How do you terminate employment in the Netherlands?
Employment law in the Netherlands offers far reaching protection to employees with respect to dismissal and termination of their employment. Generally there are four ways to terminate an employment contract:
- by mutual consent
- by permission from the Dutch Employment Insurance Agency (UWV WERKbedrijf)
- by dissolution of the contract by the subdistrict court (kantonrechter)
- by summary dismissal for urgent cause.
Termination of employment under Dutch law by mutual consent
In many cases employer and employee opt for termination by mutual consent (beeindiging met wederzijds goedvinden) and agree to an amicable settlement, with no prior permission required from the authorities. The employee has a reflection period of 14 days from signing an agreement to terminate employment within which the employee may rescind the agreement.
Employer and employee must agree a written settlement agreement (vaststellingsovereenkomst) regarding termination and severance pay to satisfy the employment authorities that dismissal is not due to the fault of the employee, thus curtailing his or her right to unemployment benefit.
Termination of employment under Dutch law by permission of the UWV
If the employer wants to give notice to an employee on economic grounds or after a period of illness of more than two years, the employer will first have to obtain permission to terminate the contract from the Employment Insurance Agency (UWV WERKbedrijf) under Article 7:671a of the Dutch Civil Code. Notice given without such permission is voidable: the employee may request annulment or reinstatement from the subdistrict court within two months of the dismissal.
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 for dissolution of the contract.
The UWV reviews whether there are valid reasons for termination, such as company restructuring or closure. The grounds for termination must be substantiated with sufficient evidence, such as recent company accounts, prognoses etc.
The employee may file objections to the request and in total it takes 8 to 12 weeks for the UWV to decide whether to grant permission. Unless there are clear grounds for dismissal, the UWV may, however, refuse permission.
Once permission has been obtained, the employer may give notice. At the end of the notice period (opzegtermijn), the contract will be officially terminated and no further compensation is due.
Since the Balanced Labour Market Act of 2020, severance pay is due to the employee from the first day of employment upon termination of the employment contract; there is no minimum service period.
Dissolution of Employment under Dutch Law by the Subdistrict Court
If an employer has other grounds for terminating the employee's contract, such as structural underperformance or gross negligence, the employer must apply for leave to dissolve the employment contract through the subdistrict court (kantonrechter).
Severance pay is due to the employee regardless of length of service, unless the employee is guilty of seriously culpable conduct in relation to the circumstances leading to the request, in which case compensation can be set at zero.
Severance pay under employment law in the Netherlands
Since the introduction of the transitievergoeding in 2015, and as reformed by the Balanced Labour Market Act of 2020, severance pay under Dutch law is due irrespective of which route termination takes (via agreement, permission or court order). Under Article 7:673 of the Dutch Civil Code, it equals one-third of the gross monthly salary for each full year of service, pro rata for partial years.
Since 1 January 2020, the calculation includes holiday allowance, fixed bonuses and, where relevant, structural variable remuneration. The earlier formula, which used different accrual rates before and after 10 years of service and a separate, more generous accrual rate for employees over 50, was abolished as of that date and no longer applies.
For 2026, the award is capped at €102,000 (up from €98,000 in 2025), or a year's gross salary, whichever is higher; this cap is adjusted annually. There are also some special rules for small employers and companies in serious financial difficulty, but in most cases the above will be applicable.
The protection against dismissal extends further: in cases of unfair dismissal or gross misconduct by the employer, the courts may award an equitable amount of extra severance pay to compensate the employee. As this legislation is relatively new, there are no exact guidelines in place yet as to when an equitable award will be granted. These damages are not capped.
Summary Dismissal of an Employee in the Netherlands for Urgent Cause
Under Dutch employment law, an employer may dismiss an employee for an urgent cause with immediate effect, in case of serious misconduct. Summary dismissal for urgent cause (ontslag op staande voet) is used in cases of theft, fraud, situations immediately endangering others, or repeatedly refusing to follow urgent instructions.
Summary dismissal is the heaviest sanction that an employer can invoke, so the reasons for dismissal must warrant that the employer in all reasonableness cannot tolerate the employee on the work floor anymore. In such cases no prior permission by the courts or Employee Insurance Agency is required. However, the employee must be notified forthwith about the dismissal and can dispute the urgent cause. As the employee will forfeit all rights to unemployment benefit if the dismissal stands, in most cases the employee will contest the dismissal. In such cases, it is often wise for the employer to file a conditional petition for dissolution of employment, in case the employee is reinstated by the court.
Key legal sources
- 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