Netherlands Employment Guide

Navigating Employment Termination in the Netherlands: A Guide for International Employers

Terminating employment contracts in the Netherlands requires careful navigation of complex legal frameworks and country-specific regulations. The dismissal process must be managed collaboratively between employers and key stakeholders, often involving special considerations and mandatory procedural steps.

Valid Grounds for Termination

Dutch law permits contract termination only when justified reasons exist and no suitable alternative positions are available within the organization. Acceptable grounds include:

• Redundancy due to economic circumstances
• Long-term disability exceeding two years
• Frequent absenteeism causing operational disruption
• Consistently poor performance
• Serious misconduct
• Conscientious objection to contractual duties
• Irreparable workplace relationship breakdown

Unlike many jurisdictions, Dutch employers cannot typically terminate contracts unilaterally without approval from either the court system or the Employee Insurance Agency (UWV). Mutual agreement termination often proves more efficient, bypassing governmental authorization requirements.

Notice Period Requirements

Mutually agreed terminations require appropriate notice periods tied to employee tenure:

All notice periods commence from the end of the calendar month, providing predictable transition timelines.

Severance Compensation Structures

Mutually agreed terminations typically involve severance packages equivalent to 2-6 months' salary, though amounts vary based on negotiation outcomes. Statutory severance through court/UWV proceedings generally calculates at approximately one-third monthly salary per service year.

For instance, a marketing manager with eight years of service receiving €5,000 monthly would typically negotiate €10,000-30,000 in mutual separation, versus approximately €13,333 in statutory compensation.

SailGlobal's proactive approach includes severance accruals in all Dutch employment contracts, mitigating unexpected financial exposures. Our methodology combines statutory requirements with local best practices, ensuring compliance while optimizing risk management. Unused accruals are returned when employees resign or don't qualify for severance.