1 July 2020
Employees in the Netherlands are generally well protected against dismissal.
An employer can only unilaterally terminate the employment contract according to a limited number of grounds. One of these is redundancy for “business economic reasons”. This also includes a reorganisation. Below are the steps employers must take to dismiss an employee due to reorganisation.
In the event of redundancy for economic reasons, the employer may only terminate the employment contract if they have obtained permission from the UWV (Employee Insurance Agency) to do so. The employer must therefore submit an application to the UWV requesting permission. This is often done with the help of a lawyer. The application contains all relevant information about the employer and the employee. The employer must also explain why the reorganisation is necessary. For example, there may be a reduction in work, a worsening financial position, a business relocation or a redesign of the company structure. Often it will be a combination of factors.
The employer must also indicate exactly which measures are taken and substantiate that this achieves the desired goal. They should also explain why it is necessary to lay off workers and why the goal cannot be achieved in any other way.
It is also important that it concerns a long-term reorganisation. The legislator has determined that the reorganisation must apply to a period of at least 26 weeks. Therefore, the employer cannot apply for a dismissal from the UWV if there is only a temporary reduction in work.
The employer may not determine who is eligible for dismissal. The so-called “reflection principle” applies to this selection. The reflection period is a set of rules, based on a number of objective data, which determines the order in which employees are eligible for dismissal.
Finally, the employer must demonstrate that the employee in question cannot be reassigned to another job within a reasonable period of time. The reasonable period may vary from case to case, and is in fact equal to the notice period of the employer. Reassignment can be considered not only to the same functions; it may also concern other positions as long as these are suitable for the employee, with or without additional training.
After the employer has submitted all information to the UWV, the UWV will forward this to the employee. The employee is then given two weeks to respond to the employer’s request. A lawyer often responds on behalf of the employee. The UWV forwards the employee’s response to the employer. If necessary, the UWV asks the employer to respond to (certain points of) the employee’s response. If that happens, the employee can again respond. In principle, the UWV must decide on the employer’s application for dismissal within four weeks.
If the employer gets permission from the UWV to terminate the agreement with the employee, the employer can give notice to terminate the employment contract. The employer must observe the correct notice period. The duration of the procedure may be deducted from the notice period; however, there must always be one month’s notice left. In this situation, the employer is obliged to pay the outstanding holidays, transition allowance, etc. If the employee disagrees with the UWV’s decision, s/he can go to court.
It can happen that an employer does not receive permission from the UWV. This may be the case, for example, if the employer has provided incorrect information or has not (sufficiently) followed the legal rules. This is often brought to light because the employee informs the UWV about this in his/her response to the dismissal application. There may also be a prohibition of termination. A prohibition of termination means that the employer may not terminate the employment contract based on the law. This is the case, for example, if the employee has been ill for less than two years or if the dismissal is related to a transfer of the company. If there is a prohibition of termination, then the employment contract remains. If the employer does not agree with the UWV’s decision, they can go to court.
The above procedure takes time and costs are involved. The employer will therefore often prefer to reach an agreement for termination by mutual consent. This option means that no procedure is required at the UWV and the parties jointly determine the conditions under which they separate. Depending on the circumstances, this can also be advantageous for the employee. During the negotiations, both parties are often assisted by a lawyer. Among other things, the lawyer can estimate the chances of both parties in a UWV procedure and indicate what a reasonable outcome is.
As an employer, would you like to know more about submitting a dismissal application? Or are you, as an employee, confronted with a dismissal application? I would be happy to advise you further. You can also contact me if you want to offer a settlement agreement or if you have been offered one.
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