As a general rule under Dutch law, employment contracts for an indefinite period of time can only be terminated with the approval of UWV (Employee Insurance Agency) or the Cantonal Court. The UWV or the court decides whether the intended dismissal is reasonable and gives its opinion to whether or not it is possible to replace the employee in a suitable alternative position. There are only nine ‘reasonable dismissal grounds’:
In case of dismissal due to financial and/or economic reasons and/or long-term (two year) disability (reasons a and b) the employer needs approval of the UWV by filling in an application for the UWV to judge. The other dismissal grounds (c until h) need to be presented to the Cantonal Court.
The above two ways for termination of an employment agreement (by UWV or court) do not have to be followed if the employee agrees to the dismissal in writing and/or parties reach an agreement regarding termination (regarding this settlement agreement parties are expected to themselves agreeing on the terms and conditions of the termination of employment).
Apart from the abovementioned possibilities, instant dismissal is possible in some situations. There should be behavior or characteristics of the employee as such that the employer cannot be expected to continue the employment contract. The consequence of this situation is that the employment contract has to end immediately/at once, because continuing of the employment contract is unacceptable for the employer.
In case of non-renewal of a fixed-term contract that has lasted at least two years and in case of dismissal through the UWV after at least two years of employment, the employer has to pay the employee a so called transitional remuneration (which remuneration is statutory obliged).
Appeal and cassation of a decision of the Cantonal Court regarding termination of the employment agreement is possible for both parties.
Whereas the employer may, if a request for permission to give notice has been denied by UWV, initiate proceedings for rescission with the Cantonal Court, the employee may also initiate separate legal proceedings with the Cantonal Court after permission to give notice has been granted. An employee can appeal the decision of the UWV at the Cantonal Court.
Even if the employer has managed to obtain a dismissal permit, it may not be possible to use it. This is because, besides there being a general dismissal prohibition, there are, additionally, dismissal obstacles. The law prohibits giving notice of termination in certain situations. The most common of these is where the employee is unable to perform his work (fully) for medical reasons. Other examples are pregnancy and where the employee is or recently was a member of the works council, one of its committees or the board of a pension fund, or where the notice is on account of the transfer of an undertaking.