Dismissal and end of employment contract

An employment contract between an employer and an employee can end in various ways. This may be because there is a fixed-term contract and the employment contract expires, but there may also be other reasons for ending an employment contract, such as dismissal. Depending on how an employment contract is ended or terminated, there are legal rules that must be followed.

Termination of employment contract during probationary period

There may be no match, and the employee or employer may already want to terminate the contract during the probationary period. If a probationary period is included in the employment contract, there is no notice period and early termination is possible. The cooperation can be stopped immediately during the probationary period. No further procedure is required for the termination of the employment contract.

Very occasionally, an employer may renounce the cooperation even before the start of the probationary period. Terminating an employment contract before the start of the probationary period is only possible if the contract includes a probation clause. Does the contract not include a probation clause? Then terminating an employment contract is only possible with the cooperation of the employee or, if economic reasons are the reason for dismissal, with the UWV’s permission. Are there other grounds? Then an employment contract can be terminated before the probationary period by a decision of a subdistrict court judge.

Dismissal and end of fixed-term employment contract

In case of a fixed-term employment contract, the employment contract in principle ends automatically (by operation of law) at the end of its term. Since the introduction of the Work and Security Act (WWZ), the employer does have a duty to give notice when terminating an employment contract. This means that the employer must inform the employee one month before the temporary employment contract ends whether or not the contract will be extended and under what conditions, if any, the contract will be continued. The notice must be given in writing.

If the employer forgets to notify that a fixed-term employment contract is ending or fails to do so on time, the employer must pay the employee a notice fee; this is compensation of up to one month’s salary. In practice, this means that an employer has to continue paying one month’s salary to the employee. In some cases, the employer does not have this obligation:

• If the temporary employment contract is for a duration of less than 6 months;
• If it is a temporary contract for a term that cannot be determined in advance (e.g. when replacing illness or for a particular project);
• If it is an agency contract with an agency clause;
• Transition compensation for temporary contract;
• With the introduction of the new Labour Market in Balance Act (WAB), employees with a temporary contract are also entitled to a transition allowance when an employment contract is terminated, just like employees with a permanent contract. This compensation is compensation for job loss. From the first day of work, the compensation is accrued. Here, all contracts are added together. Only contracts interrupted by six months are not counted.

It does not matter if the contract was not renewed or if the employer terminated the contract, or if a dismissal procedure was followed. The amount of the transition compensation is determined by looking at the salary and how the employment has been.

Termination of employment contract for an indefinite period

To terminate an employment contract for an indefinite period of time, the employer (or employee) must perform a specific act to effect the termination. There are several options for the employer to terminate an employment contract. The parties can terminate the employment contract by mutual consent at any time. In doing so, parties can choose to record the termination in a so-called settlement agreement. At the time the employer takes the initiative to terminate the employment contract, the employee is entitled to WW benefits.

In case the employee does not agree to terminate his employment contract, the employer must follow a fixed dismissal route since the introduction of the Work and Security Act (WWZ). If the dismissal has business economic reasons or takes place due to long-term illness or long-term disability, the employer must turn to the UWV.

Reasonable grounds for dismissal

A valid dismissal and end of employment contract requires reasonable grounds. This is laid down by law. Termination of an employment contract is possible if there are urgent reasons. Examples of grounds for dismissal through which an employment contract ends include:

• Business economic reasons;
• Reorganisation or closure or relocation of a company;
• Long-term occupational disability;
• Regular absenteeism due to illness;
• Inadequate performance;
• Culpable behaviour;
• Disrupted working relationship;
• Serious conscientious objection;
• A combination of circumstances;
• Instant dismissal;
• In case the dismissal concerns personal reasons, such as dysfunction or a labour conflict, the employer must apply to the subdistrict court with a request to dissolve the employment contract. In addition, an urgent reason can also be the basis for dismissal or termination of the employment contract. In that case, we speak of summary dismissal. Urgent reasons include criminal behaviour, violence, serious incompetence, work refusal and breach of the duty of confidentiality.

No right to unemployment benefit

Previously, there was also the possibility of the manifestly unreasonable dismissal procedure, and the employer could request the subdistrict court to determine fair compensation based on the subdistrict court formula. These options have both lapsed under the WWZ. In case of summary dismissal for culpable conduct, an employee may not be entitled to WW benefits.

Dismissal on personal grounds

Is there a disturbed working relationship between employer and employee? If so, the subdistrict court should be called in for dismissal and termination of the employment contract. However, a dismissal for personal reasons is subject to several conditions. For instance, the subdistrict court asks the employer for the reason for the disturbed working relationship and what steps have been taken to improve the relationship. An employer must also substantiate why it is not possible to solve the conflict by reassigning the employee.

Terminate contract by mutual agreement

The employer and employee can also choose to terminate the employment contract by mutual agreement. This way, parties can save time and (legal) costs. Another advantage is that the conditions for terminating the employment contract, including the amount of any severance pay, are agreed by mutual consent. A transfer fee is not mandatory in these agreements, but will often be a condition of the employee agreeing to terminate the employment contract by mutual consent. If the employer reaches an agreement with the employee, it is important to clearly record the agreements made in a so-called settlement agreement. A lawyer specialising in employment law can draft such an agreement.

Termination of employment contract with consent

Suppose the employer wants to terminate an employment contract, the employer can terminate the employment contract if the employee gives his or her consent in writing and declares that he or she agrees with the termination. In this case, we refer to an employment contract termination by consent. An important difference with a termination by mutual consent is that in this form of terminating a contract, a transition fee has to be paid. There are fixed rules and regulations for calculating this compensation.

Collective redundancy

If an employer intends to terminate the employment of at least 20 employees, working in one working area, within a period of three months, it is a case of collective dismissal. In the event of termination of the employment contract of at least 20 employees, the employer is bound by the Notification of Collective Redundancy Act (WMCO). Under this Act, the employer is obliged to report an intention to make collective redundancies to the trade unions and the UWV Werkbedrijf.

Employee wants to terminate employment contract

In practice, the initiative to terminate the employment contract does not always come from the employer. Employees can also terminate the employment contract. This can be done verbally or in writing, as long as the notice has reached the employer. The employee must comply with the applicable notice period.

A request to the court for dissolution by an employee is particularly the case if the situation in the workplace or the mutual relationship with the employer is so bad that the employee can no longer be expected to maintain the employment contract. If such a situation is due to the employer, liquidated damages can be claimed. The damages are then equated to the salary over the period that the employment contract should have continued in the event of regular termination. Whether such a situation arises depends on the circumstances of the case.

Employment law lawyer in case of dismissal

The lawyers at Fruytier Lawyers in Business specialise in proceedings surrounding dismissal and termination of employment contracts. Would you like advice on terminating an employment contract, drafting an employment agreement or including a non-competition or non-solicitation clause in your employees’ contracts? Our employment law specialists are happy to advise and assess your options: from summary dismissal due to culpable actions to terminating a temporary employment contract. For legal advice and the best solution for your specific challenge, contact us directly.