NETHERLANDS Law and Practice Contributed by: Inge de Laat, Tijmen Noordoven, Ilaha Muhseni and Laetitia Wezenbeek, Rutgers & Posch
7.3 Dismissal for (Serious) Cause An employer may dismiss an employee with imme - diate effect if the employee has engaged in such misconduct that the employer cannot reasonably be expected to continue the employment relationship. There must be an urgent reason, in which case the employment agreement can be terminated with imme - diate effect. This urgent reason must be communicat - ed to the employee without delay, and the dismissal must be conducted immediately and without notice. In the case of instant dismissal, the employer is not required to observe a notice period. Since the dis - missal is based on culpable conduct by the employee, the employer is entitled to compensation equal to the salary that would have been paid during the regular notice period. If the dismissal results from serious culpable behav - iour (which is often, but not necessarily, the case in summary dismissal), the employee will in principle not be entitled to the statutory transition payment. In addi - tion, instant dismissal also means that the employee is likely not to be entitled to unemployment benefits. 7.4 Termination Agreements In Dutch employment law, a settlement agreement (also referred to as a termination agreement) is used when the employment agreement is ended by mutual consent. In this agreement, the employer and employ - ee jointly set out the conditions under which the employment relationship will be terminated. Although Dutch law does not require a settlement agreement, it is considered best practice. This is partly because an employee who concludes a legally valid settlement agreement generally retains the right to unemploy - ment benefits from the Unemployment Act, as long as the settlement agreement provides that the termina - tion is on the initiative of the employer, the employee cannot be blamed for the reason for termination and no prohibition to give notice applies. A settlement agreement typically includes the follow - ing elements: • the personal details of both employer and employ - ee; • the employee’s current position and salary;
employer is required to observe a notice period that is twice as long as the employee’s. Deviation from the statutory notice periods is possi - ble through a collective labour agreement, provided it stays within the legal limits. If the deviation exceeds these limits, the statutory notice period remains appli - cable. Unless otherwise agreed, the notice period begins on the first day of the month following the month in which notice is given. Transition Payment From the first day of employment, including during any probationary period, employees are entitled to a stat - utory transition payment if their employment agree - ment is terminated on the initiative of the employer and for reasons other than urgent ones. This payment amounts to one third of the gross monthly salary for each calendar year of service. The transition payment is currently capped at EUR98,000 gross. If the employee’s annual salary exceeds this amount, the cap is set at one annual salary. Generally, the transition payment is not owed when the employee terminates the agreement, unless the termination results from seriously culpable behav - iour on the part of the employer. In such cases, the employee remains entitled to the payment. Employers may apply for compensation from the gov - ernment for the transition payment when termination occurs due to long-term incapacity for work (after two years of illness). Where the employer ceases business operations due to illness or retirement, compensation may also be granted. This arrangement is only available to small businesses (fewer than 25 employees) and applies solely to transition payments owed in the six months preceding UWV approval or termination of the employ - ment agreement. A number of strictly defined condi - tions must be met for eligibility. When calculating the duration of employment, suc - cessive employment agreements between the same parties (or their legal successors), with breaks of no more than six months between them, are counted as continuous service.
384 CHAMBERS.COM
Powered by FlippingBook