Welcome to Penrose Employment law
The attorneys of Amsterdam based law firm Penrose specialise in employment law. Our lawyers have a comprehensive employment law practice where employers, directors, works councils and employees are assisted in areas including employment conditions, dismissal procedures, severance and transition payments, bankruptcy and reorganisations. Our lawyers moreover provide employment law advice on setting up a works council in the Netherlands and how to deal with such council as an employer. A number of common and relevant employment law issues that we encounter on a daily basis are addressed hereafter.
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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.
Employment contract
The contractual relationship between the employer and employee is usually laid down in a written employment contract. The employment contract may not always be in writing in practice and it is possible that it only exists verbally. Roughly speaking, employment contracts can be divided into fixed-term and permanent contracts. A written employment contract states the terms and conditions of employment agreed between the employer and employee, or contains a reference where the applicable terms and conditions of employment can be found (e.g. a collective agreement, regulations or personnel handbook).
Terms of employment and collective bargaining agreement
Terms of employment are specific arrangements applicable to an employment contract. First of all, this will include primary conditions, such as the working hours, the salary and the holidays. But also (more flexible) fringe benefits can be included, such as leave days, training, a travel allowance or a company car. Besides the employment contract, terms of employment are often included in any applicable collective bargaining agreement or staff regulations. Go here to learn more about the terms of employment applicable to an employment contract in the Netherlands.
Dismissal / end of employment contract
The end of the employment contract can be based on several legal grounds that are defined under Dutch law.. Usually an employment contract ends because the employee gives notice in order to work somewhere else, or because the employee retires. Yet, often an employment contract ends against the employee’s will. The end of an employment contract may for example be due to a work related dispute, or because the employer can no longer allow the employment contract to continue for business-economic reasons. Go here to learn more about the most important aspects for employees and employers that should be kept in mind during dismissal procedures.
Settlement Agreement
When the employee and employer agree to terminate the employment contract, this will usually be laid down in writing in a settlement agreement, also called a termination agreement. The settlement agreement under Dutch law usually contains agreements regarding the end date on which the employee last worked, the amount of any (transition) allowance, the method of transfer of the work and agreements about references, non-competition and confidentiality. A settlement agreement usually states that the termination of the employment relationship takes place on the initiative of the employer, and that the cause of the dismissal is rooted in an irreconcilable difference of opinion between employer and employee. This is based on the employee’s wish to be able to apply for unemployment benefits, despite the fact that the employee agreed to the settlement agreement and the resulting dismissal.
Settlement Agreement check: many employees who receive a proposal for a settlement agreement from their employer want to have it checked out and assessed by an employment lawyer.
Transition allowance
By the end of the employment relationship on the initiative of the employer, an employee is entitled under Dutch employment to a transition allowance by means of severance pay. The transition allowance is a legal right that has replaced – what used to be referred to as – the subdistrict-court formula. Since 1 January 2020, this right exists from the first working day and regardless of the duration of the employment. The amount of the transition allowance does depend on the duration of employment and is accumulated equal to a third month’s salary per year of service. However, if a provision is laid down in a collective bargaining agreement (CAO), the employee will receive that CAO provision. Since the introduction of the Wet Arbeidsmarkt in Balans (WAB), the “Balanced Labour Market Act”,) on 1 January 2020, there is no longer any extra accrual of severance pay for employees over the age of 50 and/or employees with an employment contract of more than ten years.
Various tools are available online to calculate the transition allowance, for example on the Dutch website ontslag.nl.
Flexible contracts, payrolling, secondment
There are various legal possibilities to temporarily employ employees and so-called flexible workers in the Netherlands. However, there are legal limits to this. For example, the employer and employee cannot enter into more than three temporary contracts in a maximum of three years without any consequences. Otherwise, the employment contract is deemed to be concluded indefinitely. Frequently used ways to keep a relationship between an employer and one or more employees flexible are secondment, temping or payrolling. It is relevant to distinguish between these different types of contract and to make the right choice for each employment situation under Dutch law. We will elaborate on this in more detail.
Reorganisation / transfer of undertaking (TUPE) in the Netherlands
Companies have to keep up with the signs of the time, and sometimes this requires a reorganisation in order to save costs or implement a more efficient production process. A reorganisation can affect both business operations and personnel matters. Personnel reorganisations often have a major impact on employees who may lose their jobs or have to accept other work as a result. What are the possibilities for employers in the Netherlands in case of a reorganisation? What are the Dutch legal rights of employees in such a situation? What role does the works council play? Hereafter, we will discuss the steps to be taken by an employer in the event of a reorganisation and the important issues that need to be considered under Dutch law.
Works Council
Personnel can have a say in the employer’s company in various ways. Sometimes participation is provided for informally and in a free form, and sometimes it is organised and formalised, for example in the form of a works council. If companies have more than 50 employees, there is a legal obligation in te Netherlands to set up a works council (EC). The rights of the works council are also laid down by Dutch labour law. Through the works council, employees can contribute to the proper performance of the organisation. In addition to the right to be informed, the employees council has a say and may advise on certain company decisions. Certain decisions within the company may even only be taken with the consent of the works council. Go here to learn more about the position and rights of the works council.
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