Dismissing an employee: what should you consider?
Dismissing an employee is not as simple as terminating an employment contract. The way in which you end the employment relationship has legal and financial consequences.
In practice, an employment contract is regularly ended by means of a settlement agreement (vaststellingsovereenkomst, VSO). The employer and employee agree together on the termination of the employment relationship.
Termination by mutual consent
In a VSO, the employer and employee can agree on matters including:
- the termination date;
- the payment;
- release from work duties;
- holiday entitlement and holiday allowance;
- a non-compete or non-solicitation clause;
- a certificate of employment or reference;
- full and final discharge.
A VSO can avoid proceedings before UWV or the Dutch subdistrict court and gives the parties room to make arrangements that fit their circumstances.
Please note: always have a VSO carefully reviewed. The wording of the arrangements may, for example, affect entitlement to Dutch unemployment benefit (WW), the termination date, and the financial settlement.
What about the transition payment?
When an employment contract is ended at the employer's initiative, the employee is in many cases entitled to the statutory transition payment (transitievergoeding).
The statutory transition payment is calculated on the basis of salary and length of service. In a VSO, the parties can also agree a higher payment.
Whether there is reason to do so depends on the circumstances, including the reason for dismissal, the length of service, and the strength of the employer's file.
The transition payment is therefore often a subject of negotiation in a VSO.
Other dismissal routes
A VSO is not always possible. For example, dismissal proceedings through UWV may be required for economic reasons or long-term incapacity for work. The Dutch subdistrict court may be asked to decide on certain other grounds for dismissal.
The appropriate route depends on the reason for dismissal and the circumstances.
Summary dismissal: proceed with caution
In a summary dismissal, the employment contract ends immediately. This is only permitted where there is an urgent reason, and strict conditions apply.
A summary dismissal can have serious consequences if it later proves not to have been legally valid.
Are you considering summarily dismissing an employee? Always obtain legal advice before taking action.
Common mistakes when dismissing an employee
An inadequate performance file
For dismissal on the ground of underperformance, you must be able to show, among other things, that the employee was addressed about their performance in good time and was given a genuine opportunity to improve. An incomplete file may result in an application for termination being refused.
Dismissal during illness
You cannot simply dismiss an employee who is ill. The prohibition on giving notice during illness applies during the first two years of incapacity for work. There are exceptions, but they are limited.
Incorrect notice period
The notice period depends on the length of the employment relationship. Always check the statutory or contractually agreed notice period.
End an employment relationship well prepared
It is important to act carefully when dismissing an employee. Particularly with a VSO, you should know your legal position and the arrangements you want to make in advance.
Legal Comfort can assist with drafting and reviewing a VSO and with advice and negotiations concerning its terms and payment.
Are you dealing with a dismissal matter? Please get in touch for a no-obligation discussion. I will be happy to consider your situation with you.