The reflection principle, used to select employees for redundancy (in Dutch: afspiegelingsbeginsel), was introduced in March 2006. The reflection principle requires that employees are selected in such a way so that the age range within a specific category of interchangeable positions is proportionately the same before and after the dismissals.
To start with, the employer must determine which positions are redundant. All interchangeable positions (i.e. those which are mutually exchangeable, comparable and equal to other positions with respect to the nature, content, level, remuneration and (in some cases) competencies of the role) must be categorized. The employees within each category must then be divided into the following age groups: 15 to 25, 25 to 35, 35 to 45, 45 to 55 and 55 and older. The employer must determine how many employees within each age group are to be selected and then select that number of employees by applying the ‘last-in-first-out principle’, i.e. the employee with the shortest service must be selected first.
This requirement to apply the reflection principle to dismissals for economic reasons significantly limits employers' flexibility.
However, changes may be afoot. On October 29 2012, a coalition agreement was reached which is likely to have a significant impact on the Dutch labour market, including collective dismissals. We expect the legislation to come into force on 1 January 2014 although the precise details have not yet been set out.
The coalition agreement provides for, amongst other things, the ability to deviate from the reflection principle by collective bargaining agreement (CBA). This will give employers more flexibility when it comes to selection for redundancy, and will enable employers to select employees other than by reference to their length of service, for example, for performance related reasons.
However, the coalition agreement did not contain a provision that also allows for deviation from the reflection principle following consultation with the works council (WC). The taskforce considering the right of participation (in Dutch: Werkgroep Medezeggenschapsrecht) is drawing attention to this possibility.
If a company has no active trade unions or prefers consultation with the WC, the consequences/social measures of a reorganization are usually effected in consultation with the WC. The taskforce has therefore queried whether the legislature should also enable deviation from the reflection principle following consultation with the WC, or whether the legislative framework already provides for this possibility (e.g. under article 32 Works Councils Act). The outcome remains to be seen, but we believe that this would be a logical and sensible addition to the coalition agreement.