General expectations and recommendations

• Netherlands

• Employment law

07-07-2014

The changes in Dutch employment law intend to make the dismissal system more consistent and predictable as a result whereof it may become easier for employers to terminate employment contracts by mutual consent. However, during the first years after the implementation of the changes, we expect more legal proceedings (i.e. regarding the interpretation of the new regulations and for claims for (higher) severance). Given the new rules on transitional pay and severance we also expect that the Trade Unions and the Works Councils will be more actively involved in the (preliminary stages of the) dismissal procedures, more specific in reorganizations as regards social plans. Considering the foregoing it should be kept in mind that the preliminary stage will be important to make the correct decisions and preparations for reorganizations.

Our general analysis is that under the new act, it will be more difficult for employers to force dismissals, but may also be cheaper.

In the event of long term agreed Redundancy Plans, it is recommended that employers verify if the arrangements made are in accordance with the new act. If not, these arrangements may be null and void or possibly entitle employees to a social plan severance package on top of the new mandatory dismissal compensation, e.g. if a specific dismissal route is prescribed. Further, it may be recommended for employers, Works Councils and Trade Unions to agree on appointment of a dismissal committee in a Redundancy Plan, provided the Redundancy Plan will have the status of a collective bargaining agreement.