13 May 2024

End of employment due to restructuring

By Mark Dijkstra

You have your own business and employ up to 50 people. Unfortunately, for business economic reasons, you are forced to restructure and lay off some employees.

In this article, I will explain the steps you need to take to terminate your employees’ employment contracts.

Step 1: prepare the documentation

Good preparation is half the work, so ensure that you prepare a number of documents for each employee. Firstly, a letter of confirmation of dismissal (also known as a redundancy notice), in which you explain why the position of the employee concerned has become redundant. You will also need a draft termination agreement, also known as a settlement agreement or ‘vso’. You can either prepare this yourself (using the UWV model, for example) or ask a lawyer or legal expert to do it for you.

Step 2: calculate the compensation payment

Every employee is entitled to a statutory transition compensation payment in the event of restructuring, unless he or she gives notice of termination themselves. The government has a calculation tool available to calculate this compensation payment. You can use this calculation tool to calculate the transition compensation payment.

Tip: keep a recent pay slip handy, you will need the details when filling in the calculation tool.

Step 3: notification to the UWV

Report the proposed dismissals to the UWV (Employee Insurance Agency) before announcing the restructuring to employees. You should do this to avoid the consequences of any employees reporting sick. If an employee reports sick after you have notified the UWV, he or she cannot invoke the legal protection against dismissal during illness. You can find the form to notify the UWV by searching on the UWV website for: ‘Application for a dismissal permit for business economic reasons part A’ (Aanvraag ontslagvergunning wegens bedrijfseconomische redenen deel A).

Step 4: meeting with the employee

Shortly beforehand, schedule a meeting with each employee during which you announce the intended dismissal. Explain the reasons for the dismissal. It is also important that you explain how the process will proceed.

Step 5: written confirmation

Confirm the meeting in writing with the letter you have prepared. Attach the draft termination agreement. Ask for a response within two weeks.

Step 6: negotiations

Employees often seek legal advice regarding the termination agreement. In many cases, employees try to negotiate additional benefits, such as a higher compensation payment or a longer notice period. If you are able to reach an agreement, the employment contract ends by mutual consent in the form of the settlement agreement. In that case, you can withdraw your request to the UWV.

Tip: withdraw the request to the UWV only after the 14-day statutory reflection period has expired.

Step 7: UWV procedure

If you are unable to agree on a termination arrangement with the employee, you can continue the dismissal request with the UWV. To do so, you should submit Part B and Part C of the ‘Application for a dismissal permit for business economic reasons’ (Aanvraag ontslagvergunning wegens bedrijfseconomische redenen). You can also find these forms on the UWV website. Please note that you are required to provide a large amount of information to the UWV, including your companys financial data (if that is the reason for the dismissal) and information about the employees position. The procedure takes 6-8 weeks on average; part of this procedure is that the employee is given the opportunity to respond in writing to your request for dismissal.

Step 8: termination

Have you received permission from the UWV to terminate the employees employment? In that case, you should terminate the employment contract in writing, taking the notice period into account. You may deduct the time spent on the UWV procedure from the notice period, as long as at least one month remains.

Tip: the consent of the UWV is only valid for a limited period of time. Therefore, send the letter of termination in good time.

Step 9: appeal

Did the UWV refuse your request and you did not receive permission to end the employee’s employment? In that case, you can submit an appeal to the subdistrict court, and ask the court to terminate the employment contract. For this process, you are advised to consult an attorney or legal expert who specialises in employment law.

More information

Do you have any questions or would you like more information? If so, please do not hesitate to contact us. Our employment lawyers are ready to assist you.

Mark Dijkstra

Mark Dijkstra

Lawyer

Mark specializes in employment law.

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