Terminating employment in the Netherlands can be complex for employers and HR teams. Whether you are restructuring, dealing with long-term illness, or facing economic challenges, you must follow strict Dutch employment laws. Knowing when and how you can end an employment contract helps your organisation stay compliant and protects both your business and your people.
Understanding Employment Termination in the Netherlands
In the Netherlands, an employer cannot terminate employment without valid grounds or official permission. You need approval from either the district court, the Employee Insurance Agency (UWV), or, ideally, the employee through mutual agreement.
Your HR team should aim to handle negotiations directly with employees. When external permission is needed, ensure every step respects legal and contractual obligations. Following fair procedures reduces the risk of unfair dismissal claims and maintains trust within your company.
When Can You Terminate Employment?
Dutch employment law recognises several fair grounds for ending an employment contract:
- Mutual agreement between employer and employee
- Economic reasons affecting the business
- Long-term incapacity to work (illness or injury)
- Urgent cause involving serious misconduct
Employers should always strive to reach a fair and respectful solution with their employees before pursuing formal termination routes.
Terminating Employment by Mutual Agreement
The most efficient way to terminate employment is through a mutual agreement. This approach avoids drawn-out legal steps and helps both parties part on good terms.
A settlement agreement should outline all agreed terms, including:
- Final working day and end of employment
- Severance or dismissal compensation
- Payment of outstanding salary and holiday pay
- Confidentiality clauses or non-compete terms
Employees have a 14-day reflection period to withdraw their consent. Always include this right clearly in the agreement.
During negotiations, keep communication transparent. Even if an employee continues working during the notice period, treat them respectfully to preserve workplace morale.
Requesting a Dismissal Permit via UWV
If mutual termination is not possible, you can apply for a dismissal permit with the UWV. This route is available when you can no longer pay the employee (economic reasons) or when the employee cannot perform due to illness or injury.
The UWV reviews whether the dismissal is unavoidable and if you’ve made genuine efforts to help the employee stay employed. For example, by offering another role or job placement assistance. If your application is denied, you can file an objection.
Economic Reasons for Termination
Economic reasonable grounds for termination include:
- Reduced workload
- Company relocation
- Restructuring or technological change
- Business closure or partial suspension
- Bankruptcy or subsidy expiration
If 20 or more employees are affected within three months, you must inform trade unions, the works council, and the UWV. Consulting them early ensures transparency and compliance.
Terminating Employment Due to Illness
Dutch law protects employees from dismissal during the first two years of illness or pregnancy. You may only terminate the contract after this period if recovery is impossible within 26 weeks and reintegration has failed.
To proceed, submit a medical statement from the company doctor and a request to the UWV. The agency will verify that dismissal is the last resort and that you’ve made every effort to support the employee.
Dissolution by the District Court
If an urgent situation requires immediate action, you can ask the district court to dissolve the employment contract. This process is faster than applying through the UWV.
The court will invite both parties to a hearing and decide whether the termination is justified. If the dismissal is approved, the court may order a severance payment, unless the employee is guilty of serious misconduct.
Summary Dismissal for Urgent Cause
Summary dismissal applies in rare, serious cases where the employee’s behaviour destroys trust in the employment relationship, for example, fraud, theft, or violence.
If you need to act immediately, communicate the reason in writing at once. The employee then has the right to seek legal advice. If found culpable, they will lose entitlement to severance or unemployment benefits.
What to Include in a Severance Package
Employees are usually entitled to compensation when their employment is terminated. Depending on the case, this may include:
- Transition payment: one-third of the monthly salary per year of service.
- Additional payment (cumulation ground): when dismissal is based on combined reasons.
- Fair compensation: when the employer’s behaviour is considered seriously culpable.
To encourage cooperation, enhance the severance offer with extra benefits such as:
- Career coaching or outplacement support
- Legal aid or a reference letter
- Retaining company equipment
- Flexible end dates or paid leave
Outplacement Support from Octagon Professionals
Restructuring and dismissal decisions require sensitivity, strategy, and compliance. That’s why Octagon Professionals offers outplacement services designed to support HR teams facing layoffs in the Netherlands.
At Octagon Professionals, our mission and vision are one: to be the trusted HR partner of choice in the Netherlands and beyond, delivering innovative, people-first solutions that help organisations and individuals thrive. We believe in creating workplaces where diversity flourishes, connections matter and integrity guides every action.
