Can an employer end a permanent contract in the Netherlands?

No. A Dutch employer cannot terminate a permanent contract (contract for an indefinite period) at will. Under article 7:669 of the Dutch Civil Code (Burgerlijk Wetboek, BW) the employer needs a reasonable ground from a closed statutory list. It must also show that redeployment in another suitable role within a reasonable period is not possible. And it needs prior permission from the UWV or a dissolution order from the subdistrict court (kantonrechter), unless you agree to the termination in writing. Only summary dismissal for an urgent cause bypasses that permission. Every other route is a procedure in which the burden of proof lies with the employer.

What is a permanent contract and how can it end?

A permanent employment contract is a contract without an agreed end date. It runs until one of the parties ends it, and Dutch law prescribes exactly how that may be done. In practice there are four routes, plus summary dismissal.

First, you as the employee can give notice, observing the statutory notice period. That is the simplest route, but think about it carefully. Resigning normally costs you both the right to unemployment benefit (WW) and the right to the transition payment. If you have already signed for a new job, that is rarely a problem. If you have not, it usually is.

Second, the employer and the employee can agree to end the contract by mutual consent, recorded in a settlement agreement (vaststellingsovereenkomst). Third, the employer can give notice after obtaining permission from the UWV. That is the route for redundancy and for long-term incapacity for work. Fourth, the employer can ask the subdistrict court to dissolve the contract. That is the route for all the personal grounds. Alongside these sits summary dismissal (ontslag op staande voet) for an urgent cause, which ends the contract immediately and without permission.

Which reasonable grounds for dismissal does Dutch law accept?

Only the grounds listed in article 7:669 paragraph 3 BW. The list is exhaustive, so an employer cannot invent a ground of its own.

In outline the grounds are:

• redundancy for business economic reasons;
• long-term incapacity for work lasting more than two years;
• frequent absence with unacceptable consequences for the business;
• unsuitability for the job, other than through illness;
• culpable acts or omissions by the employee;
• refusal to perform the work because of a serious conscientious objection;
• a seriously and permanently disrupted working relationship;
• other circumstances such that continuation cannot reasonably be required of the employer;
• the cumulation ground, introduced in 2020, under which a combination of two or more incomplete personal grounds can together justify dissolution.

Two of these grounds go to the UWV: redundancy and long-term incapacity. All the others go to the subdistrict court. The cumulation ground is a court route as well. Where the court dissolves on that basis, it can award the employee an additional payment on top of the transition payment.

Why does redeployment matter so much?

Because without a proper redeployment assessment, even a proven ground is not enough. Whichever ground is invoked, article 7:669 paragraph 1 BW adds a second hurdle that employers tend to underestimate.

Dismissal is only permitted if redeployment of the employee in another suitable position within a reasonable period, with retraining where that can be expected, is not possible or does not make sense given the reason for dismissal. Where the employer belongs to a group of companies, the redeployment search can extend across the group. A file that proves the ground but says nothing about redeployment is an incomplete file.

For unsuitability in particular, the law requires that the employee was told about the shortcoming in good time and given a genuine opportunity to improve, with support where necessary. A dismissal file put together after the decision has been taken tends to show exactly that, and courts read such files accordingly. Our article on refusal of work deals with a ground that is often misapplied.

How does dismissal by mutual consent work?

The employer and you sign a settlement agreement in which you both agree to end the contract. Many Dutch dismissals end this way rather than in a decision by the UWV or the court, as a settlement agreement gives both sides control over the outcome.

That suits both parties. The employer avoids a procedure with an uncertain outcome and a public file. You gain influence over every term rather than over none. Everything is negotiable: the end date, the payment, the notice period, the reference, the final holiday balance, the treatment of a non-competition clause, an outplacement budget and a contribution to legal costs.

What makes a settlement agreement work?

Three points. First, it must be drafted so that unemployment benefit is preserved. In practice that means the initiative is recorded as coming from the employer, no urgent cause or culpability is attributed to you, and the end date respects the applicable notice period.

Second, you have a statutory cooling-off period under article 7:670b BW. You can dissolve the agreement in writing, without giving reasons, within fourteen days. That period becomes twenty-one days if the employer did not point out this right in writing within two working days.

Third, the payment is a matter of negotiation. The statutory transition payment is the usual benchmark, but in a negotiated exit the amount is whatever the parties agree. The strength of the employer’s file largely determines where that ends up.

Do not sign on the day you receive the agreement. Have an employment lawyer check it first. You can ask the employer to contribute to the cost of that review, as a properly checked agreement is in its interest as well.

How does the UWV route work for redundancy and long-term incapacity?

The employer applies to the UWV for permission to give notice. The procedure is in writing, you are given the opportunity to respond, and the UWV assesses whether the ground is made out and whether redeployment was properly examined.

In a redundancy case the employer must also show that the right employees were selected. The statutory rule is the reflection principle (afspiegelingsbeginsel). Employees in interchangeable positions are divided into age groups, and within each age group the last in, first out principle applies. This keeps the age structure of the workforce intact. Getting the interchangeable positions wrong is a well-known reason for a redundancy application to fail.

What happens after the UWV decides?

If permission is granted, the employer must give notice within four weeks, observing the applicable notice period. The time the UWV procedure took may be deducted from that period, but at least one month of notice must always remain.

If permission is refused, the employer can still ask the subdistrict court to dissolve the contract on the same ground, and the court will make its own assessment. Where a collective labour agreement (cao) provides for a sector dismissal committee, that committee takes the place of the UWV. When many employees are affected at once, the rules on individual arrangements in collective dismissals add a further layer.

How does the subdistrict court route work?

For all the personal grounds, the employer files a petition with the subdistrict court asking for the contract to be dissolved. You file a defence. In the same proceedings you can ask for a fair compensation (billijke vergoeding) and put forward a counter-request. There is a hearing, and the court gives a reasoned decision.

Both parties can appeal. Appeal is a real remedy rather than a formality, and courts of appeal do overturn dissolutions.

What must the court find before it dissolves the contract?

The court must find the ground fully made out. A ground that is only partly proved is not enough on its own, which is why the cumulation ground was added.

Where the court dissolves the contract, it sets an end date that takes the notice period into account. It awards a fair compensation on top of the transition payment where the dismissal results from seriously culpable conduct by the employer. An example is an employer that caused the very disruption it now relies on.

The court can also refuse to dissolve. The employment then continues. That is why disrupted relationship cases are often settled: neither side really wants the employee back at a desk after the hearing, and both know it.

When is the employer not allowed to give notice?

Article 7:670 BW prohibits termination in a number of situations, regardless of the ground. The best known is illness: an employer may not give notice during the first two years of incapacity for work. Others include pregnancy and maternity leave, membership of the works council, and trade union membership in connection with union activities. A termination in breach of a prohibition can be set aside by the court.

Are the prohibitions absolute?

No. They do not apply where the employee consents in writing, where the contract is dissolved on a ground unconnected with the protected circumstance, or where the business or a distinct part of it is being closed down. Nor do they protect an employee who fell ill after the dismissal request had already been received.

The interaction between illness and dismissal is a frequent source of disputes. Our article on illness, burnout and work pressure sets out what both sides must do during the first two years.

Which notice periods apply?

Article 7:672 BW sets the periods. Notice is given against the end of the month, unless a written agreement or established practice designates another day.

The employer’s notice period depends on length of service:

The employee’s notice period is one month.

Can the notice periods be changed?

Yes, by written agreement and within limits. The employee’s period can be extended to a maximum of six months, but only if the employer’s period is then at least twice as long. A contract that extends the employee’s notice period without doubling the employer’s period is defective, and the defect works against the employer. A collective labour agreement can shorten the employer’s period, and many do.

When is summary dismissal allowed?

Only for an urgent cause, and only if three strict requirements are met. Summary dismissal ends the contract immediately, without notice and without permission from the UWV or the court.

Articles 7:677 and 7:678 BW set the bar. There must be an urgent cause, such as theft, fraud, serious violence or gross dereliction of duty. The dismissal must be given without delay once the cause is known. And the reason must be communicated to the employee at once, at the same time as the dismissal. All three requirements must be met; failing any one of them is fatal.

Courts apply this strictly. They weigh the employee’s personal circumstances, including length of service and the consequences of the dismissal, against the seriousness of the conduct. An employee who is summarily dismissed loses pay immediately and normally has no right to unemployment benefit. That is why the two-month deadline described below matters so much. An employer that is unsure should suspend the employee on full pay, investigate properly and then decide, rather than dismiss first.

Are you entitled to a transition payment?

Yes, in most cases where the employer ends the contract. Under article 7:673 BW an employee whose contract is terminated at the employer’s initiative, or not continued at the employer’s initiative, is entitled to a transition payment (transitievergoeding).

The right exists from the first day of employment, so also during the probationary period. The payment is one third of a monthly salary for each year of service, calculated pro rata for incomplete years. The salary includes fixed allowances such as holiday pay. There is a statutory maximum that is adjusted each year. For 2026 it is €102,000 gross, or one gross annual salary if that is higher, according to the Dutch government (Rijksoverheid). Check the current year’s figure before relying on it.

When is no transition payment due?

There are exceptions in both directions. No payment is due where the court finds that the employee acted in a seriously culpable manner, although the court can still award it in exceptional cases. No payment is due where the employee is under eighteen and worked limited hours, where the employee reaches pension age, or where the employer is bankrupt.

That last exception catches people out. In a bankruptcy there is no claim for the transition payment, and the UWV wage guarantee scheme does not cover it. Our article on the rights of employees when the employer goes bankrupt explains this further.

The fair compensation is separate from the transition payment. It is awarded only where the employer acted in a seriously culpable way. There is no formula: the court assesses it on the circumstances, including the loss of income you can be expected to suffer.

Which deadlines can you not afford to miss?

The deadlines in article 7:686a paragraph 4 BW are forfeiture periods. They cannot be extended, and the court applies them of its own motion.

If you want the court to set aside a termination given without the required permission, including a summary dismissal, or you want compensation instead, you must file the petition within two months of the day on which the contract ended. A claim for the transition payment must be filed within three months of that day. If you miss the two-month deadline, the dismissal stands, however unlawful it was. Take advice in the first week, not in the second month.

The employer has deadlines of its own: notice within four weeks of the UWV permission and, for a summary dismissal, action without delay once the facts are known.

What should you do if your permanent contract is being terminated?

Ask for the ground in writing and for the file that supports it. The employer must be able to state which statutory ground it relies on. Do not sign a settlement agreement on the spot, and remember that the cooling-off period gives you a further fourteen days even after signing.

Check that the notice period is reflected in the proposed end date. An end date that is too early costs you weeks of income and can affect the start of your unemployment benefit. If you have been summarily dismissed, object in writing immediately, state that you remain available for work, and get advice the same week.

What should employers do?

Start from the file rather than from the decision. Identify the ground, document the redeployment assessment and, where the ground is unsuitability, be honest about whether the employee was genuinely given the chance to improve. That is the point where dismissal cases most often go wrong for employers.

For further reading, see our Dutch employment law guides, our overview of employee rights in the Netherlands and of employers’ rights and obligations, and our pages on Dutch employment law and on employment contracts in the Netherlands.

In summary

• A permanent contract can only be ended by the employer on a statutory ground under article 7:669 BW, after a redeployment assessment, and with UWV permission or a court decision.
• Redundancy and long-term incapacity go to the UWV; all personal grounds go to the subdistrict court.
• A settlement agreement is common; you have fourteen days (sometimes twenty-one) to dissolve it without reasons.
• Notice prohibitions, such as during the first two years of illness, protect you regardless of the ground.
• To challenge a dismissal you have two months after the contract ends; for the transition payment, three months.

Frequently asked questions

Can my employer dismiss me without giving a reason?

No. Apart from the probationary period, the employer needs one of the statutory grounds in article 7:669 BW and must be able to support it with a file.

Do I lose my unemployment benefit if I sign a settlement agreement?

Not if the agreement is drafted correctly. The initiative must lie with the employer, no culpability may be attributed to you, and the notice period must be respected.

Can I be dismissed while I am ill?

Not by notice during the first two years of illness, unless an exception applies, for example if you fell ill after the dismissal request was received or the business is closing down.

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.