How can you terminate an employment contract - under Dutch law?

8 ways to terminate an employment contract under Dutch employment law

Under Dutch law, an employment contract or a period of employment can be terminated in 8 different ways. The 8 ways in which employment can be terminated in the Netherlands are as follows:

1. An employment contract can terminate by operation of law
2. Employment dismissal by mutual consent
3. Expiry of the of trial period
4. Giving valid notice to terminate the employment contract
5. Application of a resolutive condition in employment contract
6. Dismissal with immediate effect - summary dismissal
7. Termination of the employment by decision of a Dutch court
8. Collective redundancy

The rules that apply to an employment termination, depend on how the employment contract is terminated.

1. An employment contract can terminate by operation of law

If a fixed-term contract under Dutch labour law ends on the agreed date, such a contract ends by operation of law. This also applies in the event of the employee's death and sometimes when the employee reaches the state pension age. 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 employment dismissal. For example, by signing a termination agreement. 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. Also, the employee should make sure that the employer complies with the notice period.

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.

Irrespective 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 to the other party (employer or employee), either party terminates the employment during the contract period. However, this is usually subject to a period of notice. An employee can tell 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 before terminating 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' in the contract. Such a resolutive condition could be, for example, if you have not obtained a diploma by a certain date. Or if you are temporarily replacing a sick employee, and that empoyee hase recovered.

6. Dismissal with immediate effect - summary dismissal

If the employee is dismissed immediately (and not wrongfully), the employment ends immediately. But the employer must have a good and urgent reason for doing so. Such a reason could be, for example, that you stole, cheated or refused to work without good reason.

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 court to dissolve your employment contract. 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 severance pay.

8. Collective redundancy

When is there a collective redundancy? When a company wants to make 20 or more employees redundant within 3 months. There must be an economic reason for this. For example, a reorganisation, cessation of business activities, downsizing or relocation of the company. Your employer must notify the UWV and the trade unions 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.