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Country snapshot

Key considerations
Which issues would you most highlight to someone new to your country?

Dutch employment law:

  • is highly regulated and very specific;
  • contains many provisions implemented pursuant to EU law;
  • has recently been overhauled (effective in three phases from January 1 2015, July 1 2015 and January 1 2016);
  • differs in many ways from other employment laws globally; and
  • is more protective of employees than of employers, which is based on the principle that employees by definition are in a weaker economic position than employers. The legislature has endeavoured to address this disparity by strengthening the legal position of employees and employee representative bodies (eg, works councils).

Specialised courts deal with employment law disputes, and published case law is a central additional pillar in the Dutch employment law framework.

What do you consider unique to those doing business in your country?

The Netherlands has a highly educated, flexible and motivated workforce. The workforce is internationally oriented, with many people able to speak more than one foreign language. 

Is there any general advice you would give in the employment area?

Although employment law requirements appear rather difficult to overcome, they can in practice be complied with relatively easily without jeopardising business continuity.

Emerging issues/hot topics/proposals for reform
Are there any noteworthy proposals for reform in your jurisdiction?

Noteworthy legal developments include the recent implementation of the Employment and Security Act. The act introduces major changes to employment laws, particularly in relation to dismissals and flexible employment. Parts of the act came into force in January 2015, with the majority taking effect from July 2015.

What are the emerging trends in employment law in your jurisdiction?

A trend towards flexible working, as well as say on pay and restrictions on remuneration in the financial sector.

The employment relationship

Country specific laws
What laws and regulations govern the employment relationship?

Employment law is set out in many separate statutes. Book 7(10) of the Civil Code is regarded as the main statute, but other acts are equally important, including:

  • the Act on Collective Bargaining Agreements;
  • the Works Councils Act;
  • the General Act on Equal Treatment;
  • the Unemployment Act; and
  • the Notification of Collective Dismissals Act.

Who do these cover, including categories of worker?

The legislation can potentially cover numerous categories of worker, pursuant to the base rule that an employment agreement is an (oral or written) agreement under which one party (the employee) undertakes to perform work on the instruction of another party for a certain period in exchange for wages. The principle of ‘substance over form’ applies in this regard – for example, an independent contractor can be qualified as an employee if the facts warrant such a qualification.

In addition, there is a legal (rebuttable) presumption that a relationship between parties qualifies as an employment agreement if a person, over a consecutive three-month period, performs work for another person or legal entity for payment of a financial contribution and such work is carried out on a weekly basis or for at least 20 hours over one month. The interested party may state facts in an effort to invalidate this presumption.

There is also a presumption that where an employment agreement has lasted at least three months, the contracted work is assumed to amount to at least the average working hours per month in the three preceding months.

Other contractual relationships and workers other than employees
Distinct from employees within the meaning of Book 7(10) of the Civil Code are other categories such as civil servants, apprentices and temporary workers. Specific rules apply to such workers and their contractual relationships.

Specific rules also apply to foreign workers and managing directors.

On July 1 2015 new protection was introduced for employees working under, for example, a services agreement with their employer. Both parties to the services agreement are jointly liable for the employee’s wages. In case of a chain of service agreements (ie, subcontracting), the employee must file a claim with either the employer or the closest link in the chain before moving to the next party in the chain.

Misclassification
Are there specific rules regarding employee/contractor classification?

Yes.     

Contracts
Must an employment contract be in writing?

No, although written form is preferred and is common practice.

Given the statutory definition, an employment agreement can be concluded orally or in writing.

A written (express) agreement may take the form of a formally drafted agreement or letter signed by both parties. In either case, and pursuant to EU Directive 91/533/EEC, the employer must inform the employee in writing of (at least) the following:

  • the parties’ identities and place of residence;
  • work location(s);
  • start date;
  • a description of the role or job title;
  • confirmation of normal working hours per day or week, initial base salary and other wage components, eligibility for or method of calculating holidays and applicable notice period;
  • whether the employee will participate in a pension scheme;
  • whether a collective bargaining agreement applies; and
  • whether the employment agreement has been entered into for a fixed period and if so, the duration thereof.

Are any terms implied into employment contracts?

Yes. Given the statutory definition, an employment agreement can be concluded orally or in writing, so any such agreement and its applicable terms can be implied as well as expressed.

Are mandatory arbitration/dispute resolution agreements enforceable?

Yes, although such arrangements are uncommon, as the law states specifically that parties must always have access to the civil courts, given the existence of specialised tribunals which deal with employment disputes professionally and swiftly.

How can employers make changes to existing employment agreements?

The employer can contractually reserve the right to unilaterally amend the terms and conditions of employment, and invoke this right in circumstances where its own interests outweigh those of the employee. Positive advice from the works council is usually an indication to the court that such circumstances apply. If a unilateral amendment clause has not been included in the employment agreement, it is more difficult for the employer to change the terms and conditions of employment.

According to the Supreme Court, unilateral amendment clauses are primarily aimed at collective changes and if there is no such clause in the employment agreement, the employer must conduct the necessary negotiations with individual employees. In these negotiations employer and employee must conduct themselves diligently. When assessing whether the employees should accept a change, it should be considered whether the employer has sound reasons for the change. If that is the case, it should then be determined whether acceptance of the employer’s reasonable proposal could reasonably be expected from the employee.

In case of collective changes, in the absence of a unilateral amendment clause, an employer will generally need to demonstrate that continuing with the current terms and conditions would be unreasonable, under the standards of reasonableness and fairness, or that there are unforeseen circumstances. These are both strict tests. 

Foreign workers
Is a distinction drawn between local and foreign workers?

The Act on Cross-border Work ensures that certain essential statutory rights under Dutch employment law apply to employees who work in the Netherlands, but whose employment agreement is subject to foreign law. These rights relate to issues such as health and safety, minimum wage and minimum holiday allowance. Further, there are a number of restrictions on applicable foreign law for employees who work in the Netherlands: a choice for foreign law cannot result in the loss of mandatory rights under Dutch law and a choice of law cannot set aside mandatory provisions of Dutch law.

Recruitment

Advertising
What are the requirements relating to advertising positions?

In principle, a job advertisement may state only job-related requirements which are relevant for the job. Certain groups should not be discouraged or excluded from applying. In job advertisements employers should use neutral wording, such as ‘person’ or ‘candidate’. The use of gender and age-related wording could be interpreted as discrimination and should therefore be avoided. Wording relating to minimum years of experience is generally allowed. 

Background checks
What can employers do with regard to background checks and inquiries in relation to the following:

(a) Criminal records?

Employers may ask employees to submit a certificate of conduct. This is a document in which the state secretary for security and justice declares that the applicant has committed no criminal offences that are relevant to the performance of his or her duties. For example, a taxi driver who has been convicted several times of driving under the influence or an accountant who has been convicted of fraud are unlikely to be issued with a certificate. The employee can apply for a certificate of conduct at the Population Affairs Department of the municipality in which he or she is registered in the Municipal Personal Records Database. The application is sent to Justis, which issues certificates on behalf of the state secretary.

(b) Medical history?

The Medical Examinations Act applies to medical checks. The act provides that an employer can ask questions about the medical condition of an individual and request a medical examination in connection with the conclusion or amendment of an employment contract. The nature, content and scope of the examination must be limited to the purpose for which it is performed. The selection of employees with a view to future absenteeism due to sickness is not a legitimate purpose for an examination. Such examinations may be carried out only if special requirements with regard to medical suitability apply to the position in question (eg, pilot of a commercial aircraft).

Medical suitability for a position relates to the protection of the health and safety of both the individual and third parties during performance of the work in question. No questions may be asked or medical examinations performed that constitute a disproportionate invasion of the individual’s privacy.

(c) Drug screening?

Examinations focused on the use of alcohol, drugs and medicines are possible only for very specific positions in which they are justified by the safety risks involved in connection with the work. 

(d) Credit checks?

Only commercial credit providers can apply to the Credit Registration Agency for for credit information. The agency keeps a central register of all credit liabilities in the Netherlands. This includes personal loans and ongoing credit, as well as credit cards and substantial hire-purchase agreements. As only credit providers have access to the database, it is impossible for an employer to consult the agency. The employer may ask an employee to provide it with an extract from the agency database, although this is unusal. The employer must have a legitimate interest in obtaining this information. There should be no less intrusive alternative available and interference with the employee’s privacy should not exceed what is strictly necessary to obtain the information.

(e) Immigration status?

Employers are required to request relevant immigration information (eg, regarding a work or residence permit).

(f) Social media?

Employers can generally use information from social media sites when selecting candidates, since this is considered to be public information. Employers should bear in mind that candidates may not have made information available online for the purpose of screening a future employer. Also, information may have been copied, meaning that the employer cannot rely on the fact that it is current. Moreover, employers cannot rely on the fact that the information has been made public by the candidate; mistaken identity cannot be ruled out. Employers should therefore preferably obtain the candidate’s consent or mention in the job advertisement that internet screening is part of the recruitment process.

(g) Other?

N/A.

Wages and working time

Pay
Is there a national minimum wage and, if so, what is it?

Yes. On the basis of the Minimum Wage and Minimum Holiday Allowance Act, all employees aged 23 and above are entitled to a gross minimum wage per month. As of July 1 2015, the monthly minimum wage is €1,507.80 gross. Employees under the age of 23 are entitled to a certain percentage of this minimum wage. 

Are there restrictions on working hours?

Yes. Employees’ working hours are restricted by the Working Hours Act. The act contains a number of restrictions, inlcuding in relation to maximum working hours, breaks andresting hours, night shifts, on-call duty and Sunday labour. Most restrictions do not apply to employees earning more than three times the minimum wage and minimum holiday allowance. Maximum working hours are:

  • 12 hours per shift, 60 hours per week and 48 hours per week in a period of 16 consecutive weeks; and
  • 55 hours per week in a period of four consecutive weeks.

Rest hours are set at 36 hours in each consecutive period of seven times per 24 hours, or 72 hours in each consecutive period of 14 times per 24 hours, which can be split into periods of at least 32 hours each.

Hours and overtime
What are the requirements for meal and rest breaks?

Breaks are set at a minimum of 30 minutes (which can be split into breaks of at least 15 minutes each) for shifts of more than 5.5 hours, or a minimum of 45 minutes (which can be split into breaks of at least 15 minutes each) for shift of more than 10 hours.

How should overtime be calculated?

There is no law on working or calculating overtime. Most collective bargaining and individual employment agreements contain clauses on overtime and how overtime pay should be calculated.

What exemptions are there from overtime?

N/A.

Is there a minimum paid holiday entitlement?

Yes. The statutory minimum holiday entitlement per year amounts to four times the number of working hours per week (eg, a minimum of 20 days per year in case of full-time employment). Individual employment agreements and collective bargaining agreements often contain more substantial entitlements. 

What are the rules applicable to final pay and deductions from wages?

Employers must deduct payroll tax from employees’ wages. Payroll tax consists of:

  • wage tax (wage-withholding tax);
  • employee and national insurance contributions; and
  • an income-dependent Healthcare Insurance Act contribution (employer's contribution towards healthcare insurance).

Record keeping
What payroll and payment records must be maintained?

The employer must keep records of wages, including tax-exempt reimbursements. The employer must provide each employee with a payslip for each payment it makes to the employee. In addition, the employer must inform each employee on an annual basis of the total amount of wages earned, wage withholding tax and social security withheld.

Discrimination, harassment & family leave

What is the position in relation to:
Protected categories

(a) Age?

Based on several EU directives, non-discrimination obligations are set out in:

  • the General Act on Equal Treatment;
  • the Act on Equal Treatment of Men and Women;
  • the Act on Equal Treatment of Age within Employment;
  • the Act on Equal Treatment Based on Handicap or Chronic Illness; and
  • the Civil Code.

Under these various regulations, an employer cannot discriminate on the basis of religion, personal beliefs, political orientation, race, gender, nationality, sexual orientation, civil status, disability, age, part-time employee status or fixed-term employee status, in relation to an offer of employment, termination of employment or employment terms and conditions.

Discrimination can be either direct or indirect. Indirect discrimination can be objectively justified if it is proportionate and contributes to a legitimate aim.

Some other limited exceptions are also possible – for example, under certain conditions women may be privileged over men to reduce their under-representation in a company.

Employees who believethat they have been discriminated against can decide either to file a claim in court or to file a complaint with the Dutch-based Human Rights Committee. The committee rules on whether equal treatment legislation has been breached, but it cannot award damages and its rulings are not binding (in case ofsubsequent litigation). Employees who claim that they have been discriminated against may not be prejudiced by the employer.

(b) Race

See above.

(c) Disability?

See above.

(d) Gender?

See above.

(e) Sexual orientation?

See above.

(f) Religion?

See above.

(g) Medical?

See above.

(h) Other?

The Governance and Supervision Act came into force in 2013. The act includes a gender quota, which specifies that the boards and supervisory boards of certain large companies must comprise at least 30% women and 30% men. Non-compliance must be explained in the company’s annual accounts. However, it will not result in any legal penalties.

In addition, equal work in principle should be equally paid, unless a difference in compensation can be objectively justified. This principle follows from the general obligation under Dutch employment law to act as a diligent employer. However, the Supreme Court has ruled that even if equal work is not paid equally and there is no objective justification, this does not automatically mean that it is not allowed. There is a right to equal pay only if the difference in pay is of such a nature that it is unacceptable under the standards of reasonableness and fairness, which is a strict test.

Family and medical leave
What is the position in relation to family and medical leave?

Pregnancy leave 
On the basis of the Work and Care Act, female employees are entitled to pregnancy leave and maternity leave amounting to a total of 16 weeks (as a main rule).

Adoption leave
Adoption entitles the employee to four consecutive weeks of leave in a 26-week period. During pregnancy leave, maternity leave or adoption leave, the employee is entitled to social security benefits.

Parental leave
The act also grants employees (male and female) the right to unpaid parental leave to care for their children below the age of eight. If an employee commences a family-law relationship with more than one child at the same time, the employee will be entitled to leave with respect to each of those children. Collective bargaining agreements sometimes provide for paid parental leave.

Other types of leave
The act provides for several other types of leave of absence, such as calamity leave and short and long-term care leave, allowing the employee to take care of family members.

Medical leave/disability: continued payment of wages during Illness
Under Dutch law, the employer must continue to pay employees who are absent due to illness at least 70% of their regular daily wage with a maximum of 70% of the maximum daily wage (as of January 2015, this is €199.15 gross), for up to a two-year period (104 consecutive weeks).

In practice, employers often agree to pay ill employees 100% of the full monthly wage during the first 52 weeks of illness and 70% during the following 52 weeks. Collective bargaining agreements commonly include such additional obligations for employers.

If the illness has been caused deliberately by the employee, or for any period during which recovery is impeded by his or her own actions, or if he or she refuses to perform other suitable work, then in principle the employee is not entitled to continued payment of wages during illness. The employee and employer must ensure that the employee can return to his or her role within the company. If the employee fails to fulfil these (statutory) obligations, the result may be cessation of payments or dismissal.

If the employer fails to fulfil its reintegration obligations, an extension of the obligation to continue to pay the employee’s wage in the event of illness may be ordered by the Employee Insurance Agency. After 104 weeks of illness, the employee may be entitled to disability benefits.

Harassment
What is the position in relation to harassment?

Under the Civil Code and the Labour Conditions Act, an employer is primarily responsible for the prevention of sexual harassment. To prevent sexual harassment, the employer must evaluate the risk of sexual harassment and formulate a prevention programme in order to limit the risks as much as possible. The employer must ensure, among other things, that the workplace is safe. The employer can meet this obligation by appointing a confidante and implementing a complaints procedure, including penalties. 

Whistleblowing
What is the position in relation to whistleblowing?

The non-statutory Corporate Governance Code stipulates that companies listed on the Dutch stock exchange must have a whistleblowing procedure in place. Other than this, no specific legislation deals with whistleblowing in the private sector. Based on case law, an employee is entitled to disclose misconduct externally if:

  • the matter amounts to serious misconduct;
  • the employee has attempted to bring the matter to the employer’s attention; and
  • the employee discloses the matter externally in a way that is proportionate.

A legislative proposal with respect to whistleblowing is pending, which aims to strengthen the protection of whistleblowers.

Privacy in the workplace

Privacy and monitoring
What are employees’ rights with regard to privacy and monitoring?

Employers must observe the Data Privacy Act rules. In short, employers must have a policy to monitor email and internet usage. Monitoring is allowed for legitimate reasons only. The Data Protection Committee has established guidelines with respect to monitoring.

To what extent can employers regulate off-duty conduct?

In general, employers can set rules with respect to the usage of social media, also with respect to off-duty conduct. Insofar as use of social media disturbs the good order within the employer’s business, the employee may be disciplined.

Are there rules protecting social media passwords in the employment context and/or on employer monitoring of employee social media accounts?

Employees are not obliged to provide personal passwords to the employer and can shield social media accounts from employers.

Trade secrets and restrictive covenants

Intellectual Property
Who owns IP rights created by employees during the course of their employment?

As a general rule, the employer owns any IP rights created by employees in the course of their employment. Under certain circumstances, the employee can claim equitable remuneration, insofar as this has not been provided for in the employment contract.

Restrictive covenants
What types of restrictive covenants are recognised and enforceable?

Employment agreements often contain restrictive covenants imposing confidentiality, non-solicitation and non-compete obligations on employees (both during the employment and after termination thereof). Such covenants are often combined with penalty clauses; these covenants and penalty clauses are generally enforceable under law.

Two rules must be met to validly enter into such covenants:

  • The restrictive covenant/non-compete clause must be agreed in writing and signed by both parties.
  • The employee must be at least 18 years of age at the time of signing.

Since January 1 2015, a non-compete clause is void if it is included in a fixed-term employment agreement without clear justification based on articulated, substantial business interests.

Where a non-compete clause clearly sets out the scope of the prohibited activities, a reasonable geographical scope and a reasonable and specified duration (ranging from a number of months to several years), it will usually be upheld by the courts, except in specific individual circumstances.

A request to enforce a non-compete clause may be restricted or denied by the court. The court may also deny a request of the employer to enforce a non-compete clause if an employee would become too restricted in finding a new job as a result of the non-compete clause. A non-compete clause may become invalid if the responsibilities ensuing from the employee’s position are substantially amended in the course of employment and if such amendments created an obstacle to finding a new suitable position elsewhere.

Non-compete
Are there any special rules on non-competes for particular classes of employee?

No – the position described above applies to all persons who are employees.

Discipline and grievance procedures

Procedures
Are there specific laws on the procedures employers must follow with regard to discipline and grievance procedures?

No. However, most employers have such procedures in place.

Industrial relations

Unions and layoffs
Is your country (or a particular area) known to be heavily unionised?

Although there is no recent data, about 20% to 25% of all employees in the Netherlands are union members – in 2014 there were approximately 1.8 million union members in a workforce totalling 7.2 million. Union membership has been declining in recent years. Certain geographical areas have become more heavily unionised than others (ie, companies in the upper north, eastern and southern regions of the Netherlands commonly have more union members than those in the western region and around larger cities, such as Amsterdam and Rotterdam). The same applies to specific industries (eg, the civil aviation sector is more heavily unionised than the banking sector).

What are the rules on trade union recognition?

In principle, an employer may refuse to negotiate with (certain) trade unions. However, sufficiently representative trade unions may seek admission to negotiations through court proceedings.

What are the rules on collective bargaining?

An employer can be bound by a collective bargaining agreement (ie, an agreement between a company and a trade union or between an employers’ association and a trade union on terms and conditions of employment) on one of the following grounds:

  • The employer is a contracting party to the collective bargaining agreement.
  • The employer is a member of the employers’ association which is a contracting party to the collective bargaining agreement;.
  • A collective bargaining agreement has been declared generally binding to its industry. In this case, if the employer falls within the scope of application of the collective bargaining agreement, it is bound to apply the agreement by law.

Dutch employment law distinguishes between those employees who are a member of the trade union which is a party to an applicable collective bargaining agreement (‘bound employees’) and those who are not (‘unbound employees’). Individual terms and conditions of employment that conflict with the terms and conditions of the collective bargaining agreement are legally void in relation to bound employees.

All provisions of the collective bargaining agreement apply to employment relationships with bound employees. In respect of unbound employees, the employer must also observe its obligations under the collective bargaining agreement, although the employees cannot themselves enforce terms and conditions in the collective bargaining agreement that conflict with their individual terms and conditions of employment; only the contracting trade union can. In addition, the provisions of a collective bargaining agreement do not automatically apply to the employment relationship.

Given that in various industries the number of bound employees is relatively low (and employers do not know which employees are trade union members, as this is sensitive personal data), employers frequently incorporate the terms of the collective bargaining agreement into individual employment agreements, in order to ensure that the collective bargaining agreement applies to all employees.

Collective bargaining agreements

A collective bargaining agreement can have a minimum or a standard character – that is, it can set out either a minimum from which the employer and employee can deviate in the employee’s favour or a standard framework that cannot be deviated from at all.

Collective bargaining agreements commonly set out all terms and conditions of employment for a certain period, but can also be social plans (in case of restructurings) or harmonisation plans (eg, to harmonise different sets of employment terms and conditions after a transfer of undertakings), or can comprise an obligation to pay an amount to an educational fund set up for a specific industry.

When a collective bargaining agreement expires and is not replaced, it can have a so-called ‘after-effect’ in relation to bound employees, meaning that the terms and conditions of the collective bargaining agreement remain do not lapse; although the employer and employee are free to agree different terms and conditions on an individual basis. While this does not apply to unbound employees, the collective bargaining agreement will likewise continue to apply to them if it has been incorporated into their individual employment agreement.

A collective bargaining agreement that has been declared generally binding to an industry in principle does not have an after-effect. When the expired collective bargaining agreement is replaced, this does not automatically end the after-effect of the old collective bargaining agreement; unless the new collective agreement states otherwise (or has a standard character), bound employees can claim provisions of the old collective bargaining agreement which were more favourable than those of the new collective labour agreement.

Termination

Notice
Are employers required to give notice of termination?

Yes. The Dutch dismissal rules are described in detail below, given their specific nature and complexity compared to comparable laws in other jurisdictions.

At the end of 2012, the Dutch government and Dutch social partners (trade unions and employers’ associations) agreed several major changes to employment/dismissal laws. The Employment and Security Act is being implemented in three phases: on January 1 2015, July 1 2015 and January 1 2016. The changes effective from the first two dates are described below. New rules are also being introduced in 2016 to relax the protection of employees who continue working beyond pensionable age.

Among other things, since 2015 employers can no longer choose to dismiss employees on indefinite employment agreements either through court proceedings or through a dismissal permit; appeal (to the high court and the Supreme Court) is now possible in all dismissal cases. As a rule, dismissed employees are also legally entitled to a ‘transitional allowance’ (which can be regarded as constituting a statutory entitlement to a severance payment).

Termination of fixed-term employment agreements on the expiry of the agreed term is thus fairly straightforward, but the new legislation has also introduced several relevant changes in this respect. For example the use of trial periods and the use of non-compete clauses in fixed-term contracts has been restricted, and employers are now obliged to notify the employee in a timely fashion as to whether the contract wull be renewed. In addition, the use of successive fixed-term contracts has been restricted further: fixed-term contracts will become indefinite either after two years of using fixed-term contracts or as soon as a fourth contract is agreed. The only way to prevent fixed-term contracts from becoming permanent contracts is to maintain a mandatory ‘non-use’ period of at least six months between two fixed-term contracts.

Under the new rules, an indefinite employment agreement can be terminated by employers in the following ways:

  • mutual consent confirmed in a written termination agreement;
  • court order (rescission);
  • notice of termination without the employee’s consent and after having obtained a permit to give such notice; or
  • summary/instant dismissal in case of an urgent reason (eg, theft or fraud).

Termination by mutual consent
The employer and employee are free to reach an amicable settlement at any time, which is then laid down in a settlement agreement between the parties. This will confirm that the employment agreement is terminated by mutual consent with effect from a certain date and on the initiative of the employer, in order to safeguard social security entitlements for the employee (if any) insofar as possible.

A settlement agreement usually includes a number of issues in addition to a specific termination date and severance payment, such as bonus entitlement, holiday entitlement and garden leave.

In practice, employers usually offer a settlement agreement before unilateral dismissal (eg, rescission by court order) is pursued. Should the parties fail to reach agreement, a settlement agreement can also be reached at a later stage (eg, at the time of a court hearing).

As from July 1 2015, an employee who has entered into a settlement agreement can revoke his or her consent to that agreement during a mandatory two-week cooling-off period. The employer must notify him or her of this right in advance. Failure to do so results in extension of the cooling-off period to three weeks.

Rescission by court order
The employer may request a court to rescind the employment agreement where a reasonable ground for termination applies.

Performance-related issues (eg, underperformance) constitute reasonable grounds for termination. Dutch law now states explicitly that the employer must first have given the employee timely notice of such underperformance and sufficient opportunity to improve his or her performance.

In the rescission request, the employer must set out its case for dismissal. The employee will be given the opportunity to defend himself or herself, both in writing and during the court session.

The court may refuse to rescind the employment agreement if it is not convinced of the employer’s case (eg, if the employee has not been given a genuine chance to improve his or her performance). Should the court honour the request (usually within eight weeks of the request being filed), it will determine a termination date and a transitional allowance (see below). In light of EU Regulation 44/2001, an employer cannot request a Dutch court to rescind the employment agreement if the employee lives abroad.

The employee can also request rescission of the employment agreement, although such requests are fairly uncommon.

Termination by giving notice with dismissal permit
The employer may request a dismissal permit from the semi-governmental Employee Insurance Schemes Implementing Body (UWV) either for economic reasons or following two years of continued illness.

As in the court route described above, the employer must set out its case for dismissal, and the employee will be given ample opportunity to submit a defence (in writing, in principle, without a hearing).

As in the court route, the UWV may refuse to grant a dismissal permit if it is not convinced of the employer’s case. This decision can be appealed before the court; likewise, if the UWV grants the requested dismissal permit, the employee can appeal to the court in an effort to restore the employment agreement. Both court decisions are subject to further appeal.

Only if the UWV honours the request for a dismissal permit (usually within eight weeks of the permit request being filed), the employer can give notice to the employee. The termination date depends on the applicable notice period (if this employer does not intend to observe this, payment in lieu is required). The time spent on the UWV proceedings may be deducted from the notice period, provided that the remaining notice period will equal at least one month.

Prohibitions against giving notice may apply which could potentially prevent the use of a successfully obtained dismissal permit. Such prohibitions apply, for example, to pregnant employees, ill employees during the first two years of illness, employees in military service and employees who are members of a works council.

Financial compensation in case of dismissals under Dutch law
With effect from July 1 2015, dismissed employees may be eligible for two types of financial compensation under Dutch law (in addition to compensation if the notice period is not observed).

A statutory transitional allowance (a statutory severance payment) was introduced into Dutch law for the first time on July 1 2015. The employer must pay the transitional allowance to the employee if:

  • the employer has given notice of termination (with or without the employee’s consent);
  • the employment agreement has been rescinded by the court at the employer’s request;
  • a fixed-term contract has not been renewed at the initiative of the employer; or
  • the employee has taken the initiative for the termination (eg, by requesting rescission or giving notice of termination) due to serious misconduct by the employer (eg, sexual harassment, discrimination).

The transitional allowance is calculated as follows in relation to employees below the age of 50:

  • one-sixth of the employee’s monthly salary for every six months of service for the first 10 years of service (ie, one-third of the employee’s salary for every full year of service for the first 10 years); and
  • one-quarter of the employee’s monthly salary for every six months thereafter (ie, one-half of the employee’s monthly salary for every full year of service thereafter).

For employees aged 50 and above with 10 or more years of service, every six months of service after the age of 50 counts for one-half of the employee’s monthly salary (ie, a full month for every full service year thereafter); these employees are thus eligible for a higher transitional allowance compared to their younger colleagues or colleagues with under 10 years of service.

The transitional allowance is paid only to employees (aged 18 or over) who have been employed by the employer for at least two years. It is capped at €75,000 gross or one year’s salary, whichever is greater.

Several exceptions apply, including in relation to small companies (ie, with fewer than 25 employees) in specific circumstances and companies in financial difficulties. In addition, the transitional allowance need not be paid if the employee can be seriously blamed for the dismissal.

The court may also award an employee an additional financial compensation at its discretion, but only under very specific and exceptional circumstances – essentially, in case of gross misconduct by the employer, such as sexual harassment or discrimination.

Summary dismissal
Either party to the employment agreement may face circumstances in which the employment relationship could not reasonably be expected to continue (‘urgent reasons’). If these circumstances are the fault of the employee, the employer can terminate the employment agreement with immediate effect. Likewise, if these circumstances are the fault of the employer, the employee can terminate the employment agreement with immediate effect.

Dutch law sets forth a number of examples of ‘urgent reasons’, such as gross negligence in the performance of duties, disclosure of trade or professional secrets, theft, fraud, embezzlement or (other) crimes involving breach of trust. However, only the competent court can determine whether the facts of any given case constitute urgent reasons justifying immediate termination.

Redundancies
What are the rules that govern redundancy procedures?

In addition, if an employer intends to terminate at least 20 employment agreements within a three-month period, specific provisions apply under Dutch law which trigger consultation, notification and information obligations towards the works council (if any), trade unions and the Employee Insurance Schemes Implementing Body.


Non-compliance with these obligations may cause notice given by the employer or executed settlement agreements to become voidable. The provisions aim to give the employer and the trade unions the opportunity to negotiate a social plan, although there is generally no legal obligation to reach agreement on such a plan.

Are there particular rules for collective redundancies/mass layoffs?

Yes – see above.

Protections
What protections do employees have on dismissal?

Under Dutch dismissal laws, employment cannot be terminated ‘at will’. In addition, there must always be substaniated, reasonable grounds for any dismissal.

Prohibitions against giving notice may apply which could potentially prevent the use of a successfully obtained dismissal permit. Such prohibitions apply, for example, to pregnant employees, ill employees during the first two years of illness, employees in military service and employees who are members of a works council.

Courts/tribunals

Jurisdiction and procedure
Which tribunals or courts have jurisdiction to hear complaints?

The (cantonal branches of the) district courts have jurisdiction over employment disputes.

What is the procedure and typical timescale?

Most proceedings are initiated by the petitioner filing a petition against the defendant. The petition must include the legal and factual grounds for the claim. In principle, cases will be heard by one judge. The defendant may file a defence. In the meantime, the court will order a hearing for the parties to appear in person. After the hearing for oral arguments, in principle the court will render its decision within a couple of weeks.

In general, it typically takes eight to 10 weeks until a final decision is rendered (subject to appeal to a higher court and the Supreme Court). 

Appeals
What is the route for appeals?

Judgments of the (cantonal branches of the) district courts may be appealed before a court of appeal. The appeal court will fully reassess the case, both factually and legally. Its judgment may, in principle, be submitted for review or cassation before the Supreme Court on issues of law only. The Supreme Court will not decide on any factual issues.