Dismissal on financial grounds

When you have a permanent contract, you cannot be fired without cause. Your employer will need to have a valid reason to do so. A decline in profit or revenue can be a valid reason. However, when it is a matter of such financial reasons, the employer will need to meet a number of conditions to continue the process of dismissal. When requesting a dismissal the employer will need to demonstrate that the reason is in fact of a company’s financial nature, that reallocating is impossible and that the dismissal procedure is not done at random but happens according to a correct reflection of the composition of the workforce. Then, the Dutch governmental organisation UWV will need to approve the dismissal request.

Dismissal on personal grounds

Besides financial grounds, personal reasons can also be the foundation for dismissal. If an employer thinks an employee is not functioning properly, is negligent, acts questionably, is frequently sick or finds that something that has distorted the employment relationship, then he or she will first need to find a way to solve this with the employee. When the employer fails to come to an agreement and the problems continue or get worse, he or she can proceed with the dismissal procedure. Contrary to the dismissal on financial grounds, the application for this will go through the district judge. This judge will determine if the reasons are serious enough to justify a dismissal.

With the start of the Law Balanced Labour Market (WAB) the cumulative ground has been approved as a legitimate reason for dismissal as of January 1, 2020. With this law, it has been made possible to dismiss an employee in the case of a combination of the above mentioned personal factors. A combination of less serious factors can, combined, be bad enough to legitimize a dismissal. Dismissal based on cumulative grounds also go through the district judge.

What are your rights when dismissed?

Employees are legally protected when it comes to dismissal. It is important to know your rights when facing dismissal.

1. Notice period
   First of all the employer must respect the notice period. This way you can prepare for unemployment (and therefore be without income) and you can make the necessary steps to make sure you have an income in the future. The longer an employee is employed, the longer their termination term. You can see what termination term applies in what case in this table (in Dutch). The  change termination term can be altered, if this is included in your Collective Labour Agreement (CAO)   or when there is reason to dismiss someone immediately. The latter is only possible when serious misconduct has occurred. You can read more about what are valid reasons for immediate dismissal. 

2. Notify
   When you have a temporary contract, your employer may finish the working relationship when your contract ends. In this case there is no legal dismissal procedure (because you are not dismissed, but your working agreement has ended), but your employer is obliged to notify you in time. Read more about your rights concerning notifying when your contract ends here.

3. Dismissal restriction
   You cannot be dismissed on the grounds of your gender or when you are pregnant. And there are more reasons why a dismissal cannot take place or will need to be reversed. Are you wondering whether the dismissal restriction could apply to your situation? You can contact the UWV and check if that is indeed the case. When you have been dismissed despite the restriction, make sure to notify your employer about this within two months after the illegitimate dismissal in writing. Your employer is then obligated to continue to pay your salary.

4. Severance pay
   When you are fired, you are usually entitled to a so-called transition compensation. Unless, for example, when you have been dismissed immediately for serious misconduct, you quit your employment yourself or the company you work for has gone bankrupt, you can assume you are entitled to severance pay.  With the start of the Law Balanced Labour Market (WAB) on January 1, 2020, the transition compensation applies from the first day of employment. On the government website you can find the tools (in Dutch only) to calculate the amount of the dismissal compensation.

5. Challenge dismissal
   Do you disagree about being dismissed? You can challenge your dismissal with the district judge. You can submit a petition to reinstate the employment agreement, cancel the dismissal or receive a financial compensation for the dismissal from your employer. When you start this legal procedure, it is advisable to receive professional legal advice.

What do you need to do when you are dismissed?

When you are dismissed, roughly three things should happen: you conclude things with your employer, you request an unemployment benefit and you start your search for a new job.

1. Conclude your employment with your employer:

Make sure your employer gives you a correct final account, in which the remaining holiday pay and a possible transition compensation is included. It can also be helpful to receive a certificate in which your employer explains what your activities are and what qualities your employer noticed. This can help you in finding new employment. Lastly, do not forget to make agreements about returning company assets that you still possess. As long as valuable assets (such as a laptop or company phone) are still in your possession, your former employer is entitled to withhold the expenses on any possible remaining payments.

2. Apply for benefits

When you are fired, you are usually entitled to an unemployment benefit. You can apply for this at the UWV. But there are several conditions you need to meet if you want to apply for this. For example, you will need to have worked at least 26 of the past 36 weeks and need to be immediately available for paid employment. On the website of the UWV you can find a plan (in Dutch only) in which you can see exactly what you will need to do for your application for unemployment benefits.
Pay attention: when you transition from employment to an unemployment benefit for the first two months your benefit is 75% of your last salary and after that 70%. Do not forget to communicate this change by logging in on “mijn toeslagen” at the Belastingdienst. Because the amount of your allowances can increase when your income decreases.

3. Find new employment
   Although dismissal usually comes with worries, the ending of an employment is usually also the beginning of a new period. This is a good time to think about what you want to do and what is possible. Although the UWV encourages you to find a job as soon as possible, you can also consider something else entirely, like starting your own business or going back to school. The trick is, no matter what you decide to get back on your feet and start over with confidence.
   Finding a new job starts for many at werk.nl. You are obligated to make use of your account on this website if you want to keep your unemployment benefit. However, you can also look into other ways (such as job opening sites, employment agencies, social media or your own network) to find a new and exciting job.

Further information

Want to know more?

The page on dismissal on the English website of the Dutch government is a good starting point to read more about your rights and obligations with dismissal. Also on the government website you can find more information about finding a (new) job. Werk.nl provides with English written information on working in The Netherlands in general. Or learn more about your rights concerning the labour contract and the Collective Labour Agreement (CAO). Employers can read more about their rights and obligation concerning dismissal in this article.