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. How Does an Employment Contract End 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), without any notice period. This also applies in the event of the employee's death and sometimes when the employee reaches the state pension age (AOW-leeftijd).
For fixed-term contracts of six months or longer, however, the employer must observe a separate notification obligation (aanzegplicht, Article 7:668 of the Dutch Civil Code): the employer must inform the employee in writing, at least one month before the end date, whether the contract will be continued and, if so, on what terms. If the employer fails to do so, or does so late, the employer owes the employee compensation (aanzegvergoeding) of up to one month's salary.
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. How Does Termination by Mutual Consent Work?
An employer in the Netherlands may ask the employee to agree to termination by mutual consent (beeindiging met wederzijds goedvinden), typically through a settlement agreement (vaststellingsovereenkomst). The employee has a 14-day reflection period from signing within which to revoke consent without giving a reason.
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. What Happens When the Trial Period Expires or Is Invoked?
Under employment law in the Netherlands, either the employee or the employer can terminate the contract of employment with immediate effect during the trial period (proeftijd). The party who terminates must give the reason for termination in writing if the other party asks for this.
4. How Does Giving Valid Notice Work?
When giving notice (opzegging), either party can terminate the employment during the contract period, usually subject to a period of notice. Where the employer wants to give notice on economic grounds or after more than two years of illness, the employer must first obtain permission from the UWV (ontslagvergunning) under Article 7:671a of the Dutch Civil Code before terminating; notice given without this permission is voidable.
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, as part of terminating an employment contract. Where UWV permission is required but not obtained, the employee may request annulment or reinstatement from the subdistrict court within two months. For other dismissal grounds - such as poor performance or a disrupted working relationship - the employer cannot give notice at all and must instead apply to the subdistrict court (kantonrechter) for dissolution of the contract, as described under 7. Termination of employment by decision of a Dutch court below.
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. How Does a Resolutive Condition End Employment?
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 as not obtaining a diploma by a certain date, or the recovery of a sick colleague the employee is temporarily replacing.
6. What Is Summary Dismissal with Immediate Effect?
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 as 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, the UWV can also advise the employee on what to do.
7. How Does Court Dissolution of Employment Work?
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), governed by Article 7:673 of the Dutch Civil Code, and is due from the first day of employment regardless of length of service, subject to an annually indexed statutory maximum.
8. When Does Collective Redundancy Apply?
A collective redundancy in the Netherlands (collectief ontslag) occurs when a company wants to make 20 or more employees redundant within 3 months, for an economic reason such as reorganisation, cessation of business activities, downsizing, or relocation.
Your employer must notify the UWV and the trade unions (vakbonden) of a planned collective redundancy, stating the reasons and the number of employees to be made redundant. Specific Dutch rules apply to collective redundancies in the Netherlands.
Key legal sources
- Article 7:668 of the Dutch Civil Code - employer's notification obligation (aanzegplicht) for fixed-term contracts of six months or longer
- Article 7:671a of the Dutch Civil Code - UWV permit route for redundancy and long-term illness dismissals
- Article 7:673 of the Dutch Civil Code - statutory basis for the transition payment