Contract termination and Dutch law
Does your employer intend to terminate your employment contract? It's good to know employees are well protected under Dutch law. We'll explain in which cases your contract can be terminated, what a termination agreement is and what your rights are.
Deze pagina is ook beschikbaar in het Nederlands: Vaststellingsovereenkomst.
What is contract termination?
An employment contract is a legally binding document that ties you and your Dutch employer to an agreed set of terms. Your employment contract is the groundwork for a business relationship and determines the obligations of both parties. But if circumstances change or one can't meet the agreed terms, the parties involved must have an exit clause. Contract termination is legally ending a contract in cases where parties no longer want to collaborate or one party has breached the terms of the agreement. Only you and your employer can terminate a Dutch employment contract.
Termination of contract
Terminating an employment agreement boils down to the intention to resign (employee) or to dismiss (employer). It marks the end of a working relationship and requires consideration as to ensure that all legal obligations under Dutch law are fulfilled. Pay close attention to things like the notice period (how far in advance notification needs to be given), a severance payment (like the statutory transition payment) and the right to a subsequent unemployment benefit. A commonly used contract to terminate an employment by mutual consent is the termination agreement.
Is contract termination allowed?
A Dutch employer can terminate your employment contract is he has a valid reason to do so. For instance when you keep performing poorly, despite several warnings. Dutch labor law prescribes the permitted grounds for dismissal.
🟠 Permitted grounds for termination
🔴 Common exceptions
There are exceptions when it comes to contract termination. In some cases you are protected from dismissal. That might occur when you're ill, pregnant or recovering from giving birth.
🟢 No requirements
In others, your employer doesn't need a valid reason to terminate your employment contract. For instance if you have reached retirement age or if you're still in your trial period.
🫱🏻🫲🏽 Contract termination by consent
Let's assume you're pretty fed up with your employer and you're willing to cooperate towards termination through (mutual) consent. It could actually turn out to be a positive thing when you're able to shift focus to a new job and enjoy a fair severance package.
1. Mutual consent
If you and your employer mutually agree to terminate your labour agreement, you can aim for dismissal by mutual consent. You need to draw up a termination agreement to record the terms of your dismissal. You are not entitled to a statutory transition payment, but you do need to reach a final settlement. That usually contains arrangements about unused vacation days and a fair severance payment. Make sure to apply the correct notice period.
2. Unilateral consent
A less favourable possibility to end a labour contract is through termination with unilateral consent. This implies that your employer initiates your dismissal and you agree to it in writing. Although you are entitled to a transition payment, you are not able to negotiate about the terms of your dismissal. We discourage employees to agree to this procedure. It makes negotiating impossible and limits your rights to unemployment benefits once settled.
Termination agreement for dismissal
A termination agreement is a legally binding contract in which two or more parties make agreements to resolve or prevent a dispute. The termination agreement is popular in Dutch labor law because it ensures to settle a dismissal by mutual consent, without the intervention of the sub-district court or the UWV.
The Dutch refer to this type of contract as a vaststellingsovereenkomst. Commonly used terms in English are settlement agreement, termination agreement, termination proposal, severance package, final settlement and mutual agreement.
Why use a termination agreement?
Most employers want to dismiss staff through a termination agreement (settlement agreement). Employers like this procedure because it enables dismissal by mutual consent. It is faster (and often cheaper) than applying for a dismissal permit from the UWV or submitting a petition to the sub-district court. There are also advantages for employees. You can negotiate about the contents of your dismissal proposal. Moreover, both parties know exactly what to expect after signing: the termination of the agreement followed by dismissal. A decision by the UWV or ruling by the sub-district court judge is often black or white, while you can find middle ground in consultation with each other. Contact our labor lawyers for free if you intend to resign or if you've just received a termination agreement.
Settlement agreement check
Have you just received a settlement agreement or are you willing to resign based on mutual consent? Have our labour lawyers perform a basic check to find out what's missing or should be improved. That doesn't cost you anything.
✋🏻 Object to contract termination
If you object to contract termination, your employer needs to initiate a formal procedure with the Employee Insurance Agency (UWV) or the sub-district court. The submitted ground for dismissal determines which one of them has to grant their permission.
Discharge permit UWV
Your employer has to request a discharge permit to the Employee Insurance Agency (UWV) in case one of the following two dismissal grounds applies:
You can't get fired without a discharge permit. If the UWV doesn't grant permission, your employer has to turn to the sub-district court and start proceedings for dissolution of your employment contract.
Dissolution sub-district court
For all other dismissal grounds (C to H) your employer has to send a request for dissolution to the sub-district court. A court judge will check if all of the relevant legal criteria have been met to terminate your agreement.
If your employer provides multiple grounds for your dismissal, they can be combined. A sub-district judge can be asked for dismissal on cumulative grounds (I). If granted, it's possible that you are entitled to an additional severance payment on top of the statutory transition payment.
Statutory transition payment
The ground rule for qualifying for a (statutory) transition payment is that you can't be blameworthy. If your employer initiates the dismissal, you are probably entitled to this type of dismissal compensation.
✅ Transition payment
You are entitled to a transition payment if your fixed-term contract isn't extended, if you are dismissed via the UWV or the sub-district court on valid grounds or if you resign following serious culpable conduct or negligence on part of your employer. You may even be eligible for fair compensation.
❌ No transition payment
If you resign yourself, if you agree to dismissal by mutual consent or if you are to blame for your dismissal (due to culpable conduct or negligence), you are not entitled to a transition payment. With our help and a proper termination agreement you could however still succeed in obtaining a fair severance payment.
Questions about contract termination
You might have these questions if you're considering resignation or are confronted with contract termination.
What can I do if contract termination is imminent?
If no dismissal procedure has yet been initiated, there is little you can do legally. Of course you can read up and try to turn the tide based on our tips below, assuming you want to stay employed. If your employer doesn't take the first step towards your dismissal, but you are fed up with the uncertainty or the negative atmosphere, you could initiate dismissal yourself. Call us first to obtain free legal advice.
Can I get dismissed without valid grounds?
You can get dismissed without grounds during your trial period or in case you have reached the statutory or any other retirement age.
Can I ask my employer for a termination agreement?
If you want to quit your job but also want to retain your right to unemployment benefits, a termination agreement can offer a solution. Your employer is not obliged to cooperate, but many employers are inclined to do so. In some cases, a severance payment is possible as well.
What happens if my dismissal turns out to be unlawful?
If you are dismissed without a dismissal permit from the UWV or approval of the sub-district court and it turns out that it was mandatory, your dismissal is not legally valid. You can ask the sub-district judge to undo your dismissal. Your employment contract will continue to exist and you are entitled to your regular wages.
How long is the reconsideration period upon dismissal?
Termination by mutual consent as well as unilateral termination don't need approval by the Employee Insurance Agency (UWV) or a sub-district court. You are entitled to reconsider the dismissal within 14 days without providing a reason. If your employer left the reconsideration period out in your termination agreement, this period will automatically extend to 21 days.
When is contract termination not allowed?
In the following occasions your contract can't be terminated:
- in the first 2 years that you are sick or unfit for work;
- if your employer hasn't done enough to facilitate your return during your sick leave;
- during your pregnancy, pregnancy leave or maternity leave and 6 weeks thereafter;
- in the first 6 weeks after incapacity for work due to pregnancy or childbirth;
- because you want to take parental leave;
- during compulsary military service in the country of origin;
- for reasons of discrimination on grounds of religion, race, age or disability;
- because you are a member of a trade union, political organisation or staff representative body;
- if you refuse to work on Sundays;
- if your company is taken over;
- if you work as an expert under the Working Conditions Act;
- if you are a data protection officer under the Dutch Data Protection Act.
Free legal advice about contract termination
We are happy to inform you about your legal rights in case you are confronted with contract termination. You can call us free of charge. If you fill out the form below, we will call you back at an appropriate time.