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Advocatenkantoor Bolton   Raadhuisplein 12  - 6411 HK Heerlen  - tel : +31(0)6- 50 55 55 00


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Dutch Employment Law, legal advice for expats 

Advocatenkantoor Bolton is situated in Heerlen, near Maastricht and Brunssum (NATO JFC). You can find us using Google maps. We offer a broad range of services in all aspects of employment law. These services include drafting all relevant employment documentation, termination of employment contracts and legal advice on various employment law matters in the Netherlands. Concerning employer-employee disputes, we have ample experience in litigation before the cantonal judge, kantonrechter. We also offer the option of appropiate dispute resolution (ADR) for the workplace via evening sessions. We of course provide legal advice for expats.

The information offered on this page is intended for information purposes only and therefore does not imply a specific advice about your situation. The content of this website may not be copied for commercial use, nor may it be published, altered or made available to third parties. Although our site may contain links to other websites, we are not responsible for content, links, or privacy on any of those sites.

Contact us by phone +316 50 55 55 00 or by e-mail secretariaat @ rechtspraktijkbolton.nl

Dutch labour law is well evolved and differs markedly from other EU legal systems. Employment law in the Netherlands does not consist of separate labour laws, but is included in the Dutch Civil Code, Burgerlijk Wetboek. The Dutch Civil Code consists of 9 large "chapters", each called a "Boek" (book). Dutch employment law is codified in Burgerlijk Wetboek Boek 7: 610-686 BW. The employee, especially with respect to dismissal, is better protected than in many other countries. In the case of termination by notice permission from the labour office UWV-Werkbedrijf must be obtained beforehand or else the notice is void without legal effect. 

Timely legal advice will therefore pay for itself in the long run as rushing a termination or dismissal of an employee can become a costly affair.

Working via a temporary employment agency, secondment arrangement or payrolling

Dutch temporary employment agencies may not charge you costs for placing you and has to pay you according to the collective labour agreement, CAO. In the case of a secondment agreement with a foreign company you are entitled to the employment conditions applicable in Holland. Usually a collective labour agreement is applicable to the sector in which you work. Your employer has to inform you about the stipulations of said CAO.

In the case of payrolling your employer has placed the administration of an employee with a payrolling enterprise. In the case of termination by notice via the labour office however, there are some pitfalls to watch out for. Contact us for advice. 


Termination of the employment contract

The termination of employment contracts differs markedly from most foreign legal systems, in particular with respect to the well evolved degree of protection against dismissal. There are five ways in which contracts of employment may be terminated under Dutch law: 1. During the trial period; 2. By notice; 3. By mutual consent / termination agreement; 4. By summary dismissal; 5. By judicial termination.

The termination agreement is the most favoured - and polite - way of parting ways. Sometimes people just don't get along and there' s a clash of characters. In a written agreement employer and employee both agree to end the employment agreement without according fault. The employee can then apply for unemployment benefits or is free to seek employment elsewhere if there are no restrictive clauses. Usually compensation is awarded be it lump sum or paid leave (garden leave) during the notice period. 

Each of these 5 situations will be explained below.

1. Termination during trial period - proeftijd
During the trial period, proeftijd, either party may terminate the contract of employment at will. Termination is with immediate effect and without prior notice. Art. 7: 652 BW stipulates that a contract for a definite period of 1 year has a maximum trial period of 1 month. The trial period with a contract for an indefinite period may not exceed 2 months. However, a collective labour agreement (CAO) may stipulate otherwise.   

2. By notice - voorafgaande opzegging
With respect to termination by notice, opzeggen van de arbeidsovereenkomst, there are contracts for a definite period and contracts for an indefinite period, art. 7: 667 BW.

Contracts for a definite period
A contract of employment for a definite period, arbeidsovereenkomst voor bepaalde tijd, terminates by operation of law at the end of this period without prior notice. The same applies to the second and third contract of employment for a definite period provided that the total duration of all such contracts of employment does not exceed 36 months. The second and third contracts, like the original contract, terminate by operation of law at the end of the respective definite periods.
 
If a fourth successive contract of employment for a definite period is entered into or the three year / 36 months limit is exceeded, the fourth or last contract of employment is then considered to have been for an indefinite period and the above rule concerning termination by operation of law does not apply any more. If the time span between contracts of employment for a definite period is three months or longer, however, they are not regarded as successive but as separate contracts of employment for a definite period. Neither the original nor extended term of a contract for a definite period may be terminated by notice before the expiry of the period, unless agreed to by parties otherwise. However, a contract for a definite period may still be terminated by mutual consent, summary dismissal or judicial termination.


Contracts for an indefinite period

A contract for an indefinite period, arbeidsovereenkomst voor onbepaalde tijd, as "indefinite" implies, does not expire on a particular date but continues indefinitely until terminated by notice, or by one of the other methods discussed in this section.
Before notice may be given, permission from the labor office UWV-Werkbedrijf in the form of a permit must be obtained. In the absence of such a permit, the notice is void. This applies whenever the termination by notice of a contract is within the sphere of the Netherlands labour market, even if the contract of employment is not governed by Netherlands law. That can be the case if the work is permanently performed in or from the Netherlands (and the employee is likely to claim Dutch unemployment benefits, the WW ). However, a permit is not required in case of termination (see 1.) during the trial period, (see 3.) by mutual consent, (see 4.) by (justified) summary dismissal, - in the event of bankruptcy or receivership  - concerning the termination of the contract of a managing director, bestuurder, of a limited company (ltd.), besloten vennootschap (BV)

The labor office UWV-Werkbedrijf
will only grant a permit if the proposed termination is deemed objectively reasonable. The employer must therefore indicate the grounds on which his request is based while the employee against whom it is made may submit a defence, verweerschrift. Thus, permission is not granted automatically as a simple posterior formality. The whole procedure normally lasts eight weeks although in practice it may take longer if a hearing is scheduled or further documents are requested as evidence. This can be the case if the proposed layoff, redundancy or downsizing is based on business economic reasons, called ontslag wegens bedrijfseconomische omstandigheden. Then the employer must provide a financial report by an accountant that proves that there has been a dowturn in business for the past 3 fiscal years and that downsizing the workforce is the most cost effective measure.  
 

Notice period
Once an labor office permit has been obtained, notice of termination may be given, subject to certain prohibitions. The statutory notice period to be observed by an employer is : 1 month with an employment period of 5 years or less; 2 months
with an employment period between 5 - 10 years; 3 months with an employment period between 10 - 15 years; 4 months with an employment period of 15 years or longer.
 
An employee must observe a notice period of one month. This statutory period may be increased or decreased in his individual contract of employment. In the former case, the maximum period which the employee can be required to observe is six months and the notice period to be observed by the employer must be at least twice as long as the period to be observed by the employee, unless otherwise agreed in a collective labor agreement (CAO).
 
If notice is given after a labor office permit, ontslagvergunning, has been obtained, the notice period to be observed by the employer is reduced by one month. A minimum period of one month must be observed. Even after an labor office permit has been obtained, the giving of notice is prohibited by law in certain situations, such as while the employee is unable to perform his work due to illness, unless the employee has been ill for at least two years or the employee has reported being ill after the labor office
received the request for a permit. Nor may a contract of employment be terminated by notice while an employee is pregnant. These situations where termination by notice is prohibited are called opzegverbod and have been codified in art. 7: 670 BW. In some cases termination is possible if the employee is imprisoned for an extended period, chronically late or absent.   

3. Termination agreement - beëindigingsovereenkomst
Contracts of employment for definite and indefinite periods may be terminated by mutual consent, beëindiging met wederzijds goedvinden. No notice is required. Case law has established strict requirements with respect to the validity of the termination by mutual consent since this often has detrimental consequences for the employee (for example, if the statutory notice period hasn't been observed loss of entitlement to unemployment benefits for the duration of said period, called fictieve opzeggingstermijn). In order for it to be held valid, the employee's consent must have been given explicitly and unequivocally. Termination is therefore usually in the form of a written agreement, beëindigingsovereenkomst or vaststellingsovereenkomst. A good criterium is that the employee must not be at a disadvantage (financially) when compared to a regular termination by notice.

4. Summary dismissal - ontslag op staande voet
If an urgent cause exists, an employer may summarily dismiss an employee. It's known as ontslag wegens een dringende reden or ontslag op staande voet and has been codified in art. 7: 677 BW and 6: 678 BW (Dutch Civil Code) In such a case, the contract of employment is not terminated by notice but with direct effect. Consequently the provisions which apply to termination by notice do not have to be observed. An urgent cause consists of a situation which is such that the employer cannot reasonably be expected to allow the employment to continue. Clear examples are theft, fraud, embezzlement or divulging confidential information to third parties.
 
In most cases, however, an urgent cause depends on the specific circumstances of the case. If an employer is hesitant in effecting a summary dismissal - such as instant removal from the workplace - it will be void regardless of whether an urgent cause did actually exist.
 
If an employee wishes to contest the summary dismissal, there are two possibilities. He may claim that the termination was void since no labour office permit was obtained or he may acquiesce but seek to recover damages via the on the grounds that it was unlawful. These damages are limited to the amount of salary which the employee would have received during the notice period had it been properly observed, or to the actual damages directly resulting from the dismissal. In most cases the employee will claim that the termination was void, especially if he has become unemployed as a result. If the contract contains a non-competition clause the employee may prefer to recover damages, since, as a consequence of this liability, the employer is thus prevented from invoking such a clause.

 
5. Judicial termination - ontbinding door de kantonnrechter
Both employers and employees may request that the tribunal - the cantonal judge kantonrechter - terminate a contract of employment on the grounds of "serious cause". It's known as gewichtige reden and has been codified in art. 7: 685 BW. A serious cause will be deemed to exist if either:
I. the circumstances are such that they would have amounted to an "urgent cause" for summary dismissal if the contract had been terminated instantly; or,
II. there is a change of circumstances of such a nature that the contract should in all reasonableness be terminated instantly or on short notice.

The employee may submit a written defence, verweerschrift. If the court deems that serious cause does indeed exist, it will terminate the contract. If it is granted on the basis of serious cause due to a change in circumstances, the court may award the employee compensation in an amount which it deems reasonable. Compensation is calculated using a formula based on cantonal jurisprudence, the kantonrechtersformule.


Compensation is generally calculated according to the following formula, the kantonrechtersformule : A x B x C 


A
is equal to the employee's years of service with respect to his/her age. Years of service before the age of 35 count for 0,5; between 35 and 45 count for 1, between 45 and 55 count for 1,5 and years of service after the employee has reached the age of 55 count for 2;

B is equal to the employee's salary, including his holiday allowance and other structural benefits such as a bonus;
C is the correction factor, which in most cases will be the factor 1. Depending on the circumstances - who is at fault and to what degree - C may be adjusted upwards or downwards by the judge.


Wrongfull termination wrongfull dismissal - kennelijk onredelijk ontslag


In Holland, the concept of wrongful dismissal / kennelijk onredelijk ontslag refers to dismissal contrary to the employment contract which is in turn ruled bij Dutch law art. 7: 681 BW. It constitutes premature termination due to insufficient notice or lack of (valid) grounds. Wrongful dismissal will tend to arise as a claim by the employee so dismissed who in turn has the burden of proof. Art. 7: 681 BW and jurisprudence however, are well evolved in Holland. If the dismissal is deemed wrongfull by the cantonal judge, compensation will be awarded.
 
 
Litigation costs for wrongfull termination are € 800,- (ex 21% VAT & ex court charges) and 15% of the compensation sum awarded. 



Restrictive clauses
of the employment contract

Non-competition clause - concurrentiebedingen
A non-competition clause / non-compete clause, non-concurrentiebeding or just concurrentiebeding, are terms used in Dutch employment contracts under which a - former - employee agrees not to pursue a similar profession or trade in direct competition against the employer. Due to the complexity of non-competition clause under Dutch law - art. 7: 653 BW and its extensive jurisprudence - it is not possible to address this matter more in detail here. But there are some interesting issues to keep in mind.

The use of such a restrictive clause in the employment contract takes into account that upon their termination or resignation, an employee might start working for a competitor or set up his own business. Using the knowledge gained from his former employer would give him a competitive advantage. Most Dutch judges will deem such a non-competition clause to be legally binding as long as the clause contains reasonable limitations as to the geographical area and time period in which a former employee may not compete. The Dutch courts have held that an individual cannot be barred from carrying out a trade in which he has been trained except to the extent that is necessary to protect the reasonable interests of the former employer.

A judge can however annul the non-competition clause when the former employee is disproportionately affected by the clause. A non-competition clause may have become ineffective over time. This can occur if the employee’s job within the company has significantly changed. An employer can also not claim any rights from the non-competition clause if he was at fault in the termination of the employment contract ie the termination was irregular. As the issue of a non-compete clause under Dutch law is fairly complex, it is always wise to seek legal advice before taking any action.

Non-solicitation agreement - relatiebeding
A non-solicitation agreement, relatiebeding, is closely related to the non-competition clause.  It is a clause by which an employee agrees not to solicit - or even accept - business from the employer's customers or business relations. It prevents a former employee or his new employer from gaining a competitive advantage by using business sensitive information such as customer / client lists.

Non-disclosure, confidentiality agreement - geheimhoudingsclausule
A non-disclosure / confidentiality agreement, geheimhoudingsclausule,  is used in Dutch employment contracts to prevent an employee from abusing confidential information about a former employer's operations or trade secrets, patents, upcoming products and marketing plans. By using this knowledge a competitor could gain an unfair advantage by headhunting / poaching employees with valuable business information.  


ADR for the workplace, Mediation

Sometimes all is not lost. Dismissals remain costly affairs, both financially and in terms of lost productivity. Litigation is not the "be all end all" solution for a workplace dispute. Not to mention the distrust created between co-workers in the aftermath of a nasty dismissal.
If workplace harassment or mobbing has occurred, the judge may see fault if the employer remained passive and adjust the compensation accordingly. The burden of proof is always on the employer in these cases. Alternate or appropiate dispute resolution (ADR), better known as mediation, can be an option if the stakes are high and the potential loss regrettable. We can help by using evening sessions where the parties concerned are first interviewed separately about their complaints and grievances. Using issue-based problem solving a positive outcome can be achieved if the parties concerned show their willingness. Depending on the sessions needed a sum-arrangement can be agreed to.  


Rates

The Dutch legal profession does not make use of fixed rates. It is customary in the legal profession to submit a declaration of expenses on the basis of an hourly rate. It is also customary that, even if the action is won, a part of the costs for legal aid is charged to the client. The costs of a lawsuit are determined by a judge on the basis of fixed tables. These costs are generally to be paid by the unsuccessful party. The remaining costs incurred by the client for legal advice and the legal proceedings are charged to the client.

Our hourly legal fee is € 181,50 including VAT. This is the flat fee for standard cases. If the task at hand requires a distinct specialisation or when urgency is of utmost importance a sum-arrangement can be agreed to.

Legal and court charges are decreed by law. In civil (employment) cases the services of a bailiff are called in. A bailiff serves the summons to the defendant and after the court case serves a writ upon the opposite party.


Notice
The information offered on this page is intended for information purposes only. It does not imply a specific advice about your situation nor does it constitute a binding legal relationship with Rechtspraktijk Bolton. As Dutch law is dynamic in nature, we cannot guarantee the actual correctness of the information on this website. For specific advice you can contact us for an appointment by phone  +316 50 55 55 00 or by e-mail  secretariaat @ rechtspraktijkbolton.nl    

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