Termination agreements

Godelijn Boonman

Even though the Dutch economy is growing, many companies are still dismissing employees. If you are confronted with a dismissal, these are the top eight things to consider:

1. A permanent contract cannot be terminated by an employer without your agreement. Nor can a temporary contract be terminated prior to its scheduled date of completion. Only the UWV or the cantonal court can give permission to end a contract if parties are unable to reach an agreement.

2. If you have been employed for two years or more, an employer must pay compensation for the dismissal. This is known as the transitional statutory allowance. During the first ten years of employment, this amounts to 1/6 of the monthly salary per every six full months of employment. After 10 years, the compensation increases. The compensation is then 1/4 of the monthly salary per every six full months that the contact continues after the initial ten years.

Since January 1, 2017 the maximum transitional allowance is €77.000,00 gross or, if more, the total of one yearly salary. There are a few exceptions for employees older than 50 and working for the bigger companies or companies with less than 25 employees.

3. An employer must have reasonable grounds to end the agreement and must also have tried to find another suitable position within the company before suggesting termination. If both are not the case, and you do want to agree to a proposed dismissal, be sure to negotiate a higher compensation than the transitional allowance. It is likely that your employer will be prepared to pay more because the UWV or a court will not grant permission for dismissal.

4. An employer must take the notice period into account when ending an agreement. The notice period depends on how long you were employed. If it was for less than five years, you must be given one month notice; if it was for between five and ten years, you must be given two months notice; if it was for between ten and 15 years, you must be given three months notice; and for fifteen years or longer, you must be given four months notice. The employment agreement should not end until that period has been taken in to account. The notice period commences on the date parties reach an agreement.

5. Try to agree upon garden leave during the notice period. You then have time to look for other work.

6. Make sure a non-compete or a relations clause is waived in the agreement.

7. Employers tend to not want to pay outstanding vacations days so be careful!

8. Finally, an employee has the right to dissolve the agreement within 14 days.

Of course we advise to seek legal advice when confronted with dismissal. Don’t be too afraid of legal fees. Most employers are prepared to compensate at least part of these fees and our lawyers know exactly if an employer stands a chance in court. The wording of the termination agreement itself is also important to ensure entitlement to unemployment benefits.

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