A collective dismissal according to the Collective Redundancy Notification Act (Wet melding collectief ontslag, Wmco) occurs if an employer intends to dismiss/dismisses at least 20 employees in one or more locations of the same company within one and the same region of the public employment service (there are 6 such regions in the Netherlands) within a period of three months due to reorganisation for economic reasons.

The law dictates that the employer must inform the UWV (public employment service) in advance of any collective redundancies and consult the trade unions. In the event of dismissal without mutual consent, the UWV or the collective agreement committee (cao-commissie) will assess the dismissal. Since the introduction of the Work and Security Act (Wet Werk en Zekerheid – WWZ) , it is no longer possible to request the subdistrict court to dissolve the employment contract due to reorganisation for economic reasons. The employer must first submit an application for dismissal to the UWV. If the UWV refuses the dismissal, then the employer can go to the subdistrict court to request the termination of the employment contract. This is seen as an appeal against the UWV's decision. If it turns out afterwards that the employer did not comply with the obligations of the Wmco, then the court can reverse the dismissal.

With effect from 1 March 2012, employees who reach a termination agreement with their employer about ending their term of service will be included in the count to qualify for the threshold of 20.  

For example, suppose there is a dismissal involving 15 employees that followed the usual procedure, for example the employer requested a dismissal permit from the public employment service or (if relevant) a collective labour agreement committee. On top of this, two dismissals through a court procedure occurred (relevant for temporary contracts without agreed possibility of contract termination) and three termination agreements were negotiated between the employer and the employee within a period of three months following the initial dismissals. Then according to the changes from 1 March 2012, all these dismissals would add up to 20 and therefore considered as a collective dismissal, i.e. above the threshold. All dismissals that are to be counted towards the 20 employee limit that is set for the definition of collective dismissal have to occur within three months of each other.