Bosselaar / Strengers / Legal Partners

Forums For Adjudicating Employment Disputes

Almost all employment law matters have to be brought before a Cantonal Judge of one of the 11 district courts in the Netherlands. Disputes between a statutory director and a company have to be brought before the Civil Section of these district courts. The Works Council must go to the Enterprise Section of the Amsterdam Court of Appeal when it has a dispute with a company. Other different legal authorities who settle employment law matters are the National Ombudsman, the UWV and the Netherlands Institute for Human Rights.


The Main Sources Of Employment Law

The main sources of employment law are European legislation, the Dutch Civil Code, collective bargaining agreements, the individual employment agreement, company rules and court decisions.


National Law And Employees Working For Foreign Companies

In general, Dutch law will apply to all employees physically working in the Netherlands. Parties can choose the law that governs their employment agreement. This means that both foreign employees working in the Netherlands and Dutch employees working abroad are, in principle, free to choose the laws of another jurisdiction to govern the agreement. A choice of foreign law cannot however set aside any mandatory provisions of Dutch employment law. It is good to realise that Dutch employment law has many mandatory provisions.


National Law And Employees Of National Companies Working In Another Jurisdiction

When a Dutch employee is working in another jurisdiction it depends on the law of the jurisdiction, he/she is working in whether it is possible to choose Dutch law to govern the agreement.


Data privacy

As a member state of the European Union, the General Data Protection Regulation (GDPR) applies. All companies based in the Netherlands must adhere to the obligations of the GDPR, including but not limited to processing of personal data, protection of that data and accessibility for employees.

Legal Requirements As To The Form Of Agreement

There is no legal requirement for an employment agreement to be in writing. There are however certain provisions that have to be in writing (see ‘compulsory terms’). Furthermore, the employer is required to provide the employee a written statement of particulars of certain terms of the agreement, not later than one month after the beginning of the employee’s employment (see ‘compulsory terms’).


Mandatory Requirements
  • Trial Period
  • There is no legal obligation to provide trial periods. But when parties agree upon a trial period it has to be in writing and there are mandatory requirements about the maximum duration of the trial period. Any trial period specified in a fixed-term employment agreement of six months or less is null and void. A fixed-term employment of longer than six months but less then 2 years can have a trial period of one month whilst a contract with a fixed term longer than 2 years or a contract for an indefinite period can have a trial period of 2 months. All other terms are null and void.

  • Hours Of Work
  • There are several mandatory requirements. Per shift a maximum of 12 hours applies, per week a maximum of 60 hours applies. An employee may not work every week this maximum number of hours. An average of 48 hours per week applies during a period of 16 weeks. A common full-time working week in the Netherlands is, depending on the industry, between 36 and 40 hours.

  • Special Rules For Part-time Work
  • No special rules apply for part-time work, other than the general rule that an employee cannot be discriminated against or be disadvantaged due to the fact that they work part-time.

  • Earnings
  • There are minimum wage restrictions which are dependent on the age of the employee. The minimum wage is reviewed annually. As of January 2020 the gross minimum wage for employees of 21 years and over is EUR 1,653.60 per month. There are also often collective bargaining agreements with minimum wage scales.

  • Holidays/Rest Periods
  • The minimum annual holiday for an employee needs to be the equivalent of at least four times the employee’s usual working week. In addition there are also various free national holidays.

  • Minimum/Maximum Age
  • In principle the minimum age is 16, below which employees cannot agree upon an employment agreement without permission from the employee’s statutory representative. Different rules (e.g. on working time) apply to children or young workers. There are no maximum age limits.

  • Illness/Disability
  • There are many mandatory requirements regarding illness and disability, e.g. about the right to continued payment of salary and the reciprocal obligations of the employer and the employee to reintegrate the employee in the employment process. An employer must continue to pay 70% of employees’ salary up to a statutory cap during the first 104 weeks of illness. Most employers must, however, pay more than the statutory amount under individual employment agreements or collective bargaining agreements. It is common that employers continue to pay employees 100% of their actual salary during the first year and 70% of their actual salary during the second year. The reciprocal obligations to reintegrate the employee last until the employment agreement is terminated.

  • Location Of Work/Mobility
  • There are no mandatory requirements regarding the location of work. The location of work is part of the written statement the employer has to provide (see ‘legal requirements as to the form of agreement’). Even when employees work at home, the Working Conditions Act still applies. The rules for the workplace at home however are less strict than the rules for the workplace at work.

  • Pension Plans
  • In general, the employer is not obliged to provide the employee with a pension plan. This employer’s freedom is however restricted in certain ways because the law can make it mandatory for the employer to provide one e.g. in case of an industry-level pension fund or when other employees of the employer do have a pension plan. When employees have a pension plan, there are a lot of requirements to provide employees with information about their pension.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
  • A range of “family-friendly” rights exist, including pregnancy leave and pay, maternity leave and pay, paternity leave and pay and adoption leave and pay. Employees who can satisfy the appropriate qualifying conditions for the right in question can enjoy, or can apply for, their statutory rights in this regard.

    As of 1 July 2020, fathers/partners are entitled to five weeks of unpaid leave within six months of the birth of the child. During this period, the employee is entitled to benefits from the Dutch government.

    As of 1 August 2022, any parent will be entitled to benefits during the first 9 weeks of parental leave.

  • Compulsory Terms
  • The provisions that have to be in writing if these provisions are desired, are e.g. a trial period, qualifying days in case of illness, a penalty clause, a non-competition clause and the possibility to terminate the employment agreement for a definite period of time prematurely.

    The terms that must be provided to the employee no later than one month after the beginning of the employee’s employment includes the following: the names and residences of the parties, place(s) of work, job title/job description, the date when employment begins, the duration of the agreement, whether the employee will join a pension scheme, holiday entitlement, length of notice, the scales and intervals of pay, the hours of work per day or week, any collective bargaining agreements which apply. When the employee will work abroad these terms must be provided before the employee leaves.

  • Non-Compulsory Terms
  • The employer and the employee are free to agree upon any other terms in addition to the compulsory provisions, provided that these terms are no less favourable than certain statutory rights or the relevant collective bargaining agreement.


Types Of Agreement

Employment agreements exist in several different forms, e.g. indefinite period of time, definite period of time, full-time, part-time, on-call, transfer. The compulsory terms apply regardless of the type of contract contemplated. Discrimination laws prevent employees from being treated less favourably than other employees because of their working part-time or their working on an agreement for a definite period of time.


Secrecy/Confidentiality

There are rules relating to secrecy and confidentiality that are implied into the employment relationship because part of every employment agreement is that an employee has to behave as a “good employee”. In addition to the implied duties, employers will often include in the employment agreement an express term regarding secrecy and confidentiality.


Ownership of Inventions/Other Intellectual Property (IP) Rights

In general, the employer owns the patent right for any invention that its employees make in the course of their employment. Employees are entitled to fair remuneration if their salary is not adequate compensation for the invention. If employees make an invention outside the scope of their employment agreements, the employer has no patent rights. A provision can, however, be agreed upon in the employment agreement specifying that the employer is entitled to patent rights for inventions that are in any way connected with the employee’s work. Unless otherwise agreed, the employer is considered to be the author of literary, scientific or artistic works that the employees create in the course of their employment. Therefore, the employer owns the relevant copyrights to these works.


Pre-Employment Considerations

In general, no pre-employment considerations are required. The only situation in which they might apply is if an employee must complete a training program or on the job training in advance of the employment period. If that is the case, the employment agreement should contain the conditions for the training.


Hiring Non-Nationals

Employers are obliged to ensure that all employees are entitled to work in the Netherlands. Different requirements apply depending on the nationality/status of the individual concerned. Foreign employees need a work permit unless this employee has a residence permit in which is stated that the employee is allowed to work in the Netherlands. Citizens of the European Union or European Economic Area do not need a work permit unless they are from Croatia. An employer will be liable to an administrative penalty if he/she employs someone who is not entitled to work in the Netherlands. This penalty is EUR 12,000 per person if the employer is a first time offender.

 

Hiring Specified Categories Of Individuals

There are restrictions on the types of work that vulnerable groups (e.g. children and pregnant women) can be required to undertake.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

Dependent on the type of temporary work, different rules apply. In general, employees that are hired through Temp Agencies and/or Payroll companies must receive equal primary employment benefits to employees that are employed directly by the company. For outsourcing, the obligations depend on the contract between the in- and outsourcing company. The same applies for sub-contracting, with the addition that the main contractor is also liable for any salary claims made by employees of the sub-contractor.

Changes To The Contract

Employer and employee may agree to change the contract during the term of the employment agreement. When an employee does not agree with a change, it is in some cases possible to change the contract unilateral, e.g. when the employer has a weighty interest or for reasons of reasonableness and fairness.


Change In Ownership Of The Business

When there is a change in ownership of a business, all employees automatically transfer to the new employer on the same terms and conditions. These rules apply also where only a specific part of a business changes ownership. When an employee unambiguously refuses to transfer to the new employer, the employment agreement ends automatically at the moment of the change of ownership. These rules apply when there is a change in ownership of the business arising from a contract, merger or division. These rules do not apply when there is a transaction of shares which does not result in a change of the employer.

When there is a transfer of undertaking the specific rules of the Dutch Civil Code apply. These rules are based on a European Directive. When there is a transfer of undertaking, employees who are working for the employer automatically transfer with the work and therefore become employees of the transferee. The employees must generally remain on exactly the same terms of employment as they enjoyed prior to the transfer (with the exception of pension arrangements, where there are special rules). Even changes which have been “agreed” by the employee will be voidable if they are changes which are “connected” to the transfer. Any dismissal held to be “connected with the transfer” is not allowed unless it can be proved that it is for economic, technical or organizational reasons entailing a change in the workforce.


Social Security Contributions

There are compulsory social security contributions for both employer and employee.


Accidents At Work

According to the Dutch Civil Code the employer is obliged to take such measures as may be reasonably be deemed necessary to prevent the employee from suffering damage in the course of his work. An employer shall be liable to an employee for any damage which the employee suffers in the course of his/her work, unless he/she shows that he took the necessary measures or that the damage was to a large extent the result of intent or deliberate recklessness on the part of the employee.


Discipline And Grievance

Often there are rules about discipline and grievance in the applicable collective bargaining agreement and the company rules. The Dutch Civil Code does not contain specific rules about this. Both employer and employee have to act as a “good employer” and “good employee”.


Harassment/Discrimination/Equal pay

Employees are protected from discrimination on grounds of sex, age, sexual orientation, race, nationality, marital status, religion or belief, disability, parttime status and fixed-term status. The discrimination may be direct or indirect. Direct discrimination is mostly forbidden. Indirect discrimination is forbidden when there is no objective ground for justification for the discrimination. The sanction to infringe the prohibition of discrimination is nullity. To act in violation of the equal treatment legislation can be a wrongful act. In addition, an employee cannot be dismissed because he invokes these provisions. Such a “victimisation dismissal” is voidable. There are no specific rules about harassment. It is part of the employer’s duty to act as a “good employer”.


Compulsory Training Obligations

The Dutch Civil Code states that the employer must give the employee the opportunity to receive the training needed to perform the job concerned. And, to the extent that he/she cannot reasonably be expected to comply with this, in order to continue the employment agreement if the employee’s job should cease to exist, or if he/she is no longer capable of performing this job. Above that some trades/professions impose their own standards/expectations.


Offsetting Earnings

Except at the end of the employment agreement an employer may set-off his/her debt in respect of the remuneration only against specific claims of the employee such as the damages owed by the employee to the employer or the amount of any excess remuneration paid. No set-off may be applied against such part of the remuneration as cannot be seized by garnishment in the possession of the employer.


Payments For Maternity And Disability Leave

The main rule is that an employee who has not performed the contracted work because he/she was prevented from doing so by sickness, pregnancy or confinement is entitled to at least 70% of his/her salary up to a statutory cap during the first 104 weeks. Most employers must, however, pay more than the statutory amount under individual employment agreements or collective bargaining agreements.

It is not uncommon that employers continue to pay employees 100% of their actual salary during the first year and 70% of their actual salary during the second year. When the employment agreement ends during this period the obligation of the employer to pay the salary ends at the same moment. Periods in which the employee has been prevented from performing his/her work by sickness, pregnancy or confinement shall be aggregated if they have followed one another at intervals of less than four weeks.

In cases of pregnancy, the pregnant employee is entitled to benefits during (at least) sixteen weeks, surrounding the actual birth. Any employer can apply for these benefits on behalf of the employee. The benefits will then be paid to the employer, who will continue to pay the salary of the employee.


Compulsory Insurance

Because employers have to act as a “good employer” they must care for proper insurance for the employees whose work may lead to a traffic accident (both accidents with motorized vehicles and non-motorized accidents).


Absence For Military Or Public Service Duties

Employees are entitled to take leave for military or public service duties.


Works Councils or Trade Unions

An employer with 50 employees or more must establish a Works Council. The Works Council must have been given the opportunity to advise the company’s management on any proposed decision involving important issues such as takeovers or seeking/granting substantial credit facilities. A company’s management must also obtain its Works Council’s prior consent on any proposed decision concerning certain important employment related issues such as rules relating to recruitment and dismissal. The Works Council should represent all the employees of the employer and consult with the employer. When there are less than 50 employees the employer can voluntarily decide to establish a Works Council. Members of the Works Council cannot be fired because they are a member.


Employees’ Right To Strike

There is no specific regulation under Dutch law which recognises the right to strike. The right to strike is therefore mainly governed by case law and the European Social Charter. The European Social Charter recognises the right to collective bargaining. When a collective action is covered by the European Social Charter this action is in principle legal. When substantial procedural rules have been neglected or when it is judged that the Trade Unions are acting in an unreasonable manner then the action is wrongful.


Employees On Strike

For the employees who want to strike, the main rule is “no work, no payment” until the moment they are available for work again. When it is an organised strike, they mostly get a payment from the Trade Union. For the employees who are willing to work but cannot do so because of the strike his/her right to payment depends on the nature of the strike. In general, the employer does not have to pay these employees in the case of an organised strike but must pay these employees in the case of an unorganised strike. In general, the employer cannot fire an employee in the case of a legal strike. When the strike is wrongful this might result in a termination of the employment agreement.


Employers’ Responsibility For Actions Of Their Employees

When the employee causes damages while acting in the course of his/her employment, the main rule is that the employer is responsible for this unless the damages caused are a result of an intentional act or conscious recklessness of the employee.

Procedures For Terminating the Agreement

The Dutch Civil Code states that an employer may terminate the employment agreement if there are reasonable grounds to do so and reassignment of the employee to a different suitable job, possibly with training, is impossible or inappropriate. The law specifies ‘reasonable grounds’ as follows:

    1. ) economic grounds
    2. ) illness or disability for more than 104 weeks
    3. ) frequent sickness absence
    4. ) unsatisfactory performance after timely warning and improvement programme
    5. ) culpable conduct
    6. ) conscientious objection
    7. ) damaged working relationship
    8. ) other grounds, not included in c through g
    9. ) a combination of grounds mentioned under c through e, g and/or h

For grounds a and b the employer must apply to the UWV for permission to terminate the employment agreement. If the dismissal is based on one of the other grounds (c through i) the employer must file a request for dissolution with the district court if the employee does not agree in writing with the proposed dismissal.

As of 1 January 2020, the i-ground has been added to the Dutch Civil Code. The ground allows for a combination of dismissal grounds that cannot be substantiated enough to warrant dismissal by itself, but are considered reasonable cause for dissolution when combined. This ground for dissolution comes with the option for the district court to increase the statutory dismissal fee by a maximum of 50%.


Instant Dismissal

The employer can terminate the employment agreement by instant dismissal in the event of an “urgent cause”. This is the most severe way to terminate the employment agreement and can only be used if the employee is guilty of gross misconduct. The misconduct must be an urgent cause both in an objective and subjective way. When there is an urgent cause, an employer must handle it without delay. As soon as it has become clear that there is an urgent cause, the employer has to dismiss the employee and tell him/her promptly what the reason is of the dismissal. All circumstances, also the personal circumstances of the employee, have to be considered when an instant dismissal is given


Employee's Resignation

The employment agreement can generally always be terminated by the employee’s resignation. The statutory period of notice is one month, but the employment agreement or applicable collective bargaining agreement can stipulate a different period of notice.


Termination On Notice

Termination on notice is always possible if the employee concerned agrees in writing with the dismissal. The employee can withdraw his/her approval within 14 days without reason. Agreement of the termination on notice is also not necessary when the UWV has granted permission to terminate the employment agreement by giving notice (see ‘procedures for terminating the agreement’). The statutory notice period is dependent on the period of continuous employment. However, the notice period can be shortened by the time the procedure with the UWV took, as long as at least one month of notice remains.


Termination By Reason Of The Employee's Age

The employment agreement can be terminated due to the employee’s age but only once the employee reaches the applicable state pension age. As of January 2020 the state pension age is 66 years and 4 months. The employer is free to choose the moment on which it would like to terminate the employment agreement by reason of the employee’s age (so also after the employee has reached the applicable state pension age), as long as the employment agreement was agreed upon before this moment. The employee’s age can be reason to terminate the employment agreement only once.


Automatic Termination In Cases Of Force Majeure

In general, there is no automatic termination of the employment agreement in cases of force majeure.


Collective Dismissals

Specific rules apply for collective dismissal, both regarding mandatory notification of labour unions and the UWV and which employees should be dismissed first. The latter is based on time of continues employment and age average within the company, as well as the dismissal of all temporary (agency) employees.


Termination By Parties’ Agreement

The parties are entirely free to agree upon termination on any grounds they desire. The termination of the employment agreement may however have major consequences for the employee. Not only does he/she lose his/her job and therefore income, but there are also possible risks to the possibility to successfully apply for an unemployment benefit. Therefore, there are several rules that protect the employee which apply when parties want to terminate the employment agreement by mutual consent. There must be a clear and unambiguous statement of the employee, the employer needs to investigate whether the employee understands that his/her consent to the termination is asked and the employer has to inform the employee correctly about the consequences of the termination agreement. When one of these criteria is not met, the employee cannot be held to the termination agreement.

There is a statutory requirement to agree upon a termination agreement in writing when there is a termination by parties’ agreement. The employee can cancel the termination agreement within 14 days without reason. The employer has to mention this right to cancel the termination agreement into the termination agreement. If the employer does not do so, the employee has 21 days to cancel the termination agreement.


Directors Or Other Senior Officers

When a managing director is appointed in accordance with the articles of association of the company there is no need to apply to the UWV/district court in order to terminate the employment agreement. There are some corporate rules that have to be taken into account in case the directorship is terminated. The possibility to withdraw an agreement with the dismissal without reason and to cancel the termination agreement without reason does not apply to managing directors. Please note that the Works Council has an advisory right regarding the termination of a director and should be timely consulted.

Furthermore, there are no special rules which relate to the termination of a director’s or other senior officer’s employment. Main rule is that the end of the directorship automatically brings an end to the employment agreement. However, the company must still have reasonable grounds to terminate the employment agreement. If there are no reasonable grounds, the (former) director could claim payment for the unreasonable dismissal, in the form of ‘reasonable’ compensation. This is further explained under “Severance Payments”. Examples of reasonable grounds of termination for a director include (not limited) incapacity to perform their duties and opposite views for the future of the company with the board.


Special Rules For Categories Of Employee

For certain categories of employees, it is not possible to terminate the employment agreement by giving notice. These categories are e.g. works council members, pregnant women, sick and disabled employees during the first two years and employees during compulsory military service. Under certain conditions it is however possible to terminate the employment agreement with these categories of employees by court decision.


Whistleblower Laws

Whistleblowers are protected from repercussions from their employer if their report was justified. Dutch law provides regulations when this is the case, as well as obligations for (larger) companies to allow for a safe way to report malpractice within the company as whistleblower.


Specific Rules For Companies in Financial Difficulties

When a company goes bankrupt the employees and the trustee can be given notice of termination with respect to the statutory period of notice unless the employment agreement or applicable collective bargaining agreement stipulates a different period of notice. The period of notice in the case of a bankruptcy is a maximum of six weeks. In case of bankruptcy the trustee can give notice of termination without prior permission from the UWV. From the moment of bankruptcy any claims by the employees against the company are estate debt. Bankruptcy may not be used to easily to terminate employment agreements and/ or to avoid severance payments. In case of bankruptcy and when the company forms part of the bankrupt estate the rules with regard to a transfer of undertaking as described above do not apply. Furthermore, the transitional payment is not payable in case of bankruptcy.


Special Rules For Garden Leave

No special rules apply for Garden Leave.


Restricting Future Activities

It often happens that parties agree upon a non-competition clause. Such a clause is only valid if it is agreed upon in writing with an adult who has reached the age of majority. The court may set aside all or part of such a clause on the ground that the employee is unfairly prejudiced by such clause having regard to the interest of the employer intended to be protected. If a non-competition clause restrains an employee to a significant extent from working other than in the service of the employer, the court may always direct that the employer must pay damages to the employee for the duration of the restraint. Fixed-term employment agreements may not include a non-competition clause without stating overriding business interests for its inclusion. A court may declare a non-competition clause invalid when the non-competition clause does not have this motivation or when this motivation is not sufficient. The criterion of overriding business interests will be examined at the start and end of the fixed-term employment agreement. The new rules will limit the opportunities to include non-competition clauses in fixed-term employment agreements.


Severance Payments

Period from 1 January 2020:

Regardless of the chosen termination route (UWV or district court) the employer will be required to make a severance payment, the “transitional payment” to the employee, which has replaced the “cantonal judge formula” and the manifestly unreasonable dismissal payment. Employers will have to pay the transitional payment whenever an employee is dismissed or a temporary employment contract is not renewed. The main rules governing this transitional payment will set the amount at 1/3 of monthly salary for every twelve months of employment, and a pro-rate payment for any year not completed. The remuneration will be capped at EUR 83,000, or one annual salary, whichever is higher. This cap can be adjusted every year by the Minister of Social Affairs and Employment. In the event of severe culpability on the part of the employer, the court may grant the employee additional ‘reasonable’ compensation. No criteria have been defined to set compensation of this kind. Common case law provides guidelines for criteria that can be applicable.


Special Tax Provisions And Severance Payments

As of January 2014 the Dutch government abolished the periodic payment entitlement exemption (‘stamrechtvrijstelling’). An employee does not have the possibility anymore to structure payments in instalments in order to postpone tax payments.


Allowances Payable To Employees After Termination

In general employers are not required to contribute to any allowances to employees after termination. In certain cases, e.g. when that is agreed upon or pursuant to a collective bargaining agreement, an employer has to pay contributions in addition to the unemployment allowance of the employee.


Time Limits For Claims Following Termination

The time limits for claims following termination depend on the nature of the termination and the type of the claim, the limits can be two months, six months, five years or twenty years.

Specific Matters Which Are Important Or Unique To This Jurisdiction

As of 1 January 2020, the Balanced Labour Market Act (WAB) is in effect in the Netherlands. As a consequence, a number of changes have been made to Dutch employment law, some revoking the changes made in 2015. The most significant changes from an employment law perspective are:

  • The maximum period for fixed term contracts is lengthened to 3 years before a contract for indefinite time must be given.
  • Dismissal can now be based on a combination of dismissal grounds with the addition of the i-ground. However, the Cantonal Court can enhance the statutory dismissal fee by 50% maximum if the dismissal is granted on this ground.
  • The transitional payment must always be paid in any case of dismissal or non-renewal of a temporary contract.
  • Any employee with an on-call contract must receive an offer for fixed hours from the employer after being employed for twelve months. The offer must be based on the average worked hours a month in the twelve months beforehand.


Search by:
Need more information?
Contact a Contributing Author:
Bart Duijs
Bosselaar / Strengers / Legal Partners
The Netherlands


Tom Bremers
Bosselaar / Strengers / Legal Partners
The Netherlands


Disclaimer:

© 2021, Bosselaar Strengers Legal Partners. All rights reserved by Bosselaar Strengers Legal Partners as author and the owner of the copyright in this chapter. Bosselaar Strengers Legal Partners has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021