European Restructuring Monitor (ERM)
Eurofound's ERM database on restructuring-related legal regulations provides information on regulations in the Member States of the European Union and Norway which are explicitly or implicitly linked to anticipating and managing change.
Article 7:673 Civil code; article 9 Royal decree on dismissals of 1 July 2016; Article XII, XIII, XIV and XV of Balanced labour market act of 1 January 2020
The regulation on employers obligation to support redundant employees is aimed at providing a safety network to employees who are affected by downsizing, layoffs or company closure. Employers must pay a transition compensation to employees that have been employed for a period of at least 24 months (2 years), this transition payment is a statutory severance payment.
The amount of transition compensation payment is calculated on the basis of the monthly salary and the duration of the employment contract:
With the introduction of the Balanced labour market act on 1 January 2020, an employee is entitled to a transition payment from day one if the employment is terminated at the initiative of the employer. An employee is also entitled to a transition payment if the employment contract ends or is not continued as a result of seriously culpable acts on the part of the employer. Such compensation has a maximum. To view the current cap, visit the Government of the Netherlands. Moreover, following the termination of an employee's contract, the employer must produce a declaration of prior employment upon the employee’s request.
The statement must encompass the following:
If the employer has incurred training and education costs to foster the employability of the employee, these costs may be subtracted from the transition payment. Such training and education should aim to avoid unemployment in general (news skills favour hiring either in the firm of the employer or elsewhere) or reduce the duration of unemployment, or more generally to increase the employability of the employee. The cost of training specific to the current position of the employee cannot be subtracted. Although this is not an obligation, it is a stimulus for employers to provide sufficient trainings and education.
Training and education costs may only be subtracted from the transition payment by the employer if the option to follow that training is included in the employment contract. The cost deduction is also applicable if the trainings were prematurely terminated.
In the case of collective dismissal, the UWV (public employment service) needs to be informed by the Collective redundancy (notification) act. The transition compensation payment is still applicable in this case.
The impacts of the transition payment have been closely monitored since 2015 and, as pointed out above, have had several compensation arrangements for employers added to ease the burden on employers. It is important to note that the payment does not have to be spent on the actual transition to subsequent employment.
For the training or education to qualify for this arrangement, one of these three categories shall be met:
Details on the transition payment, including reasons why there is no entitlement to such a payment (pension age or culpability), can be found under 'Severance pay/redundancy compensation'.
Eurofound (2015), Netherlands: Employers obligation to support redundant employees, Restructuring legislation database, Dublin, https://apps.eurofound.europa.eu/legislationdb/employers-obligation-to-support-redundant-employees/netherlands
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