How to go about dismissing an employee in the Netherlands

Even with a largely declining unemployment rate (2.9% in Feb. 2020, down from the Feb. 2014 high of 7.9%), the current economic times will likely contribute to a resurgence of dismissals (details available here). ABN AMRO economists indicated a more than 10% drop in value added for leisure and industry amidst the COVID-19 pandemic, with Rabobank predicting a fully recovery in Horeca (hotels, restaurants, bars) and construction to be no earlier than 2021.

Statistics Netherlands reported a near 10% increase in the number of people who lost their jobs in March, with unemployment claims rising to 42%, triggering 37,800 payouts by the Dutch Federal Employment Agency in March, up by 11,200 from the previous month (find out more here).

While pandemic-driven dismissals prevail, let’s take a broader look at how to handle a dismissal of an employee in the Netherlands, whatever the case may be:

Ascertain the reason behind the dismissal

Before dismissing an employee, establish a clear reason why you are doing so. While this is primarily in two categories (employee triggered or environment triggered), zero in on a particular cause and gather all the necessary facts to back it up.

Dutch law provides for termination due to 2-year long or chronic sickness, underperformance, serious misconduct, under performance and economic circumstances. All these provisions leave room for rebuttal and therefore an employer must be able to show a substantial negative impact arising from the cause stated, along with proof that the termination will realize an improvement.

Select a route for termination

Depending on the compliance hurdles relating to the reason behind the dismissal, and also managing the impact of a dismissal on the organization’s atmosphere along with your relationship with the employee, it is crucial to select the right approach.

In many straightforward terminations, the employer will seek consensus with the employee through negotiations. For situations in which there has been adequate emotional intelligence and mutual respect, this approach is most suitable.

However, some terminations are preceded by a deterioration in personal relationships, are motivated by reasons that are debatable or have a social-political aspect and require extra documentation/adherence to other relevant procedures, hence demand a different approach.

An employer may have to ask for a dismissal permit from the Employee Insurance Agency (UWV), a tool that comes with unique authority and therefore is usually limited to cases that require further scrutiny such as long-term sickness and organizational changes.

In other cases such as underperformance and violation of unique conduct stipulations in the employment contract, an employer should be ready to seek a dissolution of the agreement through the Courts.

Create a communication roadmap

While some cases such as embezzlement and abuse call for an urgent dismissal approach with immediate notice, in many other cases, it is important to look at a dismissal as a journey and not just a yes/no decision, for purposes that may include but aren’t limited to legal technicalities.

In many cases, an employer has an inkling that an employee will be let go some time in the future and should ask themselves what they need to say and when they need to say it. An employee who has served for 5 years will be owed a 1-month notice (opzegtermijn), 2 months if they’ve served for 5-10 years, and 3 months for 10-15 years of service.

Failure to disclose this information in a timely manner could expose an employer to a legal contest and also breed an atmosphere of toxic anxiety amongst employees as they worry that the end is always near for them and they can’t properly prepare contingency plans, which negatively affects productivity and devotion to the organization.

On the other hand, an employer in possession of performance appraisals or other information that points to a need for dismissal/downsizing should be cautious so as not to communicate in a manner that exacerbates underperformance prior to any final decision.

Furthermore, with restructuring-caused redundancies & temporary contracts, employers should take into consideration the requirements on either side and communicate clearly where need be to ensure termination is smooth.

If for some reason (e.g. a shrinking budget), employees are to be let go, it is only fair to let them know what benchmarks or stages of completion are still necessary and the resultant work product required, so they can adjust their demands too and eventually walk away in good faith.

This also extends to employees undertaking extra responsibilities outside the organization (work or family), or those experiencing major changes (medical procedures, deaths in the family etc).

All-in-all, an employer should consider the entire context in which a dismissal is being activated and do everything in their power to limit unwarranted blowback on either side while acting with empathy, honest and respect.

Every situation is unique and if there is a need to exchange ideas about an existing file or a planned reorganization, please do not hesitate to contact us. Our specialists are happy to think along with you.