Redundancy and collective dismissal in the Netherlands: the compliant employer's path

Redundancy in the Netherlands follows strict, employee-friendly rules. Employers who respect them protect both their people and their reputation. This guide maps the compliant path clearly. It covers valid grounds, collective dismissal duties, selection, notice, and pay. Therefore, international employers can restructure lawfully, and with dignity.

What counts as redundancy in the Netherlands?

Redundancy in the Netherlands means dismissal for business-economic reasons, not personal fault. Common triggers include cost cuts, restructuring, relocation, or a closing department. Because the job disappears, the Dutch employment law calls this a business-economic dismissal. Employers must prove the reason is genuine and lasting. Otherwise, the dismissal fails.

Dutch law splits dismissal into two routes. For economic redundancy, employers apply to UWV, the government agency. For personal or performance issues, they go to the subdistrict court instead. This guide follows the redundancy route through UWV.

When does redundancy in the Netherlands become collective dismissal?

Redundancy in the Netherlands becomes collective dismissal when an employer plans to dismiss 20 or more employees within three months. All must sit inside one UWV working region. This duty comes from the Collective Redundancy Notification Act, known as the WMCO. Once it applies, extra obligations begin, and skipping them carries real risk.

Importantly, terminations by mutual consent usually count toward the 20, too. So employers cannot dodge the rules through settlements alone. In addition, several smaller rounds can add up within the three-month window.

The compliant employer’s path, step by step

The compliant path means completing each legal step in order, before anyone leaves. First, employers confirm genuine economic grounds. Next, they explore redeployment. Then they select fairly, notify, consult, and finally pay what the law requires. Below, the table summarises this redundancy Netherlands sequence.

Step	What the employer must do
1	Confirm genuine, lasting business-economic grounds
2	Explore redeployment or reassignment first
3	Select employees using the reflection principle
4	Notify UWV and consult unions and the works council
5	Observe the one-month waiting period
6	Obtain UWV permits, then honour notice periods
7	Pay the transition payment on departure

Because each step builds on the last, order matters. Skipping just one can undo the whole process.

Redeployment deserves special attention here. Before any dismissal, employers must look for suitable alternative roles. If a fitting role exists, they must offer it first.

How do you select who is made redundant?

Employers select redundant staff using the reflection principle (afspiegelingsbeginsel), not personal preference. First, temporary and external workers in the role leave. Next, the employer groups remaining staff in comparable roles by age. Within each age group, the most recently hired leave first. As a result, the selection stays objective and age-balanced.

This method protects fairness across generations. However, it also limits an employer’s freedom to keep favourites. Clear documentation of the selection pool therefore matters.

What must employers notify and consult on?

During a collective dismissal, employers must notify UWV and consult every trade union with members in the business. They must also seek the works council’s advice, where one exists. Together, these talks should explore how to avoid redundancies and soften the impact.

• Notify UWV of the intended collective dismissal.
• Consult each relevant trade union.
• Seek the works council’s advice, if you have one.
• Respect the one-month waiting period before contracts end.

Unions can waive that waiting month in writing. Above all, missing these steps lets a court annul the dismissals.

How much does redundancy cost employers?

Redundancy Netherlands costs centre on the transition payment (transitievergoeding). Employees earn one-third of a month’s salary for each year of service. This right starts from the first working day. In addition, statutory notice periods still apply. A yearly-indexed maximum also caps the payment.

Exact figures depend on salary, tenure, and other factors. Because the rules change each year, employers should confirm current limits. This is general guidance, not legal advice. For a tailored calculation, Octagon’s consultancy team can help — reach out at info@octagon.nl.

Redundancy without a Dutch entity: where Octagon fits

Many international employers manage Dutch staff without a local entity. Here, an employer of record (EOR) becomes the legal employer. It carries the redundancy duties too. When a role ends, the EOR runs the process correctly. As a result, the client avoids fines, annulled dismissals, and reputational harm.

Octagon enables talent to move across borders, in both directions. We help you hire compliantly, and part with people respectfully. For nearly 40 years, we have guided employers through Dutch and European rules. So compliance stays your foundation, not your risk.

Restructure with confidence, not risk

Redundancy in the Netherlands rewards employers who plan ahead. The compliant path reduces real risks: annulled dismissals, fines, severance disputes, and lost trust. Octagon removes the administrative burden, while you keep full control of decisions, salaries, and timing. In short, we handle the complexity, so your business keeps moving. To restructure or expand with confidence, partner with Octagon Professionals today.

Frequently asked questions about redundancy in the Netherlands

How many employees make a redundancy collective in the Netherlands?

A redundancy becomes collective when an employer plans at least 20 dismissals within three months in one UWV region. The Collective Redundancy Notification Act then applies. Employers must notify UWV, consult unions, and often the works council. Terminations by mutual consent usually count toward that total.

Do I need UWV permission to make someone redundant?

Yes. For redundancy on business-economic grounds, employers need a dismissal permit from UWV before ending the contract. UWV checks the economic reason, the reflection principle, and redeployment efforts. Without this permit, or a signed settlement, the dismissal is not valid and a court can reverse it.

How much is redundancy pay in the Netherlands?

Redundancy pay centres on the transition payment. Employees receive one-third of a month’s salary for each year worked, counted from day one. A statutory maximum applies and changes yearly. Salary, tenure, and other factors affect the final amount, so employers should confirm the current cap.

What is the reflection principle in Dutch redundancy?

The reflection principle (afspiegelingsbeginsel) decides who leaves during redundancy. Temporary and external workers go first. Then the employer groups comparable roles by age and dismisses the most recently hired in each group. This keeps the age structure balanced and the selection objective, rather than personal.

Can a foreign company make Dutch employees redundant without an entity?

Yes, but the legal employer must run the process. With an employer of record, that provider handles notice, permits, and transition pay compliantly. This lets foreign companies restructure Dutch teams without a local entity. Expert support then reduces the risk of fines or annulled dismissals.