How to terminate an employment contract under Dutch law?
Introduction
When an employer wants to terminate an employment contract of an employee there are various ways to achieve this. As opposed to the employee, an employer can not terminate an employment contract by means of just giving (due) notice. Hereinafter we will discuss these various possibilities of terminating an employment contract, we will give an overview of the pro’s and cons of the various possibilities and finally we will advise which option in general is recommended to terminate a contract.Termination with due notice by the employer
One way of terminating an employment contract is by requesting a dismissal permit. If the CWI (i.e. the national employment services authority), approves the request for dismissal, an employer can terminate the employment contract in accordance with the statutory notice period.
Dissolution by the cantonal court (general procedure)
The employer can also request the court to dissolve the employment contract. The option is only recommended when you have a so called “open and shut case” with a well compiled and substantiated file on the reasons for the request of termination of the contract. In most cases an employee will file a defence against this request as he otherwise risks to be found unemployed negligibly with the result that he will lose his claims on social benefits. The decision of the judge is not always predictable and the possible severance payment awarded by the judge can be larger than calculated.
The so called Pro forma dissolution
An employer can always try to reach a settlement with the relevant employee on which terms the contract can be dissolved after which parties only have to ask the court to formalise the dissolution. This is called a pro forma dissolution. In these cases there is no hearing by the judge. The employer files a formal request to the court to dissolve the contract and the employee replies with a formal statement of defence. This way an employee will - in principle - retain his claims on social benefits (if he also meets the other requirements for claims on social benefits). Usually a severance payment is agreed upon in advance and parties are free to determine the amount of this payment.
Conclusion
Many issues are of importance when considering the different options of terminating an employment agreement. Taking into account the special circumstances of the case a decision can be made on which option to choose. All in all, in practice the pro forma dissolution has shown to be the easiest, the fastest and for both parties the most satisfactory way of terminating an employment contract.
Author: mr. Brenda Schuller
Translated by: mr. Morgane Veenhuijzen LL.M.