Netherlands — Termination & Severance

Dutch employment law establishes a dual-route framework for terminating an employment contract when the employee does not consent. Both routes are governed by Book 7 of the Burgerlijk Wetboek (Dutch Civil Code), which replaced the Extraordinary Labour Relations Decree 1945 that historically required ministerial permission for dismissal.

An employer who wishes to dismiss an employee who does not agree must obtain either permission from the UWV (Uitvoeringsinstituut Werknemersverzekeringen, the Employee Insurance Agency) or dissolution by the kantonrechter (district court, cantonal division), depending on the grounds for dismissal.

UWV route — limited to two grounds

The UWV route is available only for dismissal based on:

1. Bedrijfseconomische redenen (economic/business reasons) — redundancy due to reorganisation, workforce reduction, business closure, financial deterioration, or business relocation; or
2. Langdurige arbeidsongeschiktheid (long-term occupational disability) — inability to work for more than two years due to illness or disability.

The employer submits a dismissal application (ontslagvergunning) to UWV. Article 7:669 of the Civil Code sets out the substantive grounds the UWV must verify. For economic dismissals, the UWV assesses whether the business justification is genuine and whether the employer applied the afspiegelingsbeginsel (reflection principle, Articles 7:669(5)–(7)) — selection based on a proportional reflection of the employer's workforce by age and tenure within each interchangeable job category. For disability dismissals, the UWV must confirm that the employee has been unable to work for at least 104 weeks, that the employer satisfied its reintegration obligations under the Wet verbetering poortwachter (Gatekeeper Improvement Act), that no loonsanctie (wage-payment penalty for inadequate reintegration effort) applies, and that the employee is not expected to recover sufficiently to return to work — including in modified duties — within 26 weeks.

The UWV forwards the application to the employee, who has 14 days to submit a written defence. After reviewing both parties' submissions, the UWV issues a decision. If permission is granted, the employer must formally notify the employee of dismissal in writing within four weeks; the notice period then begins. An employer who dismisses without obtaining required UWV permission renders the termination void. If the UWV denies permission, the employer may instead file for court dissolution.

Court dissolution route — all other grounds

For any ground not falling within the UWV's jurisdiction, the employer must apply to the kantonrechter for dissolution of the employment contract (ontbinding van de arbeidsovereenkomst). Article 7:669 lists the permissible grounds, which include:

• Disfunctioneren — poor performance or underperformance;
• Verwijtbaar handelen of nalatigheid — culpable conduct or negligence (serious misconduct);
• Verstoorde arbeidsrelatie — irretrievable breakdown of the working relationship;
• Frequent ziekteverzuim — excessive absenteeism unrelated to long-term disability;
• Conscientious objection or other substantial reasons (e.g., imprisonment); or
• Cumulatiegrond — a combination of reasons that individually would not suffice but together make continued employment unreasonable.

The employer files a petition with the district court. The court evaluates whether a reasonable ground exists and whether reintegration or continued employment is feasible. If the court grants dissolution, it specifies the effective termination date. The court may also award the employee a billijke vergoeding (fair compensation, Article 7:681) in addition to the statutory transition payment (transitievergoeding, Article 7:673) if the dismissal is found to be manifestly unreasonable.

Dismissal prohibitions (opzegverboden)

Certain categories of employees enjoy heightened protection. Article 7:670 of the Civil Code prohibits dismissal during:

• Illness or occupational disability (first two years, extendable if the employer failed reintegration obligations);
• Pregnancy, maternity leave, and six weeks post-maternity leave;
• Performance of specific protected roles (works council members, data protection officers, occupational health specialists).

An employer who terminates an employment contract in violation of an opzegverbod commits a void dismissal; the employee retains the right to continued employment and wages.

Mutual termination and summary dismissal

The dual-route requirement does not apply if the employee consents in writing to termination (beëindiging met wederzijds goedvinden / vaststellingsovereenkomst). Nor does it apply to ontslag op staande voet (summary dismissal for urgent cause), which permits immediate termination without notice when serious culpable conduct makes continued employment immediately untenable; however, the employer must act within days of discovering the misconduct, and the employee may challenge summary dismissal in court within two months.

Source: Burgerlijk Wetboek Boek 7, Titel 10, Afdeling 9 (Articles 669–686a) Source: Rijksoverheid.nl — Wat moet ik doen als ik word ontslagen?

Dutch law imposes a statutory severance payment — the transitievergoeding (transition payment) — when an employer terminates an employment contract or fails to renew a fixed-term contract after at least 24 months of service. Article 7:673 of the Civil Code sets out the qualifying conditions, the calculation formula, the annual cap, and the statutory exclusions.

Qualifying threshold and triggering events

The transition payment is owed when the employment contract has lasted at least 24 months and the contract ends on the employer's initiative. This includes:

• Dismissal by the employer (opzegging door de werkgever);
• Dissolution by the kantonrechter on the employer's application (ontbinding op verzoek van de werkgever);
• Non-renewal of a fixed-term contract after an einde van rechtswege (automatic expiry), when the employer chose not to offer a continuation contract and the contracts were separated by no more than six months.

The 24-month period may aggregate multiple successive contracts with the same employer if the gap between contracts is no more than six months; it may also aggregate service with different employers if those employers are each other's successors in respect of the work performed.

The transition payment is also owed — regardless of which party formally gave notice — if the employee resigned or sought dissolution as a result of serious culpable conduct or negligence by the employer (ernstig verwijtbaar handelen of nalaten van de werkgever), such as discrimination, sustained bullying, or a material breach of contract.

Conversely, the payment is not owed if termination is by mutual consent (vaststellingsovereenkomst / beëindiging met wederzijds goedvinden) or if the employee resigned on his or her own initiative without employer fault.

Calculation formula (as amended 2020)

Before 1 March 2020, the Civil Code used a tiered formula that accelerated the accrual rate for longer tenures and employees over fifty. The Wet arbeidsmarkt in balans (Balanced Labour Market Act, Stb. 2019/219) replaced that structure with a uniform rate: the transition payment equals one-third of the monthly gross salary for each full year of service, plus a pro-rata amount for any remaining months and days.

> Formula (Article 7:673(2) BW, as amended) > Transitievergoeding = (Gross monthly wage ÷ 3) × Years of service (with pro-rata for part years)

The monthly wage base includes basic salary, the statutory 8% holiday allowance (vakantiegeld), fixed bonuses (13th month, performance bonuses that recur), shift allowances, the average of variable overtime pay over the preceding twelve months, and the taxable value of a company lease car or housing allowance (as defined by the Besluit loonbegrip vergoeding aanzegtermijn en transitievergoeding, BWBR0035998). One-off or genuinely discretionary bonuses are excluded.

Service is counted from the first calendar day of employment; there is no minimum tenure before accrual begins, although the payment itself vests only when the contract ends after at least 24 months. Periods of illness, parental leave, or suspension on full pay count toward the tenure calculation.

Annual statutory cap

Article 7:673(2) imposes a dual cap. The transition payment may not exceed:

1. €102,000 gross (the figure in force on 1 January 2026), or
2. one gross annual salary, whichever is higher.

The Minister of Social Affairs and Employment adjusts the euro cap each 1 January in line with the prior year's forecast contract-wage growth (Macro-Economische Verkenningen); the adjustment is rounded to the nearest €1,000. The revised cap applies only to contracts that end on or after the effective date of the change. For 2025 the cap was €98,000; for 2024 it was €94,000; for 2023 it was €89,000.

High earners whose annual gross salary exceeds €102,000 therefore receive a maximum of one year's salary (not the euro cap); employees earning less face the lower absolute ceiling.

Statutory exclusions

Article 7:673(7) lists three situations in which no transition payment is owed, even if the contract has lasted 24 months or longer and the employer initiated termination:

• Minor employees — termination occurs before the employee reaches age eighteen and the employee worked on average no more than twelve hours per week;
• Retirement age — termination occurs in connection with or after the employee reaches the statutory or contractually agreed pension age (in the absence of a lower agreed age, the AOW-leeftijd under the General Old Age Pensions Act, currently rising toward 67);
• Serious culpable conduct by the employee — termination is the direct consequence of ernstig verwijtbaar handelen of nalaten by the employee (gross misconduct, serious negligence, or sustained breach of contract).

In the last case — employee misconduct — Article 7:673(8) grants the kantonrechter discretion to award the payment in whole or in part if withholding it would be unacceptable by the standards of reasonableness and equity.

Payment timing and enforcement

The employer must pay the transition payment within one month of the contract's termination date. From that deadline, statutory interest (wettelijke rente) accrues on any unpaid amount. The employee has three months from the end of the employment relationship to file a claim with the kantonrechter (Article 7:686a(4)); claims filed after that deadline are time-barred.

Employer compensation scheme (small employers only, as from 1 July 2026)

Article 7:673e permits the UWV to reimburse an employer who paid a transition payment if (a) the dismissal followed two years of incapacity for work due to illness or disability, or (b) the contract ended because a small business ceased operations when the owner reached retirement age or died. The reimbursement does not excuse the employer from first paying the employee; the employer then submits a claim to UWV. Legislation currently before parliament (expected to enter into force 1 July 2026) will restrict this compensation to employers with fewer than 25 employees on average; larger employers will remain liable for the full payment without state reimbursement.

Source: Burgerlijk Wetboek Boek 7, Artikel 673 (Transitievergoeding)

Dutch employment law imposes statutory minimum notice periods when either party terminates an employment contract. Article 7:672 of the Burgerlijk Wetboek (Dutch Civil Code) establishes an asymmetric framework: the employer's notice period increases with tenure, while the employee's default period is fixed at one month.

Employer notice periods — tenure-based

Article 7:672(2) of the Civil Code prescribes four tiers for the employer's statutory notice period, measured from the first day of employment:

• Less than 5 years' service: one month
• 5 years but less than 10 years: two months
• 10 years but less than 15 years: three months
• 15 years or more: four months

These periods are minimums; the employer may agree to a longer period in the employment contract or collective agreement (CAO), but may shorten them only through a CAO (never unilaterally in an individual contract), and even then not below one month.

Tenure aggregates successive contracts with the same employer if separated by no more than six months (Article 7:668a(4)). If an employee's contract was reinstated by court order after an unfair dismissal, the tenure calculation counts from the original start date, not from the reinstatement (Article 7:672(10)).

Employee notice period — one month default

Article 7:672(3) sets the employee's statutory notice period at one month, regardless of tenure. This asymmetry reflects the policy that the employer, who has greater economic power, should give the employee more time to find new employment, especially after long service.

The parties may agree in writing to extend the employee's notice period up to a maximum of six months, but only if the employer's notice period is simultaneously set at least double the employee's period (Article 7:672(6)). For example, if the employment contract extends the employee's notice to two months, the employer's notice must be at least four months. If this doubling rule is not observed, the employee may void the extended notice clause and revert to the one-month statutory default.

Zero-hours contracts (oproepcontract / 0-urencontract) — four-day notice

Employees working under a zero-hours contract (oproepcontract or 0-urencontract) — where the employer has no obligation to offer work and the employee has no obligation to accept it — are subject to a special abbreviated notice rule. Article 7:672(4) and (5) set the notice period at four days for both employer and employee.

A CAO may shorten this period further (some collective agreements reduce it to one day). Unlike the standard monthly notice, the four-day period takes effect immediately from the date notice is given; it does not wait until the first day of the following month. This reflects the precarious and variable nature of zero-hours employment.

When notice begins: end-of-month rule

Unless the employment contract or a custom (gebruik) specifies otherwise, notice takes effect against the end of the calendar month (Article 7:672(1)). The notice period then runs in whole calendar months from the first day of the following month.

Example: An employer gives notice on 15 March to an employee with seven years' service. The statutory notice period is two months. Notice is deemed given against 31 March; the notice period runs 1 April through 31 May, and the contract ends on 31 May.

If the employment contract specifies a different "notice day" (e.g., "against the 15th of the month"), that agreement controls.

Shortening through UWV or court procedure (krediet)

If the employer obtained UWV permission or a court dissolution order, Article 7:672(4a) allows the employer to credit the duration of the UWV or court procedure against the statutory notice period. The notice period is reduced by the number of days that elapsed between submission of the complete application and the date of the UWV or court decision, but a minimum notice of one month must remain. This prevents double-counting: the employee already had time during the application process.

Remedy for irregular notice (onregelmatige opzegging)

If either party gives notice with a period shorter than required (e.g., the employer gives two weeks' notice when two months are owed), the termination is not void, but the party who gave short notice owes the other a fixed compensation equal to the salary for the period by which the notice was deficient (Article 7:672(11)).

The kantonrechter may reduce this compensation if equity requires, but not below the salary for the statutory notice period under Article 7:672(2) or below three months' salary, whichever is less (Article 7:672(12)).

Contractual and CAO variations

• Longer employer notice: permitted by contract or CAO without restriction (benefits the employee).
• Shorter employer notice: permitted only through a CAO, and not below one month (Article 7:672(8)).
• Longer employee notice: permitted by written agreement up to six months, but only if the employer's notice is at least double (Article 7:672(6)).
• Shorter employee notice: permitted only through a CAO (Article 7:672(8)).

Any contractual clause that purports to shorten the statutory periods outside these rules is void, and the statutory minimums apply.

Notice does not apply to certain terminations

The statutory notice periods govern only unilateral termination by notice (opzegging). They do not apply to:

• Mutual termination by settlement agreement (vaststellingsovereenkomst / beëindiging met wederzijds goedvinden);
• Summary dismissal for urgent cause (ontslag op staande voet), which takes immediate effect if the employer acts within days of discovering serious misconduct;
• Automatic expiry of a fixed-term contract at its term (einde van rechtswege), though the employer must notify the employee in writing at least one month before expiry if the contract exceeds six months (Article 7:668(1)).

In these scenarios the parties may negotiate an effective termination date, but there is no statutory notice obligation as such.

Source: Burgerlijk Wetboek Boek 7, Artikel 672 (Opzegtermijn)