Facing The Facts: Redundancy in The Netherlands

Redundancy is one of those words that may send shivers up a worker’s spine, but sometimes, it’s a structural part of any job or career. However, it’s an ugly necessity companies often resort to during tough times such as financial struggles, technological changes, or restructuring.

We’re all familiar with the major aspect of the process, but how doe layoffs in the Netherlands happen? What are the company’s obligations and how long until you receive severance pay? In this article, we’ll give you all the answers.

Layoffs in The Netherlands: Defining Redundancy

Redundancy (or “ontslag wegens bedrijfseconomische redenen”) is a process with strict guidelines set by the UWV (Employee Insurance Agency) and Dutch labor law. According to the legal framework, an employer can’t just let you go for no reason. There should be fareness, more specifically, a key thing workers should focus on in similar situations.

First, let’s define redundancy according to Dutch law. First off, layoffs in the Netherlands must happen for legitimate reasons, such as:

• Financial struggles resulting in budget cuts
• Declining market demand, i.e., less works available
• The company needs to undergo downsizing or restructuring

Source: Pexels

According to Dutch law, employers have to justify why your services are no longer needed, and the UWV is the governing body that oversees the process to ensure fair job termination. It’s also important to note that redundancy is different from being offered a Settlement Agreement or Mutual Termination Agreement. In the latter, two parties terminate the employment relationship in the legally binding document, which also outlines specifics regarding financial compensation, unemployment benefits, confidentiality clauses, notice periods, and more.

Understanding the Netherlands’ Layoff Rules

As mentioned, layoffs often happen due to business challenges. In these cases, employers must follow strict guidelines to determine who should be let go. This is the “Last In, First Out” principle, which aims to introduce fairness and maintain a sense of balanced age distribution within the organisations. However, there are exceptions, especially when the CAO or collective labour agreement differs from this. In these cases, the CAO committee must review the redundancy plan as well.

When talking about layoff order, apart from the Last in First Out principle, there’s a bit more complexity added to the script. In essence, here is the order:

• Workers already eligible for retirement
• On-call workers with more project-based arrangement and irregular hours
• Temporary workers with contracts that aren’t longer than 26 weeks.

After that, companies apply the principle within age groups. For each group, the employee is let go first who has the shortest tenure in the company. Here are the age categories:

• 15–25 years
• 25–35 years
• 35–45 years
• 45–55 years
• 55+ years

On the bright side, there are also rehiring conditions. The law states that you must be offered a chance to return to your previous role if you’ve been laid off because of economic reasons and the workload picks up. 

Are There Exceptions?

The standard order can be skipped in specific situations such as:

• When unique roles, held only by one or a few employee is being eliminated
• When the business shuts down one of its locations.
• When an entire job category is being phased out.
• When the CAO has different dismissal rules.

On the other hand, if the CAO allows, employers can nominate up to 10% of layoffs outside the standard procedure.

The exceptions also pertain to other groups, who are either critical for a business or exempt from layoffs under law. More specifically:

• Critical employees with rare and vital skills can be retained but with the right documentation and reasons.
• Protected groups, people with illnesses, protected statuses (like pregnancy) or disabilities may be exempt from layoffs.

It’s also vital to know that different rules apply to workers in the healthcare industry or people hired through staffing agencies or payroll. Their specifics are detailed in the Dutch Dismissal Regulation. And if 20 or employees in a single workspace are affected, the employer must also abide by the rules of collective dismissal.

Source: Pexels

Netherlands Firing Requirements  (When Related to Economic Reasons)

Employers must obtain permission from the UWV before they can start the dismissal process due to economic reasons. As mentioned, the employer must back it up that the dismissal is necessary and a direct result of financial difficulties, cessation of activities, or business reorganization. 

In these cases, the strict “Last In, First Out” rule applies in standard cases. During the process, the employer must do everything in their power to assign employees to other suitable positions if they can, within 26 weeks. Severance pay in the Netherlands is usually required, based on the transition compensation formula set by Dutch law.

Indefinite Contract Termination Netherlands (When Due to Redundancy)

Terminating permanent contracts in the country due to redundancy must also follow a specific legal procedure. After providing the necessary documentation and seeking approval from the UWV, the employee will become entitled to a statutory transition payment, which will be calculated based on the number of service years and age. 

The employer must respect notice periods as defined by law or employment contract, usually ranging from one to four months. Additionally, if the employer fails to comply with legal dismissal procedures, the termination can be deemed invalid and the employee may seek reinstatement or additional compensation in court.

Layoffs In The Netherlands: Things To Focus On

1. Is The Process Valid?

Laying off people is a formal procedure, no matter the reason. This means that legitimate processes should be approved by the UWV or previously negotiated by a works council. To make sure that all legal aspects are being followed, ask your employer for the details and if something feels or sounds suspicious, reach out to a labor expert for help.

2. Remember Your Notice Period.

Even if you’ve been laid off, it doesn’t mean that you are free to go immediately. There’s a specific notice period for each case, and until that expires, you should keep working for the company. Check your contract for the details of the redundancy for a smoother transition.

3. Severance Pay

According to the “Transitievergoeding” scheme, redundancy pay in the Netherlands is available for employees if they’re let go. This is the case in most redundancy processes, and the amount you get depends on the number of years you’ve worked for the company. That’s your money so make sure you collect it. You can also calculate the amount you’re entitled to, which is ⅓ of your monthly salary per year worked

4. Understand Your Social Plan

Most companies will offer some type of social assistance as a part of their redundancy. This may come either in the form of training budgets, outplacement services, or additional financial compensation. See what’s available at your company. It may be a game-changer in terms of future employment.

5. Review Your Unemployment Benefits

If you’re left without a job, you need to check whether you qualify for WW-uitkering (or unemployment benefits). Check eligibility on time to ensure that you have at least one ace up your sleeve if the worst happens.

Redundancy in the Netherlands and Residency Status

When you move to the Netherlands for professional reasons, your residence permit is usually closely tied to your employer and job. If your reason for dismissal is poor performance, your residency status may also suffer as a consequence.

Source: Pexels

In these cases, you often have only three months to find another job for the permit to remain valid. If you fail to secure a new position within these three months, or your permitted stay expires during that period, the IND (Immigration and Naturalisation Service) may revoke the permit.

Understand Your Rights and Situation

Because of the complexity of the redundancy process, it’s never a bad idea to look for legal help. An expert in Dutch labour law can help you review the dismissal procedure, identify whether your dismissal is fair, talk about the severance pay and other settlement options offered to you. 

In case of any options for negotiation or foul play, these experts can also help you either get you better dismissal terms or even a chance to save your job (if the legal structure allows). 

Don’t Get Discouraged, Check Out Available Positions!

While redundancy may seem like a nightmare, unfortunately, it’s a part of the business world both for employees and employers. Remember, losing your job due to economic downturns or complex market changes isn’t your fault. These things happen and the best thing to do is take it as it is, and look for your next opportunity.

That said, if you are looking for splendid offers, you can always check out the available vacancies for the Netherlands at Robin.jobs!