Under the Collective Redundancy (Notification) Act (Wet melding collectief ontslag - the Act) employers are obliged to notify trade unions and the UWV (the work placement branch of the Employee Insurance Agency - the UWV), of an intended collective redundancy.
Collective redundancy is the termination of a number of individual contracts of employment affecting 20 or more employees who work within the jurisdiction of one of the legal departments of the UWV within a three month period.
Employers initiating a collective redundancy must inform/consult the trade unions, notify the UWV, request that the works council, if any, provide advice in writing, observe a one month waiting period, apply for dismissal permits or terminate the employment contracts with mutual consent and give notice.
Obligation to inform and consult the trade unions
Under the Act, the relevant trade unions must be consulted. Notification must take place at such time as to allow for timely consultation with the trade unions. If a collective labour agreement is in place the contracting trade unions are also deemed to be relevant or "interested" and so must be consulted. The consultation should include avoiding the collective redundancy or reducing the number of employees to be made redundant, and mitigating the consequences of the dismissals, in particular by finding ways to re-employ or re-train employees who have been made redundant.
Employers do not have the obligation to reach agreement with the trade unions. After the consultation, the employer has to observe a one month waiting period.
Obligation to notify the public authorities
Once the trade unions have been informed, copies of the notifications should be sent to the UWV. The employer’s notification must contain the following information: the reasons for the reduction of activities, the number of employees to be made redundant (divided by position, age and gender), the number of employees normally employed, the proposed date of termination, the selection criteria, calculation of redundancy payments, and whether a works council is in place and, if so, whether it has an advisory right and, if so, when it will be consulted.
Once everything is done, a one month waiting period will commence. During this period the employer cannot terminate the employment agreement.
Obligation to inform and consult works councils
The employer must give its works council the opportunity to give advice on any decision it proposes to make concerning (amongst other things) a significant reduction in the work force. The advice must be requested in writing and sought in sufficient time for the works council to have a significant impact on the decision to be taken.
Once the advice has been provided, the employer should make its decision. Where the works council’s advice has not been followed the company must give reasons.
During the postponement, the works council may appeal the employer’s decision to the Companies Chamber of the Court of Appeal in Amsterdam.
The UWV’s approval of applications for collective redundancies depends on a number of factors, including the reasons for the collective dismissal, the selection process used and the outcome of any works council/trade union consultations. The employer should select the redundant employees on the basis of the balancing principle (afspiegelingsbeginsel).
Obligation to look for alternative employment
There is a statutory obligation for the employer to search for an alternative position within the company or even its subsidiaries if the company is part of a group. The employer must check whether there are suitable positions vacant or will become vacant in the near future. Furthermore, if a suitable position is taken by an employee employed on the basis of a fixed term employment agreement, an on call employee or a temporary agency worker (uitzendkracht) and the position is of a structural nature, the redundant employee must be appointed in this position.
Failure to comply with the redundancy process may result in the UWV’s not issuing dismissal permits or in unfair dismissal proceedings.
From 01 July 2015, the dismissal methods changed and are dependent on the reason for the dismissal.
Applications for dismissal on account of business economic reasons or long-term disability are to be sent to the UWV for review.
Applications for dismissal on account of a damaged working relationship or inadequate performance (personal reasons) are to be sent to the Subdistrict Court. The decision of the Subdistrict Court is open to appeal under normal procedural law.
From 01 July 2015, the transition payment was introduced. Payment of the transition payment is a statutory severance requirement. In addition to the transition payment and/or any compensation agreed in the redundancy plan, the following costs arising in connection with termination must also be taken into account. They include: salary and related costs until notice is given and during the notice period, contractual obligations (such as those relating to holiday pay, outstanding holiday entitlement, bonus entitlements, etc), costs relating to pension benefits, outplacement budget and reimbursement of legal fees.
Further information on collective dismissals in the Netherlands is available from our International Employment Issues microsite here.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.