5 things to know about Employment Law in the Netherlands

In this series, Barry Stanton, Managing Partner, is talking to his European colleagues with whom he has worked on numerous projects about five things we should know about employment law in their country.

Today, Barry is joined by Matthijs Roest Crollius, Partner at Doorn & Keizer, an expert in Dutch employment law. Their discussion covers the process and legal requirements for termination and redundancy in the Netherlands, including the role of the UWV and the challenges of performance-based dismissals. Matthijs explains notice periods, severance rules, and the necessity of structured Performance Improvement Plans. 

The episode also explores employer obligations regarding sick employees, restrictions on termination during illness, and the risks of non-compliance. Additionally, the conversation delves into non-compete clauses, their enforceability, and potential legislative changes. Finally, they examine on-call and zero-hours contracts, outlining employer responsibilities and employee rights. 

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Transcript

Barry Stanton: 0:01 

Hello, my name is Barry Stanton, I'm the Managing Partner at Boyes Turner and I've also practiced as an employment lawyer for the past 25 years. In that time, I have seen the growing importance of a knowledge of European and international employment law. In this series I'm talking to my European colleagues, with whom I have worked on numerous projects, about five things we should know about employment law in their country should know about employment law in their country. 

Today I'm joined by Matthijs Roest Crollius, who is a Partner at the Dutch law firm of Doorn & Keizer Matthijs, Hello. So I wanted to explore a few issues with you around termination and particularly around redundancy and how that's treated in the Netherlands. 

Matthijs Roest Crollius: 0:42 

Yeah, well, in the Netherlands, the termination there is a limited amount of grounds for termination. So termination, for example, with regards to economic grounds and incapacity for work, is dealt in one way and the other grounds are dealt in another way. And so I think, first start with the economic grounds. You can't terminate in the Netherlands without permission of the UWV, which is a government body, and you have to first prove that there are economic grounds to terminate the employment agreement, and how challenging is that to prove? 

Barry Stanton: 1:22 

Well, it depends. 

Matthijs Roest Crollius: 1:23 

There are a couple of reasons, like economic reasons, for example, financial reasons or changes in the organization etc. For financial reasons, you have to show why. So you have to show all the annual accounts For changes in the organization you have to show that with big spreadsheets and how the roles change etc. And after you send this in to the UWV, the employee or the employees can defend themselves and state that it's not right or anything. So it can take a long time, at least eight weeks At least eight weeks. 

Barry Stanton: 2:05 

Okay, can you act more quickly than that for economic grounds, or is that really it? 

Matthijs Roest Crollius: 2:10 

No, you can always try to come to a mutual agreement. 

Barry Stanton: 2:13 

Right. 

Matthijs Roest Crollius: 2:14 

It's not always that easy. However, you always still, after that eight weeks, you still have to take into account the notice period. You can deduct the period of this process, but there always will stay one month of notice period will be applicable. 

Barry Stanton: 2:29 

Is there a typical notice or a statutory notice period? 

Matthijs Roest Crollius: 2:33 

The statutory notice period in the Netherlands is one month for the employee, and for the first five years it's one month for the employer, and then every five years one month extra. And is there a maximum? Maximum is four months. Yes, four months, okay, or you can differentiate from that, and then it's always the employee has at least the half of the employers notice period, with a maximum of six months for the employee, so a year for the employer. For example, we don't have golden parachutes in the Netherlands, but with a statutory director you take up something like that at least, and he has something of a golden parachute in a contract. 

Barry Stanton: 3:12 

That's the economic grounds, and then looking at the other grounds 

Matthijs Roest Crollius: 3:24 

The other grounds are, for example, inadequate performance, culpable conduct, et cetera. But in that case you have to go to court and ask the court to terminate the employment agreement 

Barry Stanton: 3:33 

And would the employee be aware of you going to court. 

Matthijs Roest Crollius: 3:33 

The employee will definitely be aware that you go to court because he can defend himself as well, and especially with what is the most um uh ground, which is normally used, is inadequate performance but before that you have to have a PIP, so personal improvement plan. 

Barry Stanton: 3:47 

And how long would the PIP normally take in the Netherlands? 

Matthijs Roest Crollius: 3:54 

We always say three to six months. But if a court is generous, they will award a three months PIP it's enough, but normally they would ask for six. But the most funniest thing is that if you look at the case law in the Netherlands, mostly you never see case law based on adequate performance, because if there is a correct pip, they will settle after that. 

Barry Stanton: 4:18 

In the UK one would expect to have a meeting and tell the employee what you expect them to achieve, and they get a reasonable period of time so a month and then you have a meeting. Is that the similar process in the Netherlands? 

Matthijs Roest Crollius: 4:30 

Yes, you get your PIP for three months or for four months or et cetera. We always start with four and then you have, every week at least, a meeting with one of your coaches, and then halfway you have a check-in to see how it's going and at the end you have the final meeting. 

Barry Stanton: 4:49 

Presumably during that PIP with the coaches you're supposed to support and help them get to the level they're supposed to get to. 

Matthijs Roest Crollius: 4:55 

Yes, and even, if necessary, give them a training or etc. 

Barry Stanton: 5:01 

Most employers be familiar with that. 

Matthijs Roest Crollius: 5:03 

Most English clients we have. They know how it works. 

Barry Stanton: 5:06 

Do employers try and avoid that and reach a mutual agreement, or are they quite keen to go down that route? 

Matthijs Roest Crollius: 5:12 

I would say, at least in our clients, that at least foreign clients don't know how the Dutch court works, so they would always try to come to a mutual agreement. 

Barry Stanton: 5:23 

Right, okay, and you and I have talked about people going sick and having to be very careful about how you treat people or what you tell them. Can we just talk a bit about the rules around sickness and termination? 

Matthijs Roest Crollius: 5:39 

Yeah, we always have, at least from HR managers. They always say we come and live in the Netherlands because during sickness in the Netherlands the company has to pay the first two years of sickness the salary. So normally in law it states it's 70% of the maximum daily wage during the first 104 weeks, so that's around the daily wage is 5,500, nearly 6,000, so it's around 3,500 minimum per month. However, most companies pay the first 52 weeks 100% of the salary and the second year 70% of the maximum daily wage and during that period you can't terminate the employment agreement. That sounds like a lot of fun. That's a lot of fun. And if you don't do everything right according to the company, doctor etc to help the reintegration, the UWV, the government body, can award a third year that you have to pay the salary. 

Barry Stanton: 6:45 

Okay, that's quite a lot of money. So how would you go about terminating an employee to avoid having the employee going sick? 

Matthijs Roest Crollius: 6:57 

So, with regards to a redundancy, you can start a procedure at the UWV without the employee knowing and once it's filed you will inform the employee and he can't call in sick anymore. Or if he calls in sick, then the process is already going and you can later go to court and state hey, he called in sick because of this. In case of a court hearing that's a little bit more difficult because the employee already knows that there is a PIP, etc. So in that case the only thing is make sure that he's going as quick as possible to the company doctor. Because, probably like the same in the UK, an employer can't ask what's really the sickness of an employee for privacy reasons. So only the company doctor can see if the employee is really sick. 

Barry Stanton: 8:02 

So if the company doctor then says the employee is well enough to work, does that mean that they're not then sick, even if their doctor says they are sick? 

Matthijs Roest Crollius: 8:06 

No, if the company's doctor says he's not sick, then he's not sick. The company doctor can state there is, for example, some problems on the work floor. So he advises maybe mediation or anything else, and that's something we always advise as only possibility to terminate a sick employee. If there's also something on the work floor, some problems, you can try to persuade a company doctor to state maybe there's something more. So maybe mediation would be a good idea. And during mediation everything can be on the table, and that also including termination 

Can be quite tricky. 

Matthijs Roest Crollius: 8:50 

The latest time there's a lot of sick employees here in the Netherlands, unfortunately. I will bring you one more thing with that. There is only one reason to terminate during sickness and that's when the company closes, not only when a section of the company but the whole company, but that needs to be a separate entity. And if it's, for example, a branch we just had an English client and they only had a branch office and they were closing the branch office here in the Netherlands and they had one employee who was sick and the government states well then, England can still pay for it during the sickness. 

Barry Stanton: 9:26 

So even if the branch is closed, England could still pay the salary. 

Closing a company is quite an extreme way of getting rid of one sick employee. 

Matthijs Roest Crollius: 9:34 

Well, I think we had five of them in the last year trying. 

Barry Stanton: 9:40 

That's very interesting. Thank you, Matthijs. Non-competition, restrictive covenants I mean that's always a very hot topic for employers. So can we just talk about the position in the Netherlands again? 

Matthijs Roest Crollius: 9:50 

Yeah, because it's currently still different than in the UK. For example, if you have assigned and legally binding non-compete, it's valid. In case of termination, then the company does not have to pay during the non-compete period. However, there are a couple of rules. The employee who signs it has to be 18 at least and there has to be a specific time during which non-compete is valid. So it will be around. Normally it's between six and one year, month and one year, but it could also be two, up to two years. 

Barry Stanton: 10:29 

Okay and how do they judge? Because I mean there's always a lot of debate in in England around the validity of a covenant and with a maximum period of 12 years at the very top end, but if in the Netherlands you can go to two years, how do you judge what is reasonable? Is it judged on reasonableness or is there some other test? 

Matthijs Roest Crollius: 10:47 

No, in principle, as stated, they don't judge it at all. If it's valid, then it's valid. However, you used to be able to make a non-compete for a definite period of time contract as well. It's still possible, but then there have to be very important business interests, which are not often there. But for an indefinite contract it's still possible. However, an employee can, of course, go to court and try to waive the non-compete later on. We used to have one of the reasons, which is a heavier burden. So when an employee started as an intern and now is a partner, that could lead to a heavier burden. However, that's no longer that much taken into account. However, you, if the non-compete does not make it happen that he can find a new job, or that he got a very short employment agreement, or there are no really business interests of the company, that could lead for the company, for the court, to waive the non-compete or maybe reduce it in months. 

Barry Stanton: 12:04 

Okay, and just in terms of the breadth. So the geographical extent of a covenant are they limited to the Netherlands or can they extend worldwide? 

Matthijs Roest Crollius: 12:15 

They can extend worldwide. That's the whole problem. But, of course, if non-compete is much more reduced, for example for the Netherlands, or to a specific scope of kilometres or miles around the city, then it's more reason for the court to uphold the non-compete policy. However, sometimes you see it's for the whole Europe or Northern Europe, etc. And it's still in place. But be aware, in March 2024, there is a new draft bill and that could lead that it has to be maximum two years or maximum one year and the company has to pay. But, however, this is still pending this bill. So that would be that it look much more than to the UK, if I'm right, that the company has to pay to uphold the salary during the period of the non-compete. 

Barry Stanton: 13:14 

No, we don't have to pay in the UK, oh, but you do in places like Germany and France. There has to be some form of payment, whereas in the UK you just need consideration at the time they sign the contract. The final point I wanted to talk about was on-call employees, which I know, I think are a perennial problem in most countries. But what are the issues in the Netherlands? 

Matthijs Roest Crollius: 13:34 

It didn't used to be a problem in the Netherlands because an on-call contract could be a zero-hours, a min max contract etc. And it used. It used to work. When the company needed some extra hands, they could call those person, etc. However, in the last five years this changed, and we've got more legislation on this and there probably will be even more legislation in 2026. Well, that's also a draft bill, but for now the company has to inform the employee at least four days in advance if they want the employee to work, and if the company during those four days terminate or say it's no longer necessary, they still have to pay for the period they want to call this employee. 

Matthijs Roest Crollius: 14:25 

In a collective bargaining agreement, there can be a couple of changes, but that's not many options for change. Also, there is a minimum on-call period in place which is at least three hours per day. If you call an employee, it will be at least for three hours. If you call the employee for two hours, they will be paid three hours per day. And then the most obligation, which we talked about a little is what happens after a year. For foreign employers it's very difficult and different that after a year the employee has to get a contract for the period, for at least the hours he worked in the last year, so an average amount of hours. 

Barry Stanton: 15:09 

So I mean, I think here we're talking about really about zero hours contracts and the employee being called at various points. Has that legislation meant that employers have moved away from zero hours contracts? 

Matthijs Roest Crollius: 15:21 

Yeah, that's correct. The whole government doesn't want to have any on-call employees anymore. Seasonal work is probably the only option which is there for which the government is allowing on-call workers. 

Barry Stanton: 15:33 

We have a similar situation here with the Labour government and the trade unions don't like zero-hours contracts and employers are saying but they work very well, and for some people they do work very well. They get abused as well. 

Matthijs Roest Crollius: 15:45 

Yeah, we have the problem with a student who likes to be an on-call worker and he can say yes or no if he is called, but after a year he gets a contract which he doesn't want at all, with an average amount of hours. 

And what happens in that context? 

Well, he is, of course, entitled to say no, but if the company forgets to give him this contract, then it's automatically by law he gets this amount of hours. So if, for example, he works 15 hours a week average the last year and the company forgets to give him this contract within one month after the end of the year, the employee is entitled to 15 hours a week, if he works or not. 

Barry Stanton: 16:30 

Do people enforce that? 

I bet they do. It's free money 

For the employees. Yes, are there mechanisms to stop abuse? So to stop an employer terminating the contract just at the point where they're about to roll over and get the benefit there are. 

Matthijs Roest Crollius: 16:42 

but if it's a definite contract, of course. If a definite contract ends by operation of law, if it's an indefinite contract and we get back to the start again, then there has to be one of those grounds to terminate the employment contract. And the problem is that, as we call it a closed termination system, that if you don't have the whole dysfunctional employee but only a little, then that's not enough reason for the court to terminate. 

Barry Stanton: 17:12 

That is problematic, isn't it? 

That's definitely, yes. 

I think at that point we probably ought to leave our discussion about termination before everybody gets too many grey hairs. Matthijs, it's been wonderful talking to you. Thank you very much. You're welcome. 

Thank you for joining us today. I hope you've enjoyed our conversation. If you want to listen to more episodes in this series, you can follow or subscribe to our podcast. Goodbye.