1 March 2017

Business reorganization and collective dismissal under Dutch law

Category: Employment law

Sometimes a reorganization is necessary for a business to lower its costs.

This often means that jobs become redundant and that a (collective) dismissal of employees is inevitable.

In case of collective dismissal (20 or more employees) the Collective Redundancy Notification Act (Wet Melding Collectief Ontslag (WMCO)) is applicable.

According to this act, the trade unions should be notified and consulted and the dismissal should be reported to Employee Insurance Agency (UWV) in case the reorganization concerns 20 or more employees within a time frame of three months.

The employer should also consult with its Works Council, if any (required in companies with 50 or more employees).
The Works Council Act may then be applicable.

After notifying the UWV and consultation of the trade unions, the employment agreements can be terminated.
This can be done in several ways (see employment termination proceedings in The Netherlands).

In most cases the employer takes the initiative to terminate the employment agreement by mutual consent based on the Social Plan. In most cases the trade unions and the Works Council negotiate with the employer over a redundancy package and the content of a Social Plan.

In a Social Plan the conditions for termination are arranged such as: severance payment, termination date, notice period, outplacement, redeployment, etc.

It also must be established which positions become redundant. This can established according to the “reflection principle” (in Dutch: “afspiegelingsbeginsel”).

Our employment attorneys assist both employers and employees regarding reorganizations.

We can draft a reorganization plan and assist with dismissal proceedings and negotiations with the trade unions.

We also assist employees who become redundant and who need assistance in the dismissal process.