Dismissal: Step-by-step plan for employers

An employee that is not functioning properly, a distorted employment relationship or declining income. These are just a few of the causes that can make an employer consider dismissing employees. However, as an employer you cannot terminate an employment contract without cause. You will need to adhere to various conditions, regulations and procedures. Do you want to -or have to- dismiss an employee? Read about the steps you will need to take in this article.

Step 1: Determine reason for dismissal

Before you  start dismissal procedures, you will need to know on what ground you will dismiss your employee and determine if this is a valid reason.

• Financial grounds
  A bad or worsening financial situation in a company can be a legitimate reason to dismiss employees. In the case of reduced income, activities or subsidies it is possible to request dismissals. You can do this at the UWV (only in Dutch).
  In the case of a temporary decline in income and/or activities a dismissal is not always necessary. For example, because of the Corona epidemic many companies and sectors needed to deal with a temporary setback. Is this also the case for you? Check if you can make use of the Temporary Bridging Scheme (The NOW).

• Extended sickness (invalidity)
  Is your employee not capable of working for an extended period? And is the legal term of obligation to continue payment expired (usually 104 weeks)? Then you can request a dismissal application on the basis of extended invalidity. Unless, however, the expectation is that the employee can continue working (or an adapted version of working) within 26 weeks. This application can also be requested at the UWV.

• Personal grounds
  Besides financial grounds, personal reasons can also be the foundation for dismissal. Do you, for example, have an employee that is not functioning properly, is negligent, acts questionably, is frequently sick or has something distorted the employment relationship? Then you will first need to find a way to solve this with the employee. When you fail to come to an agreement and the problems continue or get worse, you can proceed with the dismissal procedure. Contrary to the dismissal on financial grounds, the application for this will go through the district judge. He or she will determine if the reasons are legitimate enough to justify a dismissal. 
  
• Cumulative grounds
  With the start of the Law Balanced Labour Market (WAB), the cumulative ground has been approved as a legitimate reason for dismissal as of January 1, 2020. Due to law, it is now possible to dismiss an employee in the case of a combination of the above mentioned personal factors. Circumstances from different dismissal grounds can, together, be a reasonable ground for dismissal. A combination of less serious factors can, combined, be considered serious enough to legitimize a dismissal. Dismissal based on cumulative grounds also needs to be approved of by the district judge.

• Immediate dismissal
  In the case of serious offences, for example theft, abuse, serious insults or fraud, it is possible to fire the employee with immediate effect (so, without notice or approval of the UWV or district judge). Make sure to notify the employee with the reason for the dismissal, preferably in writing. When the employee disagrees with the decision, he can make a case with the district judge.

Step 2: Request dismissal

When you think one of the reasons mentioned above applies to your situation, and you have reasonable grounds to dismiss then (unless it concerns an immediate dismissal) you file for a dismissal request.

When applying for a dismissal on the basis of financial grounds or in the case of extended invalidity, you can go to the UWV. You can apply through the employers' portal. There is more information about the application procedure from the UWV here (again, only in Dutch). The Dutch government provides employers with information on dismissal procedures in The Netherlands in English.

When you apply based on personal or cumulative grounds, your application will have to go to the district judge. You can apply for a request to dissolute the labour agreement. Read more about the application procedure here.

Step 3: Terminating the employment agreement

When your request to dismiss is honoured, you will need to terminate the employment agreement in time. This way employees can prepare for their dismissal in a timely fashion, and they can make steps to gain income in a different manner. The longer an employee is employed, the longer their termination term. You can see what termination term applies in what case in this table*. You can change your termination term, if this is included in your Collective Labor Agreement. (CAO)[1] .
Does your employee have a temporary contract? Then the employment can end after the last day of the contract term. No termination term applies in this case. However, a notice period [2] applies: you will need to notify the employee that his or her contract will not be extended.

Step 4: Conclude the employment relationship

When you conclude the employment relationship, ensure you will have a correct final account, that also includes the remaining holiday pay and possible transition compensation. With the start of the Law Balanced Labour Market (WAB) on January 1, 2020, the transition compensation applies from the first day of employment. On the government website you can find the tools* to calculate the amount of the dismissal compensation. When necessary, ensure you have a certificate ready that explains the activities of the employee and what qualities the employee demonstrated. This can help your employee when applying for a new job. Lastly, do not forget to make agreements about returning company assets that the employee still possesses.

Would you like to know more on dismissal procedures?

Would you like to know more on how to apply for dismissal? Read about what reasons are (un)grounded reasons here*. On the government website you will find more information about labour law and dismissal, the WAB* and the transition compensation.

Lexlupa is a multidisciplinary effort of fiscal, legal and economic experts. We give advice and guidance to companies, institutions and private individuals at   life events.   Lexlupa  helps you to make well-informed choices in business and personal affairs, and we support you in managing your business in the best possible way.

*Need help navigating the Dutch websites? info [at] lupacompany.com (Contact us)