Important and/or distinctive aspects of rights on termination in The Netherlands.

Termination of an employment contract

Introduction of the Work and Security Act (from 1 July 2015) has changed Dutch employment law, and more specifically dismissal law, dramatically. Key changes are the dismissal procedure and the grounds for dismissal.

A fixed-term contract ends by operation of law on the termination date of the contract. For the early termination of a fixed-term contract or termination of a contract for an indefinite period of time, the employer will need permission either from the Employee Insurance Agency (UWV) or the sub district court to terminate the employment agreement, unless there is cause for summarily terminating the contract, or if the termination is occurring during the probationary period, or if the individual has reached the state pensionable age.

The Dutch Civil Code contains an exhaustive list of reasonable grounds, being:

  • economic grounds;
  • long-term incapacity for work;
  • frequent absence due to illness;
  • inadequate performance of the employee;
  • serious misconduct of the employee;
  • refusal to work based on conscientious grounds;
  • a highly damaged working relationship; or
  • other circumstances, based on which the employer cannot be expected to continue the employment contract.

In case of termination on economic grounds or termination based on long-term incapacity for work (after 24 months), the employer needs permission from the UWV in order to give notice of termination of the employment agreement. Before receiving this permission, the employer must follow a pre-notice procedure, which in practice takes between six to eight weeks. During this procedure, the employer must substantiate the grounds for dismissal and the employee has the right to question this reasoning. Ultimately, the UWV will take a decision based on both arguments.

In all other cases, the employer must follow a procedure with the sub district court in order to have the employment agreement terminated by the court. The court will only terminate the employment agreement where there is a reasonable ground as listed above.

In all cases, the employer must show that it is not possible to transfer the employee to another position internally. Furthermore, the employer must prove the specific ground for the termination of the employment agreement conclusively. If the grounds are not substantiated fully, the court could decide not to terminate the employment agreement.

In almost every case concerning the termination of an employment agreement, both the employee and the employer can lodge an appeal against the decision of the UWV and/or the sub district court. Also, in the case of termination based on a summary cause for termination the employee can challenge the dismissal by commencing the procedure.