8 ways to terminate an employment contract under Dutch employment law
Under Dutch employment law, you can terminate an employment contract in 8 different ways. The specific rules that apply depend on which termination method is used. Below you will find a complete overview of each method, including the applicable procedures and conditions under Dutch law.
- An employment contract can terminate by operation of law
- Employment dismissal by mutual consent
- Expiry of the trial period
- Giving valid notice to terminate the employment contract
- Application of a resolutive condition in employment contract
- Dismissal with immediate effect - summary dismissal
- Termination of the employment by decision of a Dutch court
- Collective redundancy
1. An employment contract can terminate by operation of law
If a fixed-term contract (arbeidsovereenkomst voor bepaalde tijd) under Dutch labour law ends on the agreed date, the contract ends by operation of law (van rechtswege). This also applies in the event of the employee's death and sometimes when the employee reaches the state pension age (AOW-leeftijd). The employer must, however, observe a period of notice.
In the event of the employee's death, the employee's surviving dependants may still be entitled to a death benefit of one month's salary.
2. Employment dismissal by mutual consent
An employer in the Netherlands may ask the employee to agree to termination by mutual consent (beeindiging met wederzijds goedvinden). For example, the employer may propose a settlement agreement (vaststellingsovereenkomst). The employee should always check first that he or she fully understands and agrees with the settlement.
An employee should not sign if he or she thinks the termination agreement is not fair. For example, a Dutch employer may claim that the employee is resigning, when this is not the case. The employee may then be denied unemployment benefits (WW-uitkering). Also, the employee should make sure that the employer complies with the notice period (opzegtermijn).
3. Expiry of the trial period
Under employment law in the Netherlands, either the employee or the employer can terminate the contract of employment with immediate effect during the probationary period (proeftijd).
Regardless of whether the employee or the employer terminates the employment contract during the probationary period, the party who terminates the employment must give the reason for termination in writing if the other party asks for this.
4. Giving valid notice to terminate the employment contract
When giving notice (opzegging) to the other party (employer or employee), either party terminates the employment during the contract period as part of terminating an employment contract. However, this is usually subject to a period of notice. An employee can tell the employer (preferably in writing) that he or she wants to leave the company or organisation at the end of the notice period.
The employer must obtain prior permission from the UWV (ontslagvergunning) before terminating the employment contract. This permission can be granted to the employer in case of economic reasons or long-term incapacity.
The specific notice period that applies to the employee and the employer is often stated in the employment contract or in the applicable collective agreement (CAO), if there is one.
Please note: there are special conditions for terminating a temporary employment contract.
5. Application of a resolutive condition in employment contract
An employee can agree with the employer that the employment contract will end if there is a so-called resolutive condition (ontbindende voorwaarde) in the contract. Such a resolutive condition could be, for example, if the employee has not obtained a diploma by a certain date. Or if the employee is temporarily replacing a sick colleague, and that colleague has recovered.
6. Dismissal with immediate effect - summary dismissal
If the employee is dismissed immediately in a summary dismissal under Dutch law (ontslag op staande voet) and the dismissal is not wrongful, the employment ends immediately. The employer must have a good and urgent reason (dringende reden) for doing so. Such a reason could be, for example, theft, fraud, or refusal to work without good cause.
In such an urgent case, the employer does not need permission from the UWV and can stop paying the employee's wages immediately. The dismissed employee will also not be entitled to UWV unemployment benefit if it turns out that the employee is actually responsible for the dismissal. If an employee has been dismissed without due notice, the employer must immediately inform the employee of the reasons for the dismissal. If the employee disagrees with the dismissal, it is highly advisable to seek legal advice immediately. UWV can also advise the employee on what to do.
7. Termination of employment by decision of a Dutch court
Either you or your employer can ask the subdistrict court (kantonrechter) to dissolve your employment contract (ontbinding van de arbeidsovereenkomst). In principle, an application for dissolution will be dealt with within eight weeks.
If you are dismissed, you may be entitled to financial compensation. This redundancy compensation is called the transition payment (transitievergoeding).
8. Collective redundancy
When is there a collective redundancy in the Netherlands (collectief ontslag)? A collective redundancy occurs when a company wants to make 20 or more employees redundant within 3 months. There must be an economic reason for this, such as a reorganisation, cessation of business activities, downsizing, or relocation of the company.
Your employer must notify the UWV and the trade unions (vakbonden) of a planned collective redundancy. The employer must state the reasons for the collective redundancy, including the number of employees to be made redundant. Specific Dutch rules apply to collective redundancies in the Netherlands.
Given the complexity of Dutch employment termination rules, it is advisable to seek advice from an employment lawyer before taking any steps to end an employment relationship.