Facing redundancy in the Netherlands: 4 steps for expats and employers

Losing your job due to redundancy is a bitter experience, especially when you are an expat and may also lose your work permit or residency rights. Which points should you take into account when facing redundancy?

Facing redundancy is never easy. It hits even harder when you’ve poured your heart into your work and strived to be a good employee. But when economic challenges hit a company, job losses can sometimes be inevitable. It’s usually a tough and stressful experience. Knowing your rights and what to do, can help you protect your interests and move on to the next step in your career.

Understanding the reasons for dismissal

According to Dutch law, an employer can end an employment contract if there are valid reasons for dismissal. This can include financial or economic factors, such as restructuring within the company, or reasons relating to an employee’s performance or suitability for their role. Dismissal is subject to a strict procedure. Depending on the reason for dismissal, the Dutch Employee Insurance Agency (UWV) or a judge at the subdistrict court is involved.

For instance, if the company’s financial situation leads to job cuts, the employer must obtain consent from the Dutch Employee Insurance Agency. In cases of personal issues, like inadequate performance, a subdistrict court judge may need to review the situation to approve the termination.

Often companies and employees prefer to reach a mutual agreement to end the contract. A settlement agreement allows both parties to negotiate terms that work best for them, including a redundancy package and other benefits.

Step-by-step guide to the redundancy process

Before you can be legally dismissed due to redundancy, your employer must follow a few steps.

1.    Determine if the position is redundant

The employer must prove that your position is no longer essential due to structural changes in the company. This could mean eliminating specific tasks, merging roles or reorganizing departments. The employer must be able to explain and justify why eliminating your position is necessary for the business.

2.    Select which employee(s) are eligible for dismissal

When more than one person holds the same or similar role, the employer cannot arbitrarily chose who to dismiss. Instead, they must follow the reflection principle (afspiegelingsbeginsel), also called the anti-age discrimination redundancy method, and the last-in, first-out principle (anciënniteitsbeginsel). This is based on factors like length of service and age distribution within the team. Generally, the employee with the least seniority in the role will be the first considered for redundancy. If an employer tries to dismiss an employee who doesn’t fit the selection criteria outlined by the reflection principle, the Dutch Employee Insurance Agency will reject the dismissal request for that employee.

3.    Explore reassignment opportunities

Even after determining a role is redundant and selecting an employee for potential dismissal, the employer must look actively for alternative positions within the company that you may be qualified to fill. The employer must prove that no other suitable job is available. They should offer you any suitable vacancies that match your experience, training and abilities. The employer also has to assess whether another suitable job is available within the (international) group to which it belongs. If there is a suitable role within the company, the employer must give the potentially redundant employee priority for that role over other employees.

4.    Consider a settlement agreement

In many cases, companies and employees choose to handle redundancy through a settlement agreement. This allows both parties to agree on the terms of separation, enabling them to avoid a lengthy process with the Dutch Employee Insurance Agency.

An essential part of the settlement is a compensation that is mostly higher than the mandatory transition compensation, in case of unilateral dismissal via the Dutch Employee Insurance Agency. By offering a higher compensation, the employer may avoid UWV proceedings. The mandatory transition compensation is calculated as one-third of the monthly salary per year of service and is intended to support employees financially while they transition to new employment.

The employer must also take into account the applicable notice period to set the termination date. Notice is effective from the end of the calendar month, with the statutory period determined by the employee’s tenure:

• Less than 5 years: one month’s notice
• 5 years or more, but less than 10 years: two months’ notice
• 10 years or more, but less than 15 years: three months’ notice
• 15 years or more: four months’ notice

Employment and dismissal lawyer

Given the complexity of the redundancy process, seeking legal advice is a smart step for both employer and expat employee. Our team can thoroughly review your dismissal procedure, confirm that all necessary steps have been followed and assess any settlement agreement offered to you. If there is room for negotiation, we can help you get better terms in your contract to maximise your outcome. Many employers even cover the cost of legal consultation.

If you’re an expat, redundancy may impact your residency status. Termination due to redundancy could affect your work permit or residency rights. Consulting a lawyer for legal advice can help you understand the implications for your visa status and explore possible options. Please contact us: