Netherlands: Public authorities information and consultation on dismissals

Effective from 1 July 2015, a new procedure with regard to dismissal permits applies. According to article 7:671a of the Civil code, in case of restructuring for business reasons (which in practice is the sole reason for restructuring), the employer needs a dismissal permit from the public employment service (UWV), if the employee and the employer do not come to an agreement. This is the procedure for dismissals which are not collective in nature (that is, under 20 people from the same branch or region of an enterprise branch). However, it is possible that binding collective agreements stipulate that a sectorial committee takes a request for collective dismissal (if an employer intends to dismiss or has dismissed at least 20 employees in one or more locations of the same company within one and the same region of the public employment service within 3 months due to reorganisation for economic reasons) into consideration instead of the UWV. 

In the request for a dismissal permit, an argument has to be made to explain why a collective dismissal is necessary. There are several reasons for collective dismissals that are recognised as valid by the UWV: 

• Bad or worsening financial situation of the enterprise;
• A decrease in demand and a subsequent decrease in available labour;
• Changes in technology or in the organisation of the company; 
• Cessation of business activities;
• Movement of business activities to another location (only if this is necessary from a business perspective); 
• Cessation of labour market subsidies for a sufficient number of employees.

This permit is also needed in case of dismissal after long-term illness and disability, when illness has lasted over 2 years and reintegration in the labour market is not possible in the foreseeable future. In these cases, a transition payment has to be made by the employer and dismissal with permission from the public employment service is possible.

With the Balanced labour market act (2020), a new ground for dismissal has been introduced: the cumulation ground. Dismissal is possible when circumstances from the various grounds for dismissal that are submitted through the subdistrict court together provide a reasonable ground for dismissal. In the event of dismissal on the basis of the cumulation ground, the court may award additional compensation to the employee.

Involvement of cantonal courts
In other cases, it is the cantonal court that decides. In case the collective agreement contains an arrangement on special bipartite boards, established by the social partners, the employer has to apply for the permit from this board. In both cases, employers and employees get the opportunity to be informed and consulted. Appeals are possible.