Redundancy in the Netherlands is not about the employee but about the job. An employer who wants to end a contract for business economic reasons — bedrijfseconomisch ontslag — has to show that the position itself has disappeared, and then follow a procedure that leaves little room for improvisation. This article explains that procedure, how employees are selected, what you are entitled to and what to check before you sign anything.
When is a dismissal a redundancy?
Dutch law lists the grounds for dismissal exhaustively in article 7:669 of the Dutch Civil Code. Redundancy is the first of them: the job has to lapse for business economic reasons. A fall in turnover, a reorganisation, the closure of a location, automation, eliminating specific tasks or moving activities abroad can all qualify. What matters is the position, not the person filling it.
That distinction has practical consequences. If the employer’s real complaint is inadequate performance, redundancy is the wrong route: that ground requires a properly built dismissal file for underperformance, not a set of financial figures. Employers who blur the two usually lose on exactly that point.
The employer needs permission from UWV first
For business economic reasons an employer cannot simply give notice. It must first obtain consent from UWV, the Dutch employee insurance agency, under article 7:671a of the Dutch Civil Code. In those UWV proceedings the employer has to show three things: that the position has genuinely lapsed, that the right employee was selected, and that reassignment was considered. The subdistrict court is not involved — that route is reserved for the other grounds for dismissal, such as a disrupted employment relationship.
There is one way around the procedure, and it is the most common outcome in practice: ending the contract by mutual consent in a settlement agreement. No permission is then needed. Both routes have their own advantages, which we compare in our article on the settlement agreement versus UWV dismissal.
Who is selected: the reflection principle
An employer does not get to choose whom to let go. The selection follows the reflection principle, the afspiegelingsbeginsel, set out in the Dutch Dismissal Regulation. Within each category of interchangeable jobs at a business location, employees are divided into five age groups: 15 to 25, 25 to 35, 35 to 45, 45 to 55, and 55 and over. The redundancies are spread across those age groups in proportion to their size, and within each group the employee with the shortest service goes first.
The effect is that the age distribution of the department stays roughly the same after the reorganisation. An employer who instead keeps the employees it considers strongest has applied the wrong test, and that is one of the most frequent reasons a dismissal request is refused.
Reassignment comes before dismissal
Article 7:669 also requires the employer to explore reassignment opportunities. Within a reasonable term, and taking any training into account, it must check whether another suitable job is available — not only in your own department, but across the company and any group companies, including those abroad. Suitable vacancies that were open during that period and were not offered to you are a serious weakness in the employer’s case.
Notice period
If UWV grants consent, the employer terminates the contract with the applicable notice period under article 7:672 of the Dutch Civil Code. The statutory period is one month for service under five years, two months under ten years, three months under fifteen years and four months from fifteen years, unless the employment contract or a collective labour agreement provides otherwise. The time the UWV procedure took may be deducted, but at least one month of notice always remains.
What you are entitled to
The statutory minimum is the transition payment, the transitievergoeding of article 7:673. It accrues from the first day of employment at one third of a gross monthly salary per year of service, calculated pro rata for part years, up to the statutory maximum or a full year’s salary if that is higher. Our article on transition compensation works through the calculation.
A redundancy package in a settlement agreement is a different matter, because there everything is negotiable: the termination date, a payment on top of the statutory minimum, whether the notice period is observed or bought off, a contribution towards legal costs, outplacement, a reference, and whether the non-compete clause is released. That last point is worth more than most employees realise — see our article on non-compete clauses under Dutch employment law.
When it is a collective redundancy
If an employer intends to make twenty or more employees redundant within one UWV region over a period of three months, the Collective Redundancy (Notification) Act applies. The employer must notify UWV and consult the trade unions, and a waiting period of one month follows before contracts may be ended. The works council has its own right to advise on the reorganisation. What that means for the individual employee is set out in our article on individual arrangements in Dutch collective dismissals.
The settlement agreement and your unemployment benefit
If you sign a termination agreement, you keep a reflection period of two weeks in which you can withdraw your consent without giving reasons, under article 7:670b. That becomes three weeks if the agreement does not mention the right. The wording of the agreement also decides whether UWV will grant unemployment benefits: it has to be clear that the initiative came from the employer, that the reason is business economic, and that there is no urgent cause. A single careless sentence can cost you the benefit, which is why the text deserves a legal reading before signing rather than after.
If your right to stay depends on your job
For internationals the stakes are higher, because a residence permit is often tied to a specific employer acting as recognised sponsor. Losing the job affects the permit, and there is a limited period in which to find new employment with another recognised sponsor. The conditions and periods have changed more than once in recent years, so check the current rules for your permit type — our guide to the highly skilled migrant scheme covers the sponsor requirements, and our immigration law practice can assess your position alongside the employment side of the case.
What to check before you sign
- Has the employer substantiated the business economic reason with figures, or only asserted it?
- Was the reflection principle applied to the right category of interchangeable jobs?
- Were any suitable vacancies open in the company or the group during your notice period?
- Is the transition payment calculated from your actual start date and full gross salary?
- Does the settlement agreement describe the reason in terms that protect your unemployment benefit?
- Is the notice period observed, and has the UWV processing time been deducted correctly?
- Are the non-compete and relationship clauses released?
Frequently asked questions
How much redundancy pay will I get in the Netherlands?
The statutory floor is the transition payment: one third of a gross monthly salary for every year of service, from your first working day, pro rata for part years. Anything above that is a matter of negotiation and depends on the strength of the employer’s case, not on a fixed formula.
Does every employer have to pay the transition payment?
In a redundancy the employer owes it whenever it takes the initiative to end the contract, regardless of the length of service. It is not owed if you resign yourself without the employer being seriously at fault, or if the contract ends because of seriously culpable conduct on your side.
Can I refuse to be made redundant?
You cannot block a reorganisation, but you can defend yourself in the UWV proceedings and you are never obliged to sign a settlement agreement. Refusing to sign shifts the case to UWV, where the employer has to prove its grounds — which is often precisely why a better package appears on the table.
What if my employer skips the UWV procedure?
A termination without the required consent is voidable. You can ask the subdistrict court to restore the employment contract or to award fair compensation instead, but short limitation periods apply, so act quickly. Our overview of your rights on dismissal sets out the options.
Speak to a Dutch employment lawyer
Most redundancy cases are decided in the first two weeks, before anything is signed. Our employment lawyers in Eindhoven and Amsterdam review the proposal, test the selection and the reassignment obligation, and negotiate the package where there is room. Call +31 40 369 06 80 or book an intake to have your situation assessed.
