Can I fire my employee? How do I arrange for dismissal in the Netherlands?

And what are the legal implications?

When an employee is underperforming, you might not know what to do. This is even more the case when an employee misbehaves themself. In the Netherlands, there are some situations in which it is possible to dismiss an employee if his/her behavior gives cause for this. If there is no “urgent reason” for dismissal, termination of an employment contract might also be possible with the employee’s consent, or by means of dissolution in court. In this article, we discuss the main conditions for dismissal under Dutch law.  

Dismissal for economic reasons or because of illness

There are several reasons why you might want to terminate an employment relationship. In the Netherlands, the most common reasons are (i) economic reasons (from the company’s point of view) and (ii) illness of the employee. About this first reason, it should be noted that in that case a dismissal permit from the Dutch executive institute for employee’s insurances (hereinafter “UWV”) is always required. This also applies to reason number two: After two years of illness, it is possible to apply for such a permit.  

Because the procedures at the UWV in the event of illness or restructuring are complex and extensive, this article will further focus only on reasons for dismissal that have to do with issues such as a severely disturbed working relationships and misfunctioning of employees. Want to know more about how the UWV works? Or do you need advice on how to contact them? Our labor and employment law specialists are here to help.

The personnel file as starting point

The starting point for a good dismissal procedure is the personnel file. Dismissing an employee is not easy in the Netherlands. Not even when there is (evidently) dysfunction or conflict. The position of employees under Dutch labor and employment law is strong. Most employees are aware of this and will not hesitate to hire a lawyer when they suspect that something is going on. This means, processes of dismissal quickly become legal in the Netherlands. For this reason, it is especially important in all cases to keep written records of all the steps in the process. This means that a file is needed to provide evidence of the employee’s reasons for dismissal. However, such a file does not yet mean a linear path to a successful dismissal. This requires not only a file, but also taking the right path and providing the right grounds for dismissal. What paths and what grounds are available to employers will be explained in more detail below.

Instant dismissal (ontslag op staande voet)

Instant dismissal (ontslag op staande voet) means that an employee is fired with immediate effect. This means that the employee will not be employed one more day longer, nor will they receive pay. The Dutch law calls this: dismissal because of “urgent reasons” (dringende reden). Such an urgent reason consists of conduct by the employee that results in a situation in which the employer “reasonably cannot be required to continue the employment contract” (redelijkerwijze niet gevergd kan worden de arbeidsovereenkomst te laten voortduren).  

Although there are numerous reasons that sensibly can lead to a situation in which the employment contract can no longer reasonably be required to continue, the instrument of instant dismissal should be applied with great caution. This is because for valid “urgent reasons,” the Dutch law and case law assume extraordinary situations. Therefore, in a situation in which your organization considers instant dismissal, it is always wise to contact a specialist first.

Instant dismissal: weighing up interests of all parties involved

Situations in which instant dismissal could be possible in the Netherlands include the following situations: 

• Drunkenness while at work; 
• Misconduct during a staff party; 
• Sexual harassment; 
• Theft of company property; 
• Crimes committed at work (e.g., assault);  
• Leaking of confidential information; and 
• Persistent refusal to work. 

Please note that whether an instant dismissal is legitimate depends on the individual case’s circumstances. In that context, questions that should be considered in any case are: 

• How serious is the accusation? 
• Has the employee been employed for a long time, has there been previous culpable behavior?  
• Does the employee set an example? 
• Has the employee already been warned in a comparable situation? 
• What are the employee’s personal circumstances? 
• How serious are the consequences of instant dismissal for the employee? 

Instant dismissal in the Netherlands: implications and potential problems

An additional consideration in the case of a (proposed) instant dismissal is that the employee may lose the right to unemployment benefits, should they be dismissed instantly. Therefore, although it sometimes seems obvious to dismiss someone instantly, it is important to handle these cases with extreme care. 

Furthermore, it is important that instant dismissal should be announced “without delay” (onverwijld) and should be communicated to the employee “without delay” (onverwijld). A brief investigation of the facts is allowed, which may include asking the employee for their views on the matter. However, once the situation is clear, dismissal must be made without further delay. If you do not act quickly enough, the dismissal might not be valid.

Dissolution at the subdistrict court (kantonrechter)

Often, the reasons for dismissal are not so extreme. Usually, they relate to matters of malfunctioning or a breach of trust. Under Dutch law, these are not direct grounds for instant dismissal (see above). In situations where this occurs, dissolution proceedings in court are required before an employee can be dismissed.  

There are two main requirements for successful dissolution proceedings:  

• A reasonable ground for dismissal; and 
• The inability to reinstate the employee within a reasonable period. 

When you are asking for dissolution at a Dutch subdistrict court a “reasonable ground” must be one of the grounds listed below. 

1. Frequent absenteeism due to illness 

When frequent absenteeism of an employee is reason for dismissal, the employer must be able to prove that absenteeism has unacceptable consequences for business operations. It must also be made plausible that recovery or adjusted performance of the stipulated work within 26 weeks is not plausible. 

Furthermore, it must be substantiated that there are no possibilities to redeploy the employee within a reasonable period to a suitable position in which:  

• The employee is expected to have less frequent absenteeism; or 

• In which the employee’s frequent absenteeism has less drastic consequences for business operations.  

Finally, the personnel file must include an expert opinion from the UWV regarding the absenteeism of the employee in question. 

2. Malfunctioning/dysfunction

In a request for dismissal because of malfunctioning/dysfunction (disfunctioneren), it must be substantiated that the employee is unfit to perform the agreed work.  

The main conditions here are as follows:  

• The employer must make it plausible that the employee is performing inadequately. For this, the employee must be aware of the job requirements; 
• The employer must make it plausible that the employee is performing inadequately. For this, the employee must be aware of the job requirements;  
• The employer must have informed the employee in a timely manner about the inadequate performance; 
• Improvement process (verbetertraject): the employer must have subsequently given the employee a “serious and realistic” opportunity to improve performance. Here, take at least a duration of three to six months into account; 
• It must be possible to argue that re-employment, with the help of training, is not possible or not reasonable.  

3. Culpable acts or omissions (verwijtbaar handelen of nalaten)

This could include situations where you would also consider instant dismissal (see above).

4. Serious qualms of conscience (ernstige gewetensbezwaren) 

An employee may be unable or unwilling to perform their work for reaons of conscientious objection. Under circumstances, this may provide grounds for the employer to request dissolution from the district court. Looking for more information on this topic? Please contact us.

5. Disrupted employment relationship (verstoorde arbeidsrelatie)

It is also possible that the employer and the employee can no longer work well together due to a breach of trust, a difference of opinion, an incident or ingrained work patterns. Dissolution may then be an option if “the employer can no longer reasonably be required to continue the employment contract.” Please note that in such situations an employer is expected to try to restore the disrupted relationship. Also, in this case, redeployment must have been investigated.

6. Other circumstances that are such that the employer cannot reasonably be required to continue the employment contract

The residual category for situations that do not fall into any of the categories mentioned above. This could be, for example: the employee no longer holds a certificate of good conduct (verklaring omtrent het gedrag), even though this is required for the job (this frequently occurs in professions in the field of childcare for example).

7. A combination of these circumstances that makes that the employer can no longer reasonably be required to continue the employment contract any longer

The above-mentioned ground for dismissal is known as the “cumulation ground” (cumulatiegrond) or the “combination ground” (combinatiegrond). These grounds for dismissal involve a combination of circumstances. This involves situations where each of the individual circumstances is not enough for dismissal.  

For example: An employee is not performing well, but a complete improvement process has not yet been followed or completed. Meanwhile there is a disturbed working relationship. The parties refuse mediation and have made insufficient efforts to restore the disturbed relationship. In such a case, the “combination ground” could offer a solution. However, here too, the employer must be able to substantiate that it “cannot reasonably be required to continue the employment contract”. In such complex situations, it is always advisable to seek specialized legal advice.

8. Breach of contract

Breach of contract can also be grounds for dismissal. The breach of contract must be so serious that it justifies dissolution of the employment contract. In practice, these are situations involving circumstances that can lead to instant dismissal. 

Dissolution by mutual agreement

Due to the numerous regulations regarding forced dismissal, you would almost forget, but in the Netherlands, most dismissals take place by means of mutual agreement (met wederzijds goedvinden). In such cases, employer and employee enter a “termination agreement” (vaststellingsovereenkomst or “VSO”). With a VSO, a costly, time-consuming procedure at the subdistrict court or the UWV can be avoided. There is also always a chance that dissolution proceedings at the institutions mentioned are not successful. A VSO thus also prevents uncertainty. However, certainty comes at a price: When concluding a VSO, almost without exception, a “severance payment” is paid to the employee involved. The amount of this severance payment depends on the negotiating position of the parties.  

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Negotiating a termination agreement, VSO, in the Netherlands

Is it very uncertain whether you have sufficient grounds for dismissal to ensure approval for dissolution from the subdistrict court or the UWV? Then the employee’s negotiating position is strong. In such a situation, the employee knows, or gambles, that he is unlikely to be fired, and therefore can make demands. In such cases, an employee in the Netherlands demands an amount of several months of salary, sometimes as much as a year.  

However, there are also situations in which an employer can be confident during termination negotiations. For example, because there seems to be good grounds for a dissolution procedure. In such a case, the first offer for the number of months of salary payment (by way of severance pay) can be based, for example, on the employment contract’s notice period. If this is one month, then one month’s salary is the basis for calculating severance pay. Furthermore, it is wise to consider the time and costs of a potential dissolution procedure when starting negotiations on a VSO. Such a procedure quickly takes two to three months and will often require extensive legal advice or even the assistance of a lawyer. The amount you choose to offer as severance pay should therefore be chosen so that it is high enough to persuade the employee to agree, while still being lower than the costs of the dissolution procedure. 

Are you looking for experienced lawyers who know their way around a dismissal procedure? Our legal specialists are happy to help. Contact us.