When contemplating collective dismissals in the Netherlands, employers should be aware that the formula generally used for the calculation of severance (the ‘cantonal court formula’) is the subject of discussion between the Dutch government and the social partners (employers’ and employees’ representative associations). An agreement in principle was reached between the Dutch government and these associations to introduce an upper limit to the formula for employees earning an annual salary in excess of €75,000 gross.

The agreement has been criticised heavily and it is unclear whether, how and when it will be implemented. Furthermore, the courts are reviewing the formula and they are expected to present an evaluation and potentially a change to the formula in the course of October 2008 or shortly thereafter. Despite the above discussions and uncertainty as to the outcome, it is generally expected that the formula will be reduced. In practice it has an impact on current negotiations on collective severance packages offered in the context of redundancies (social plans). Employers tend to delay these negotiations because they hope for a revision in their favour whereas trade unions make an effort to get employers to agree to social plans in line with the current formula.