Grounds for Termination
A fixed-term employment contract or a contract for a specific project ends by operation of law upon expiration of the term or completion of the project, without notice being required. However, as from the 1st of July 2015 an employer is obliged to notify the employee at least one month before the ending of a fixed-term contract of six months or longer whether the employment contract will be extended and, if so, subject to what terms and conditions. Furthermore, the employer is obliged to inform an employee who has a fixed-term contract about vacancies with an open-ended employment contract.
If an employer wants to dismiss 20 employees or more within a term of three months within one of the working areas of the Employee Insurance Agency, it must notify and consult the relevant trade unions and notify the Employee Insurance Agency of its intention to do so. It is also necessary to take into account all employments contracts that will be terminated by mutual consent. If the employer fails to comply with its obligation, the employee has a right to nullify the termination of his/her employment contract.
An open-ended employment contract can be terminated by:
- The employer giving notice after receiving permission from a governmental organisation;
- The employee giving consent after the employer has given notice without the abovementioned permission;
- Court proceedings;
- Mutual consent;
- Dismissal because of an urgent reason;
- Notice given by the employee.
Is severance pay required?
As from the 1st of July 2015, a statutory transition payment has been introduced. Every employee is entitled to this payment when an employment contract has lasted at least 24 months and is terminated on initiative of the employer or by operation of law, subject to a few exceptions (including dismissal for urgent cause). The transition payment is 1/6th of a monthly salary for every half year for the first 10 years of service and 1/4th of a monthly salary for all years of service above 10 years. The transition payment is capped at EUR 81.000,- gross or – if the employee is entitled to a higher annual salary – one annual salary. The transitional payment is not due in case the employee terminates the employment contract, unless this termination is a result of seriously culpable actions on behalf of the employer.
Is a Separation Agreement required or considered best practice?
In Dutch employment law separation agreements are used when the employment contract will be terminated with mutual consent (the so-called settlement agreement). In an agreement as such, the employer and employee arrange under which conditions they may terminate the contract. A settlement agreement is not a legal requirement but is considered best practice (as an employee is also able to apply for unemployment benefits after concluding a (legally correct) settlement agreement).
Remedies for employee seeking to challenge wrongful termination
After concluding a settlement agreement, the employee has a reflection period of 14 days. During that period the employee can withdraw the given consent at any time, without having to give an explanation for his/her change of mind. When this period is over, it is still possible under Dutch law to void a contract. The time limit for invoking a voidable settlement agreement is 3 years.
In the Netherlands, we have the Dutch Whistle-blowers Authority, which is for employees who want to report an abuse in the workplace within the public or private sector. The Whistle-blowers Authority provides advice, support and, if necessary, carries out investigations. The Whistle-blowers Authority Act, which came into force in the Netherlands on the 1st of July 2016, underlies the establishment of the Whistle-blowers Authority. This Act obliges all organisations in the Netherlands with more than 50 employees to introduce an internal reporting procedure for reporting abuses. The Act also bans retaliation against the reporters who have reported a possible abuse in the proper manner.