlands have several legal rights regarding dismissal, including consultation before redundancy, protection through the UWV or subdistrict court procedure depending on the grounds for dismissal, protection during illness, the right to independent legal advice before signing any documents, and fair compensation where dismissal without cause has occurred.
- Redundancy procedures: Employees must be informed of any potential redundancies and consultation with them is required before any decisions are made.
- Dismissal protection (ontslagbescherming): depending on the grounds for dismissal, the employer must either obtain a permit from the UWV (for economic grounds or long-term incapacity) or request the subdistrict court to dissolve the contract (for other grounds, such as poor performance or a disturbed working relationship). Dismissal without following the correct procedure is considered wrongful and may result in reinstatement or financial compensation.
- Protection during illness: dismissal is prohibited during the first two years of illness. During this period, the employer must continue paying the employee's salary and work on reintegration. Only after two years may the employer seek dismissal through the UWV based on long-term incapacity.
- Legal advice: Employees can seek independent legal advice prior to signing any documents related to their dismissal.
- Fair compensation: If dismissed without cause, employers may be liable for severance payments.
All parties should understand the applicable laws surrounding employee rights regarding dismissal, as there are severe consequences for employers who fail to comply with these regulations.
What Are the Grounds for Valid Dismissal in Dutch Law?
Article 7:669 of the Dutch Civil Code lists the valid grounds for dismissal: economic reasons, long-term incapacity, frequent absenteeism due to illness, poor performance, culpable conduct, a disturbed working relationship, conscientious objections, and other circumstances making continuation unreasonable. An employer must establish that one of these grounds applies before a dismissal can be considered valid.
Poor performance (disfunctioneren) refers to situations where an employee has repeatedly failed to perform up to expectations despite having been given sufficient chances to improve. Economic reasons refer to financial hardships experienced by an employer due to external factors beyond their control, such as market trends or decreased demand for goods and services. Culpable conduct covers behaviour from an employee that goes against company policies, including negligence, theft, fraud, sexual harassment and violence. A disturbed working relationship (verstoorde arbeidsverhouding) exists where continued cooperation between employer and employee is no longer reasonably possible.
Employers must verify they follow all relevant dismissal laws before proceeding with termination, and carefully evaluate whether one of these grounds genuinely applies.
What Counts as Unfair Dismissal, and What Redundancy Procedures Apply?
Unfair dismissal (kennelijk onredelijk ontslag) occurs when the correct dismissal process is not followed, or when the termination is caused by discrimination based on race, religion, sex, age, disability or other protected characteristics. Redundancy procedures must also be followed for a dismissal on economic grounds to be lawful.
Employers may have additional obligations depending on collective agreements (CAO) and any applicable works council (ondernemingsraad) regulations, which can include provisions relating to severance payments as well as rules about how redundancy decisions are taken.
Collective agreements and employee representation play an important role in these decisions, as they can modify existing legal requirements and further protect both employer and employee rights.
What Role Do Collective Agreements and Employee Representation Play?
A collective agreement (collectieve arbeidsovereenkomst, or CAO) sets out employer and employee rights and obligations in employment matters, and may include provisions on notice periods, severance pay or redundancy procedures. Employee representation ensures that the workforce's perspectives are considered in dismissal decisions.
Employee representation involves having representatives from the workforce who act on behalf of all workers within a group or organisation. The employee representative has the right to attend meetings with management concerning dismissals, and must be informed of any changes made to the dismissal procedure beforehand. If disputes arise from the dismissal process, the employee's representative must also take part in negotiations relating to such issues.
Both collective agreements and strong employee representation help protect workers against unfair practices surrounding dismissal procedures by providing recourse where needed.
What Is the Difference Between Reinstatement and Compensation Claims?
When facing dismissal, an employee can pursue reinstatement (herstel van de arbeidsovereenkomst) or compensation. Reinstatement requires demonstrating that the dismissal was wrongful and that reinstatement is possible and appropriate, restoring the employee to their position as if no dismissal occurred. Compensation applies instead when reinstatement is not feasible or no longer desired.
Compensation claims arise when reinstatement is not feasible due to irreparable damage caused by unfair dismissal, or when the employee no longer wishes to return. These claims usually involve proving financial losses incurred due to wrongful termination, including loss of wages, benefits and other forms of remuneration.
Key legal sources
- Article 7:669 of the Dutch Civil Code - statutory grounds required for a valid dismissal
- UWV: situations you need permission - official guidance on the UWV permit route for economic grounds and long-term incapacity