How do you terminate employment in the Netherlands?

An employer in the Netherlands cannot simply end a permanent employment contract. It needs one of three routes: permission from the Employee Insurance Agency (UWV), dissolution by the subdistrict court (kantonrechter), or agreement with the employee. The route depends on the ground for dismissal, not on the employer’s preference; the exception is summary dismissal for an urgent cause, which the employer can give itself.

Where the ground is redundancy for business economic reasons, or long-term incapacity for work, the employer must ask the UWV for permission. For any other ground, such as frequent absence, poor performance, culpable conduct, a disturbed working relationship, conscientious objection, or a combination of grounds, the employer must ask the subdistrict court to dissolve the contract. The third route is a settlement agreement (vaststellingsovereenkomst) concluded in writing, which the employee can revoke within fourteen days without giving reasons.

Whichever route is taken, three requirements apply. The ground must be one of those listed in Article 7:669(3) of the Dutch Civil Code (Burgerlijk Wetboek, BW) and must be fully substantiated. There must be no reasonable possibility of redeploying the employee in another suitable position within a reasonable period. And no prohibition on termination may stand in the way, in particular the prohibition during the first two years of illness. The employee is in principle entitled to a transition payment (transitievergoeding) from the first day of employment, calculated on length of service and salary. Where the employer has acted in a seriously culpable way, the court can award fair compensation (billijke vergoeding) on top.

For a settlement agreement the wording matters as much as the amount. An agreement that does not record that the initiative came from the employer, that there is no urgent cause, and that the notice period has been observed can put the employee’s unemployment benefit (WW) at risk.

Below we explain each route, the grounds, the time lines, the costs, the points international employers should watch, and the mistakes made most often.

On which legal grounds can you terminate employment in the Netherlands?

You can only dismiss an employee against their will on one of the grounds in Article 7:669(3) BW, and only if you can substantiate that ground fully. Dutch law has no dismissal “at will”; every unilateral dismissal requires a reasonable ground.

What are the statutory grounds for dismissal?

The law lists the grounds exhaustively. Each ground has its own requirements, and a file that falls short on one ground cannot simply be combined with another, except through the cumulation ground.

• a. Business economic reasons: jobs are lost because of the financial situation, reorganisation, or closure of the business (UWV route).
• b. Long-term incapacity for work: the employee has been ill for at least two years and recovery within 26 weeks is not expected (UWV route).
• c. Frequent absence due to illness, with unacceptable consequences for the business.
• d. Unsuitability for the job (poor performance), where the employer informed the employee in time and gave sufficient opportunity to improve.
• e. Culpable acts or omissions of the employee.
• f. Refusal to work because of a serious conscientious objection.
• g. A disturbed working relationship, so serious that continuation cannot reasonably be expected.
• h. Other circumstances that make continuation unreasonable.
• i. A combination of circumstances from two or more of the grounds c to h (the cumulation ground).

Grounds c to i go to the subdistrict court. For the cumulation ground, the court can award the employee extra compensation of up to half of the transition payment.

Which procedural requirements apply?

Each ground requires a specific route. For business economic reasons and long-term incapacity, you need prior permission from the UWV. For the other grounds, you must ask the subdistrict court to dissolve the contract. More on the legal process can be found on our page about the nuanced legal process of employment termination.

In all cases, the employer must show that redeployment in another suitable position within a reasonable period is not possible or not reasonable (Article 7:669(1) BW). The employer must also check that no prohibition on termination applies. The most important are the prohibitions during illness (Article 7:670(1) BW), during pregnancy and maternity leave, and during membership of a works council. They are designed to prevent dismissal for reasons related to those circumstances.

When is summary dismissal allowed?

Summary dismissal (ontslag op staande voet) is only allowed for an urgent cause, and must be given immediately and with the reason stated (Article 7:677 BW). Examples of urgent causes in Article 7:678 BW are theft, fraud, violence, serious insults and persistent refusal to follow reasonable instructions.

The requirements are strict. The employer must have convincing evidence, act without delay after discovering the facts, and inform the employee of the reason at the same time. The court also takes the employee’s personal circumstances into account, such as age, length of service and the consequences of dismissal. If the dismissal does not stand, the employee can ask the court to annul it within two months, and the employer usually owes back pay.

The Dutch system places great emphasis on protecting employees. Before dismissing, you must have done what can reasonably be expected: for poor performance, an improvement plan (verbetertraject); for illness, reintegration efforts; and in all cases, a real search for another suitable position.

Most dismissals also involve the transition payment, which is calculated on length of service and gross monthly salary, not on age. We explain the calculation below.

Good preparation is therefore essential. Keep records of performance issues, the steps taken to resolve them and all formal communication. These rules can seem complex, but they aim at a fair balance between the interests of employers and employees. Preparation and early legal advice are the key to a dismissal that holds up.

How does the termination process work, step by step?

First build the file, then choose the route that fits the ground, and finally deal with the notice period, the transition payment and the final settlement. Many employers first try to reach a settlement agreement, with the UWV or court route as a fallback. You can also read our article on handling employee dismissal legally.

Step 1: build the file and assess the ground

Before you start any procedure, check whether your file supports the ground you intend to rely on. The court and the UWV test the ground strictly, and a gap in the file is difficult to repair afterwards.

• Performance evidence: appraisals, written warnings and concrete examples of underperformance.
• Communication history: emails, meeting notes and letters showing that problems were raised with the employee.
• Improvement plan: the plan itself, the support offered, the evaluations and the outcome.
• For business economic reasons: financial figures, the reorganisation plan, and the application of the selection rules.
• For illness: the reintegration file, including the plan of action and the occupational physician’s reports.

The file must give a clear and objective picture. Vague or unsupported statements often lead to a rejected application and a claim for compensation.

Step 2: choose the formal route

Dutch law provides two formal routes for a dismissal without the employee’s consent, plus the option of agreement.

Route 1: permission from the UWV. For business economic reasons or long-term incapacity for work, the employer submits a dismissal application to the UWV. The process involves:

• submitting the application with the supporting documents, through the UWV’s online system or by form;
• the employee being given the opportunity to respond, after which the employer can reply once more;
• an assessment by the UWV, which for business economic reasons also involves advice from a dismissal committee;
• a decision, usually within a few weeks to a few months, depending on the case.

If permission is granted, the employer can give notice within four weeks. The notice period may be shortened by the duration of the UWV procedure, but at least one month must remain (Article 7:672(4) BW). If permission is refused, the employer can ask the subdistrict court to dissolve the contract.

Route 2: dissolution by the subdistrict court. For the other grounds, the employer files a petition with the subdistrict court. This route involves:

• a petition that sets out the ground and the facts in detail;
• evidence supporting the ground, such as the documents from step 1;
• a written defence by the employee and an oral hearing where both parties explain their position;
• a decision in which the court dissolves the contract or rejects the request.

If the court dissolves the contract, it sets the end date. It takes into account the notice period that would have applied, minus the duration of the procedure, with at least one month remaining (Article 7:671b BW).

Route 3: agreement. Employer and employee can end the contract by mutual consent in a written settlement agreement. The employee may revoke that agreement within fourteen days without giving reasons (Article 7:670b BW). If the agreement does not mention that right, the period is three weeks.

Step 3: settle the transition payment and the final details

Whatever the route, the employer must deal with a number of financial and practical matters:

• calculate and pay the transition payment, unless an exception applies;
• give or confirm the notice in writing, with the reason for dismissal;
• state the exact end date;
• settle holiday allowance, untaken leave and any bonus;
• address any post-employment obligations, such as a non-competition clause or confidentiality.

The transition payment is one third of the gross monthly salary for each year of service, calculated pro rata for incomplete years (Article 7:673 BW). It applies from the first day of employment and to both permanent and fixed-term contracts, if the employer takes the initiative. In 2026 the maximum is €102,000, or one year’s salary if that is higher. It is not owed if the employee is dismissed because of seriously culpable conduct, and there are special rules for small employers who close for reasons of the employer’s retirement or illness.

Which notice period applies?

The statutory notice period for the employer depends on the length of service: one month for less than five years, two months for five to ten years, three months for ten to fifteen years, and four months for fifteen years or more (Article 7:672(2) BW). A contract or collective labour agreement (CAO) can deviate from this within limits.

Notice must be given in principle at the end of the month, unless otherwise agreed. An employer that gives notice too early, or without the required permission, may owe compensation equal to the salary for the notice period that was not observed.

What about fixed-term contracts and collective redundancy?

A fixed-term contract ends automatically at the agreed end date, without a dismissal ground. For contracts of six months or more, the employer must inform the employee in writing at least one month before the end whether the contract will be continued (Article 7:668 BW). If it fails to do so, it owes a payment of up to one month’s salary.

If you intend to dismiss twenty or more employees within one work area within three months for business economic reasons, the Collective Redundancy (Notification) Act (Wet melding collectief ontslag) applies. You must then notify the UWV and the trade unions in advance and consult them, and the works council must be asked for advice under Article 25 of the Works Councils Act (Wet op de ondernemingsraden).

What should international companies and expats keep in mind?

Dutch dismissal law is more protective than the law in many other countries. International employers that apply the practices of their home country run a real risk of an invalid dismissal and compensation claims. You can read more on our page about international business legal considerations.

Which differences surprise international employers?

The biggest differences are the preventive check by the UWV or the court, the transition payment from day one, and the strict rules on summary dismissal. A choice of foreign law in the contract does not change much in practice.

• Preventive check: in most cases, a dismissal is tested in advance by the UWV or the court, rather than afterwards.
• Transition payment: a statutory payment from the first day of employment, even if the dismissal is justified.
• Notice periods: statutory periods of one to four months for the employer, plus the duration of the procedure.
• Applicable law: if the employee habitually works in the Netherlands, the mandatory rules of Dutch employment law in principle continue to protect them, even if the contract chooses another law (Article 8 of the Rome I Regulation).

Misunderstanding these rules can result in costly legal disputes, reinstatement orders and reputational damage.

How should documentation and communication be organised?

For international employers, a well-documented file and clear communication are even more important. Documents should be:

• clear to the employee, if necessary in English, while keeping in mind that proceedings before the Dutch courts are in principle conducted in Dutch;
• in line with Dutch legal requirements, not only with group policies;
• supported by objective performance data;
• consistent with the employment contract, the staff handbook and any CAO.

Pay special attention to employees who depend on their employment for their residence permit. A highly skilled migrant (kennismigrant) whose employment ends in principle has three months to find a new employer that is a recognised sponsor. That period affects both the employee and the question of what is a reasonable settlement. Language differences and cultural expectations can also cause misunderstandings during the process.

Which financial and administrative implications should you budget for?

International companies must budget for the costs that come with a dismissal:

• the transition payment;
• any additional settlement amount or fair compensation;
• the costs of legal advice and proceedings;
• relocation or repatriation costs for expatriate employees, if agreed.

Also consider the effects on work permits and residence permits, and on other employees in the international workforce. Tax questions, such as the consequences for a special tax scheme for incoming employees, should be checked with a tax adviser; we do not advise on international tax structuring. With good preparation and local legal advice, an international employer can manage a dismissal carefully and lawfully.

Which risks, best practices and common mistakes should you know?

The biggest risks are a rejected application, an annulled dismissal and a claim for fair compensation. Most of them can be avoided by building the file in time and choosing the right route.

What are the main legal risks?

A dismissal that does not meet the legal requirements has financial consequences that often exceed the cost of a careful settlement. The main risks are:

• Rejected application or annulled dismissal: without a well-substantiated ground, the UWV or the court refuses permission, and a notice given without permission or consent can be annulled at the employee’s request (Article 7:681 BW).
• Fair compensation: if the employer has acted in a seriously culpable way, the court can award fair compensation on top of the transition payment (Articles 7:671b and 7:681 BW).
• Back pay: if a summary dismissal is annulled, the employer usually owes salary for the entire period since the dismissal.

A mishandled dismissal can also damage the employer’s reputation, internally and in the labour market.

What are the best practices?

A careful approach centres on documentation, communication and legal checks at an early stage:

• Documentation: keep records of performance issues, conversations and improvement efforts as they happen, not afterwards.
• Clear standards: set measurable performance requirements that can withstand scrutiny by a court.
• Transparent communication: explain in writing what is expected, what is lacking and what the consequences may be.
• Legal review: have the file and the chosen route checked by an employment lawyer before you take the step.

An employer that gives the employee real opportunities to improve reduces legal risk and shows that it treats employees fairly.

Which mistakes are made most often?

• Insufficient documentation: no objective record of the problems or of the improvement plan.
• Inconsistent treatment: applying different standards to comparable employees.
• Delayed communication: postponing difficult conversations until the problem has escalated.
• Informal dismissal: saying “you are fired” without a legal route, or putting pressure on the employee to resign.
• A poorly drafted settlement agreement: missing wording on the employer’s initiative, the absence of an urgent cause and the notice period.

Dutch employment law gives employees strong protection, and trying to take shortcuts usually leads to higher costs. A fair and transparent process, carried out with care, protects both the employer’s interests and its reputation.

In summary

• Dismissal against the employee’s will requires a statutory ground (Article 7:669(3) BW) and the right route: UWV permission for business economic reasons or long-term illness, the subdistrict court for other grounds.
• Redeployment must be impossible or unreasonable, and no prohibition on termination may apply.
• A settlement agreement must be in writing; the employee may revoke it within fourteen days.
• The transition payment is one third of a monthly salary per year of service, from day one; in 2026 the maximum is €102,000 or one year’s salary if higher.
• Summary dismissal is only possible for an urgent cause, communicated immediately; the requirements are strict.

Frequently asked questions

Ready for a careful termination process?

The strict Dutch dismissal rules can feel overwhelming. Many employers and international businesses are unsure about the required file, UWV permission and the transition payment. Small errors or missing evidence can lead to legal risks and unexpected costs.

With Law & More you get personal support from lawyers who know Dutch employment law and understand the international context. We help you put together the right documents, give clear answers at stressful moments and set out a strategy that fits your situation. You can also contact our legal team through our website.

Unsure where you stand? Tell us about your situation. We will let you know your options within one working day.

How Law & More can help you with this is explained on our dismissal lawyer page.