In the Netherlands a new law came into force: the Act of Work and Sureness (WWZ). The first amendments of the Act onWork and Sureness already entered in to force on January 1, 2015. The amendments about dismissal law will enter in to force on July 1, 2015. “A revolution in labourlaw“: labourlaw specialists say. A short summary of the main changes of dismissal law is mentioned hereunder.
Current law
Under current law,if an employer in the Netherlands wishes to dismiss an employee, hecould (generally) make a choice between two procedures.
The first option is to ask permission for the dismissal from the UWV, a government organization. The reasons for dismissal at the UWV procedure are “business reasons” or “non-business reasons” relating to theemployee’s poor performance or the existence of serious and long-running problems in theemployer-employee relationship.The complete procedure usually takes 4-6 weeks. The decision of the UWV is definitive and not subject to appeal. In case UWV grants the permission the employee can be dismissed without any financial compensation.
The second option for dismissal is to apply directly to the court for a dissolutionof the employee agreement on ‘significant reasons’. A court may dissolve the employee agreement in two situations, i.e. (i) in case of ‘compelling reasons’ that are sufficient for immediate dismissal, or (ii) significant change of circumstances which formreasonable cause for dissolution of the employment contract. In the latter situation the court will generally grant the employeea financialcompensation which is related to the duration of the employment contract, the age of the employee and the height of his monthly salary. No need to say that this amount can rise to enormous proportions. The court’s decision is not subject to appeal.
New law
With effect from 1 July 2015 and based on the Act on Work and Surenessthe rules on dismissal and severance payments will change quite radically.The employer will no longer have a choice between a procedure by the UWV or a procedure at the court for dismissal. Where the dismissal is the result of a business reason like a reorganization or where the employee has been disabled for work for at least two years, the employer must follow the UWV procedure. In all other situations the employer must go to court to dissolve the contract with the employee.
Contrary to current law after 1 July 2015 it will be possible to appeal against the UWV decision and the court decision.Under the Act on Work and Sureness the employer must always pay the employee aseverance, the so called‘transitievergoeding’ (‘transition fee’) if the duration of the employment contract was at least two years or more. This severance is also payable after the expiration of a (> than two year) employment contract in the employer doesn’t want to continue this contract.The amount of the transition fee depends on the duration of the employment contract in relation to the height of the employee’s salary (1/3 of the monthly salary if the duration of the contract was shorter than 10 years, ½ of the monthly salary if the duration was longer than 10 years, with a maximum of €75.000,- unless theannual salary of the employee is higher than €75.000,-).The amount payed is intended to be spent by the employee on finding new employment,although this is not a requirement. In exceptional cases the court may grant the employee an additional fee where the employer hasn’t actedaccording to the rules applicable to the dismissal based on a permit from the UWV or where theemployer has acted in a seriously blameworthy manner, among other grounds. The amount of theadditional severance is not fixed but based on reasonableness and fairness.
Termination by mutual agreement
The new law does not affect the possibilities for partiesto mutually agree ontermination of the employment contract.This can be done legally, and parties are to some extent free to agree on whatever subject they want to agree upon, but it should be done very carefully as in certain situations termination by mutual agreement may have an effect on the unemployment benefits to which the employee is entitled. This could have consequences for the employer on the long run. Therefore, under the Act on Work and Sureness the employee must be given a period of 14 days during whichhe is entitled to revoke the agreement without having the obligation to specify areason.
Conclusion:
Dutch labour law is still very complicated, even after this new law will be in force. Needless to say that any Dutch employer, but especially a Dutch company lead by foreign directors, should certainly be accompanied by experienced and specialized labour lawyers to find their way out in this ‘wilderness’. Meijerman-Van de Wouw Advocaten offers the required services.
Publisher: Meijerman van de Wouw Business Attorneys