Facing redundancy in the Netherlands?

Settlement Agreement

Firstly, your employer cannot terminate your employment without either obtaining approval from UWV or your consent. Typically, companies will seek your agreement to terminate your position to avoid lengthy procedures with UWV. They will likely present you with a settlement agreement to mutually agree on the termination of your employment.

Upon receiving such an offer, it’s advisable to verify the legal basis for the redundancy, review the terms of the agreement, and assess the compensation being offered. You should be given sufficient time to seek legal advice to decide whether to accept, negotiate, or reject the offer (and wait for the administrative procedures to be initiated by your employer).

During this period, even if you reject the offer, your salary should continue to be paid as usual. Salary payments will only cease after the termination has been confirmed – either through your agreement or a UWV decision. The UWV process typically takes 6 to 8 weeks, followed by a notice period, which can prolong the situation. An earlier termination date, sometimes accompanied by payment in lieu of notice, is only possible with your consent.

Legal validity

To assess the legal validity of the redundancy, there are several key aspects to verify. Your employer should provide a legal justification for the redundancy, explaining specifically why your position is being eliminated and how this contributes to a more efficient business operation. If the reasons are financial, this information must also be disclosed.

Often, only a vague explanation is provided, indicating the company’s need to achieve cost-saving targets due to challenging market conditions, which is insufficient. The UWV rules on economic dismissals clarify the required information and documentation that your employer must provide. While this is mandatory, many companies hesitate to share such information due to potential confidentiality concerns.

A crucial document to request is the advice from the Works Council. If your organization has a Works Council, they should be consulted during significant restructuring efforts. Their considerations could be relevant to your situation.

Compensation

The settlement agreement should at a minimum include the statutory severance payment, and the applicable notice period must be observed. In many cases, if there’s uncertainty about the employer’s ability to meet the legal requirements for redundancy – or if they prefer to keep this information confidential – there’s room for negotiation. By offering more than the statutory minimum, employers can avoid UWV’s administrative procedures and reduce the risk of a potential rejection of their application.

The weaker the legal rationale, the stronger your position in negotiations. Therefore, it’s in your best interest to push for the information regarding your redundancy. You could argue that if your employer is unwilling to provide the necessary documentation or cannot meet compliance requirements, you will only cooperate if your severance package is improved. Often, the initial offer from an employer is not the final one, and there is potential for significant improvement in the terms during negotiations.

However, exceptions do exist. Larger corporations often operate under predefined Social Plans or Redundancy Schemes that outline severance package conditions for redundant employees. These plans may have been agreed upon with the Works Council, making them difficult to negotiate, as they typically offer better terms than statutory obligations. Deviating from these plans might set a precedent the employer wishes to avoid. Nevertheless, the rules regarding the legal validity of the dismissal should always be adhered to, and if they are not, negotiations can still yield a more favourable outcome.

Assistance with negotiations

If you find navigating this situation challenging, the employment lawyers at GMW are here to help. We can assess the legal validity of the dismissal to ensure compliance and negotiate on your behalf, considering your preferences for the severance package. Employers may offer to cover the costs of legal advice, but even if this isn’t provided or the amount is insufficient, we can address this during negotiations with your employer.

More information

Do you have any further questions or would you like to arrange an appointment? Please feel free to contact us.