Working in the Netherlands: getting fired, unemployment benefits and severance pay
Dec 1, 2020
You came to the Netherlands to work, not to find yourself redundant. But due to the COVID-19 situation a lot of healthy employment relations are hitting the rocks for lack of business. During the first period of governmental subsidies, employers were forbidden to let employees go. As of October 1st, 2020, NOW 3.0 allows employers to gradually let go of their employees. If you’re unfortunate to be one of them, or you’re facing unemployment for other reasons, we briefly explain what happens.
How do I know if my contract was terminated legally?
When you are employed in the Netherlands, there are 4 main ways in which your employment can end:
Your fixed-term employment contract was not extended, so ends after the fixed term. Beware that your employer must still notify you of this non-extension. This notification is called “aanzegging” and the obligation to do so is called “aanzeggingsverplichting”.
You terminate the contract, with due observance of your notice period.
You mutually agree to terminate the contract, and enter into a settlement agreement.
Your employer one-sidedly terminates the contract. This is very heavily regulated. These are the main conditions:
(a) Termination must be approved by either Court or the Dutch Employee Agency
(b) Employer must observe the legal notice period.
(c) There must be an urgent reason. Examples are : misdemeanour in the performance of the work, criminal acts, economic circumstances of Employer, among others.
Note: there is one major exception. If you have a contractual “proeftijd” or “probation period”, your employer may terminate your contract with immediate effect and without cause.
The aforementioned “economic circumstances” will be applied by employers looking to terminate employment contracts due to COVID-19. This will be reviewed by the Dutch Social Security Agency (UWV) and they pose some strict conditions. These are the main three: (i) the termination is necessary for the survival of the company, (ii) if there are multiple terminations, they need to be evenly spread out demographically over the employer’s workforce (“Afspiegelingsbeginsel”) and (iii) Employer must prove he did his best to either replace the employee at another position within the company or at another company. These are pretty strong prerequisites.
How do I find out whether I’m working on a fixed term or indefinite contract?
Start by looking in your contract. This should specify your contract term. If your contract is fixed-term, look at your employment history. If you have been working under 3 consecutive fixed-term contracts for the same employer within 3 years, and without a pause of 6 months or more, the fourth contract automatically becomes indefinite term. No matter what you may have agreed upon. This is called : the chain rule (“ketenregeling”) and is of cogent law. That means you cannot opt out of it, even if you want it as an employee.
Note: If you have been employed as an intern at your employer, before entering into a formal employment agreement, this internship period does not count towards the chain rule explained above.
I’m pregnant and my fixed-term contract is not extended. Isn’t there a rule against that
No there isn’t. Fixed-term contracts may be extended, or not extended, without cause. For this, it doesn’t matter if you’re pregnant or incapacitated.
I have been fired, now what do I do?
First try to determine whether your contract termination was legal. In most cases, it is. But we’re surprised to see what kind of tricks some employers still try to get away with. Especially when they think you’re not aware of the rules. If you are being fired over “economic circumstances”, the Employer needs to prove the points we mentioned previously. That can be pretty tough. Not sure where you’re at? Just drop us a question and we’ll see what we can do. It’s also worthwhile to check whether your employer is receiving NOW subsidies from the government. If so, he may only fire a small amount of FTE.
When your termination is legal, or when you are considering a settlement agreement with your employer, the first thing you want to know about is: severance pay. In Dutch we call it “transitievergoeding” or transition fee. The good news is: it will apply very often. The bad news is : it’s not as high as you may have hoped. The following rules apply here:
Transition fees only apply when the termination was instigated by your employer. If you quit yourself, you don’t get a transition fee unless you can prove gross misdemeanor by your employer.
Transition fees apply for every contract form, either fixed-term or indefinite term.
Transition fees even apply when a fixed-term contract is not extended by your employer.
The amount of your transition fee is roughly calculated as : ⅓ monthly salary per whole year of employment, capped at € 84,000 before taxes (2021). If you want to make exactly sure you can use the Tax Authorities calculator here. It is only offered in Dutch however...
I have a 30% ruling and I’m getting fired. How do I keep my ruling?
Your ruling isn’t forfeited immediately, but you must find another employer within 3 months after your previous employment ends. It doesn’t matter when your new employment enters into effect, as long as you sign your new contract within these 3 months. If you miss out on this, your ruling is forfeited and you need to apply for a new one from scratch. Read more about the 30% ruling here.
I’m unemployed, what are my benefits?
When you are unemployed in the Netherlands, you may be entitled to unemployment benefits (or “WW-uitkering”). The WW- uitkering roughly amounts to 75% of your last gross monthly pay during the first 2 months of your unemployment. From the third month onwards, it’s 70% of your last gross monthly pay. The WW-uitkering lasts for at least 3 months, as long as you can prove you worked during 26 of the last 36 weeks before the end of your employment. Afterwards you are entitled to 1 month of WW-uitkering for every year of your employment in the Netherlands. This is explained in more detail (in Dutch) on this page of the UWV.
The following rules apply here:
You may not be “guilty of your own unemployment” (that’s the best translation we can give, I’m afraid). This means among others: if you quit your job yourself, or you were fired because of your behaviour, you cannot get a WW-uitkering.
If you’ve entered into a settlement agreement with your employer, make sure the settlement states an “irreconcilable difference of opinion about the performance of your job” or similar words. If you state you’re fed up with the situation, you may miss out on your WW-uitkering.
Your employment contract must contain a termination clause. Fixed-term contracts don’t always have such a clause, so check this.
Be sure to let your employer continue to pay for the duration of your notice period, even if this notice period was not applied. This is called the “fictitious notice period”. You will never get WW during this period, even if you don’t receive pay during this period.
The WW-uitkering does not apply to freelancers who have worked from an eenmanszaak (ZZP-ers). If you’ve worked as a freelancer from a BV, you have pay rolled yourself and paid your social security taxes, which means you are eligible for WW-uitkering.
The Netherlands has a lot of rules for the protection of employees. If you feel you have been treated wrongfully or just feel daunted by all the regulations, you can always reach out to us.
Do you have any questions after reading this? Don’t hesitate to reach out.
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