What type of employment contract do you have and what does it mean?
An employment contract is an agreement under which an employee performs work for an employer in return for pay (Article 7:610 of the Dutch Civil Code). Whether your contract is for a fixed or an indefinite term determines how and when it can end.
A fixed-term contract in principle ends automatically on the agreed date. For a contract of six months or longer, the employer has a duty to give notice (aanzegplicht). The employer must tell you in writing at least one month in advance whether the contract will be renewed (Article 7:668 of the Dutch Civil Code). If the employer fails to do so, you are entitled to compensation of up to one month's salary.
The chain rule (ketenregeling) in Article 7:668a of the Dutch Civil Code limits the number of temporary contracts. After more than three contracts, or after a period of more than 36 months, a contract for an indefinite term arises by operation of law. The chain is only broken by a gap of more than six months. A collective labour agreement may deviate from parts of these rules.
A probation period must be agreed in writing (Article 7:652 of the Dutch Civil Code). No probation period is allowed in a contract of six months or less. A contract of up to two years allows a maximum of one month; a longer or permanent contract allows a maximum of two months. During the probation period, either party can terminate the contract immediately. At your request, the employer must give the reason in writing, and the prohibition of discrimination also applies during the probation period.
A pension scheme is not required by law. That changes if your sector falls under a mandatory industry pension fund; the employer must then take part. An employment lawyer can review your employment contract and terms of employment in advance, or help you draft them.
How can an employer terminate an employment contract?
An employer cannot simply terminate a permanent contract. The employer needs a reasonable ground (Article 7:669 of the Dutch Civil Code). The employer must also first investigate whether the employee can be redeployed in another suitable position.
The law lists the reasonable grounds exhaustively. Which route the employer must follow depends on the ground:
| Reasonable ground | Route |
|---|---|
| Business economic reasons, such as a reorganisation | Permission from UWV |
| Long-term incapacity for work (two years or longer) | Permission from UWV |
| Frequent absence due to illness with unacceptable consequences | Dissolution by the subdistrict court |
| Poor performance, after an improvement plan | Dissolution by the subdistrict court |
| Culpable acts or omissions of the employee | Dissolution by the subdistrict court |
| Disrupted working relationship | Dissolution by the subdistrict court |
| Combination of grounds (cumulation ground) | Dissolution by the subdistrict court |
If the employee agrees to the termination in writing, no permission from UWV or the subdistrict court is needed. The employee can revoke that consent within 14 days (Article 7:671 of the Dutch Civil Code). The notice period also counts. For the employer, it is one to four months, depending on the length of employment (Article 7:672 of the Dutch Civil Code).
A lawyer is not mandatory in proceedings before the subdistrict court. Still, the evidence is often complex. A well-documented file, for example in a case of poor performance, decides many dismissal cases. A dismissal lawyer quickly sees where a file is weak.
When is summary dismissal legally valid?
Summary dismissal (ontslag op staande voet) is only valid if there is an urgent reason (Articles 7:677 and 7:678 of the Dutch Civil Code). The employer must give the dismissal immediately and state the reason straight away. Examples of an urgent reason are theft, fraud or serious threats.
The court weighs all circumstances, such as the length of employment and the consequences for the employee. An employee who wants to challenge the dismissal must ask the subdistrict court to annul it within two months (Article 7:686a of the Dutch Civil Code). If the summary dismissal is valid, the right to unemployment benefit (WW) usually lapses as well. That is why quick legal advice from an employment lawyer or dismissal lawyer is needed.
What do you need to know about a settlement agreement?
A settlement agreement (vaststellingsovereenkomst) is a written agreement in which employer and employee end the employment by mutual consent. The employee may dissolve that agreement within 14 days of signing without giving reasons (Article 7:670b of the Dutch Civil Code). If the agreement does not mention this cooling-off period, it becomes three weeks.
No statutory transition payment applies to a settlement agreement; everything is negotiable. Pay attention to the end date, the notice period, the compensation, the non-compete clause and a neutral reason for dismissal. With the right wording, the employee generally keeps the right to unemployment benefit. An employment lawyer checks the agreement and negotiates better terms on your behalf.
What compensation are you entitled to on dismissal?
If the employer initiates the dismissal, the employee is entitled to a transition payment (transitievergoeding, Article 7:673 of the Dutch Civil Code). It amounts to one third of a month's salary per year of service, from the first working day. In addition, the court can award fair compensation (billijke vergoeding) if the employer has acted seriously culpably.
The transition payment is capped at an amount that is indexed every year, or at one year's salary if that is higher. If the dismissal results from seriously culpable conduct by the employee, the payment lapses. On dissolution on the cumulation ground, the court can award additional compensation of up to half the transition payment.
Fair compensation has no fixed formula. The court looks at all circumstances, including the wages the employee loses and the chance of finding other work. Anyone who wants to claim compensation or annulment must keep track of these deadlines:
| What | Deadline | Statutory provision |
|---|---|---|
| Dissolving a settlement agreement | 14 days after signing (three weeks if the cooling-off period is not mentioned) | Article 7:670b BW |
| Annulment of summary dismissal or termination | Two months after the end of the employment contract | Article 7:686a BW |
| Claiming the transition payment | Three months after the end of the employment contract | Article 7:686a BW |
| Appeal against a decision of the subdistrict court | Three months after the decision | Article 7:683 BW |
What are the rules on illness and reintegration?
During illness, the employer must continue to pay at least 70 percent of the wages for up to 104 weeks (Article 7:629 of the Dutch Civil Code). In the first year, that is at least the minimum wage. Many collective labour agreements provide that the full wage is paid in the first year.
During the first two years of illness, a prohibition of termination applies (Article 7:670 of the Dutch Civil Code). The employer may in principle not terminate the contract because of illness. Employer and employee must work together on reintegration under the Gatekeeper Improvement Act (Wet verbetering poortwachter). This includes an action plan with the company doctor and a first-year evaluation.
If an employee does not cooperate without good reason, the employer may stop paying wages. If the employer has done too little, UWV can impose a wage sanction: continued pay is then extended by up to 52 weeks. After 104 weeks, the employee can receive a WIA benefit for incapacity for work. That application must reach UWV no later than week 93 of the illness. An employment lawyer assesses whether the reintegration has followed the rules.
When is a non-compete or non-solicitation clause valid?
A non-compete clause (concurrentiebeding) prohibits the employee from working for a competitor after leaving. A non-solicitation clause (relatiebeding) prohibits contact with the employer's clients or business relations. Both are only valid if they have been agreed in writing with an adult employee (Article 7:653 of the Dutch Civil Code).
In a fixed-term contract, a non-compete clause is in principle void. It is only valid if the employer explains in writing in the contract which compelling business interests make the clause necessary. The subdistrict court can annul a clause in whole or in part if the employee is unfairly disadvantaged. As employment lawyers, we assess whether your clause will hold up and, where necessary, negotiate a limitation.
What applies to reorganisation, collective redundancy and employee participation?
In a reorganisation, the employer must apply the reflection principle (afspiegelingsbeginsel) for dismissals on business economic grounds. This means that within interchangeable positions, the employee with the shortest length of service in each age group leaves first. In reorganisations, we advise employers on the order of dismissal and the request for advice to the works council.
If an employer wants to dismiss twenty or more employees in one region within three months, the Collective Redundancy Notification Act (Wet melding collectief ontslag) applies. The employer must notify UWV and the trade unions of the intention. UWV in principle only processes the dismissal applications one month after that notification.
A company with 50 or more employees must have a works council (ondernemingsraad, OR). The works council has a right of advice on a reorganisation (Article 25 of the Works Councils Act, WOR). It also has a right of consent on arrangements on matters such as working hours, appraisal or absenteeism (Article 27 WOR). Agreements on pay generally fall outside this. If the employer does not follow the works council's advice, the works council can appeal to the Enterprise Chamber (Ondernemingskamer) within one month.
What is the position of a statutory director?
A statutory director of a Dutch private limited company (bv) has a dual position: a director under the articles of association and usually also an employee. The general meeting can always dismiss the director under Article 2:244 of the Dutch Civil Code, without permission from UWV or the subdistrict court.
Dismissal as a director in principle also ends the employment contract, unless a prohibition of termination applies. The director must be given the opportunity to state their position beforehand. A defective resolution or a dismissal without a reasonable ground can lead to a transition payment or fair compensation. You can read more on our page about the dismissal of a company director.
What can you do about discrimination or an unsafe workplace?
The employer may not make a distinction on grounds such as sex, age, origin, religion, disability or working hours. This follows from equal treatment legislation and Article 7:646 of the Dutch Civil Code.
If you feel discriminated against, you can ask the Netherlands Institute for Human Rights (College voor de Rechten van de Mens) for an opinion free of charge. That opinion is not binding, but carries considerable weight in proceedings. An employment lawyer helps you gather the evidence. The employer must also ensure safe working conditions in the workplace under the Working Conditions Act (Arbeidsomstandighedenwet). If an employee suffers damage while working, the employer is in principle liable. That applies if the employer has not met its duty of care (Article 7:658 of the Dutch Civil Code).
