Welcome to Penrose Labour and Employment law
Penrose specialises in the field of Dutch labour and employment law. We advise and assist employers, directors, works councils and employees on matters concerning employee agreements, termination procedures and termination benefits, restructurings, mergers and acquisitions and employee participation. We also provide advice on setting up and operating a works council. On this page, we address several of the employment law issues that we encounter on a daily basis.
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Introduction to Dutch labour law
For a general introduction to employment law in the Netherlands, we have drafted the e-brochure “Introduction to Dutch Labour Law” that provides a brief overview of the most important rules of Dutch labour law.
The contractual relationship between the employer and employee is usually covered by a written employment agreement. Under Dutch law, it can also be an oral agreement. The employment contract stipulates the terms and conditions of employment, such as a probationary period, where and when the work will be carried out, the salary and a number of restrictive provisions for the employee, such as a non-solicitation clause and a confidentiality clause to protect trade secrets. Under Dutch law, such employer protective stipulations need to be in writing to be valid. The rules on what can and cannot be agreed in an employment contract are very strict. Therefore, it is advisable to timely seek legal advice from a Dutch labour and employment law attorney.
Employees are remunerated for their work, predominantly through salary / wages. An 8% holiday pay is mandatory under Dutch law. In addition, the compensation can entail a 13th month salary, (non-voting) shares, stock options and bonus schemes. A proper remuneration package is, of course, important for attracting and retaining quality employees and in that sense the Netherlands is no different. At times it may be desirable to adjust the remuneration package, for example after a promotion or if employers merge and the harmonisation of the terms of employment is desirable. In that case, many employees seek Dutch legal assistance.
Dismissal and severance pay
An employment conflict often results in the termination of the employment relationship. Sometimes an employee is entitled to compensation. Whereas in the past, in the Netherlands, the so-called ‘cantonal court formula’ was used to calculate the severance pay, nowadays the transition pay system (transitievergoeding) applies.
Both the employer and employee may invoke the termination of an employment agreement. In the event of a resignation by an employee, the letter of resignation plays an important role as it is proof for both parties that the employee’s will to terminate the employment relationship is there. In the Netherlands,
the employer has various options to lay off an employee, depending on the reason for dismissal. In order to make the right choice between these different options, it is -strongly- advisable to seek legal advice from a Dutch employment lawyer. The legal and financial consequences of unfair dismissal in the Netherlands can be severe.
Restructuring and personnel
Companies change: they for instance merge or demerge. Sometimes activities are added, and sometimes an entire department will discontinue because the activities are being outsourced. This usually also affects the employees. What are the implications of these actions for the staff under Dutch law? What rights do employees have in the Netherlands? What are the options for employers? What is the role of the Works Council? To be aware of the legal implications and consequences of corporate transaction in the Netherlands, it is paramount to seek legal assistance in due time.
Acquisition or outsourcing business activities
The acquisition of a business, for instance as part of an outsourcing operation by another company, will have implications for the employees under Dutch law. If the activities within the acquired business are carried out by employees, the acquisition also implies the automatic take-over of these employees, unless it is possible to agree on this otherwise. The so-called Transfer of Undertaking (Protection of Employment rules -in short: TUPE rules- also apply in the Netherlands. As a consequence, the buyer of business in the Netherlands could be bound by the existing employment terms and conditions that regard the employees and the seller. The employees retain their right to work, their existing employment conditions, pensions and employment history.
Under certain circumstances, employees can participate in the employer’s company in the Netherlands. According to Dutch labour law, companies with over 50 employees are obliged to establish a ‘co-determination’ body, the Works Council. The Works Council has the right to receive information from the employer and the right to participate or advice on certain important corporate decisions and policies. Properly informing and having the right dialogue with a Works Council can prevent delays in the implementation of important board resolutions and prevent legal proceedings. In certain events, a Works Council has the possibility to sue the company it is part of.