Termination Requirements
Terminations must respect complex rules and the rules of an employee’s employment country. The off-boarding is always handled by the Employer with the primary stakeholders. It may include ad-hoc fees as well as required or recommended steps on specific termination cases.
An employer can only come towards a termination of an employment agreement on the basis of a valid reason in combination with the fact that there is no longer a suitable redeployment for the employee within the company. The following reasons are specified in the Dutch legislation:
- Redundancy due to economic circumstances
- Long-term disability (two years)
- Frequent absence due to illness or disability which results in unacceptable consequences for business operations
- Underperformance
- Misconduct
- Refusal to perform contractual duties due to conscientious or religious objection
- Disturbed relationship
Terminations in the Netherlands can be complex. As a general rule you cannot unilaterally terminate an employee in the Netherlands without the permission of the Dutch Courts or the Dutch Unemployment Agency (UWV). In most cases it is therefore preferred to seek mutual consent to a termination in which case the governmental permission is not required.
Notice Period
When a termination is done by mutual consent, notice periods are often required in order to obtain the employee’s consent. Typically, the notice period can be between 1-4 months depending on how long the employee has been with the company. Notice periods always start at the end of the month.
Notice periods should be applied as follows:
- Less than 5 years of service: 1 month’s notice
- Between 5 and 10 years of service: 2 months’ notice
- Between 10 and 15 years of service: 3 months’ notice
- 15 years or more of service: 4 months’ notice
Severance for Employees
When a termination is done by mutual consent, severance payments are often required in order to obtain the employee’s consent. Typically, the amounts for severance by mutual agreement can be equivalent to 2-6 months of salary or more depending on the strength of the case. In case of a termination by the court or the Dutch Unemployment Agency (UWV) the statutory severance needs to be paid which is roughly 1/3 gross monthly salary per each year worked.
To protect you from unforeseen financial risks arising from terminations, Jackson and Frank applies a Severance Accrual to all employment agreements in this country. Jackson and Frank has extensive expertise in managing litigation risk globally and our Severance Accrual calculation is based on the prevailing common-law or statutory entitlements and local best practices. In the event your employee resigns or is not entitled to severance, all unused amounts will be returned to you.
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