Individual dismissal law in The Netherlands Prof Teun Jaspers Prof Saskia Klosse Pontignano/Modena 2013

2 Dismissal law in The Netherlands Themes 1. general system 2. legal grounds and objectives 3. escape by the f-word 1. flexible work relationships 2. consequences for dismissal law

3 General system Dismissal by the employer Two-tier system: “Administrative procedure” via UWV “Judicial procedure” via the judge Preventive test Dismissal law in The Netherlands dismissal decree / Guidelines Dissolution of the contract Justified reasons Alternative Protection by prohibitions

4 Dismissal law in The Netherlands Grounds for dismissal  (mis)conduct of the employee  summary dismissal on an urgent reason (art. 677 CC)  economic reasons  unsatisfactory performance/ behaviour of the employee  not to be blamed for (incapacity)  to be blamed for (misconduct)  breach of trust

5 Dismissal law in The Netherlands Table of the use of the two-tier system: By the judge N= By the CWI/UWV * Approval granted 83.7 %85 %76 % Approval refused 5.3 %7 %8 % * Individual: ca 80 %

6 Dismissal law in The Netherlands Reasons for termination by CWI/UWV: Economic reasons Individual 54 %56 %84 % 66 % Sickness-disability25 %22 %11 % other6 %7 %5 % Collective dismissal Economic reasons 15 % 18 %

7 Dismissal law in The Netherlands Assessment of the (grounds of) dismissal by UWV  burden of proof upon the employer “economic dismissal”  incapacity of the employee after investigation of alternatives  incapacity due to illness or handicap no possibility for replacement in a suitable job in case of collective: seniority principle (mitigated)

8 Dismissal law in The Netherlands Prohibition of dismissal  General prohibition of dismissal: lacking the approval/permit of the UWV  Specific prohibitions (art. 670 & 670a CC): 1.During sickness (the first two years) 2.Pregnancy 3.Membership of works council 4.Trade union membership 5.Parental leave

9 Dismissal law in The Netherlands Sanctions unjustified dismissal “Administrative procedure” via UWV “Judicial procedure” via the judge Null & void Additionally Severance pay Notice period: Compensation? Or severance pay? Extra judicial procedure Dissolution of the contract by court Extra Severance pay ex aequo et bono District court formula: SxWxC

10 Dismissal law in The Netherlands Sanctions Administrative procedure before UWV Termination without the approval of the UWV:  termination null and void  continuation of the employment contract After getting the approval  termination by notice  observance of the notice period  possibility to invoke the apparently unfair dismissal extra compensation (severance payment)

11 Dismissal law in The Netherlands Dissolution of the contract by the court (art. 685 CC) two grounds:  urgent reasons  change of circumstances no to be blamed neither to the employer nor to the employee  ‘breach of trust’ Subject to the obligation the judge has to make sure a relation to the specific prohibitions of dismissal doesn’t exist  if so the request to dissolve has to be refused Assessing all kinds of circumstances Severance payment

12 Dismissal law in The Netherlands (mis)conduct of the employee summary dismissal on an urgent reason (art. 677 CC)  summary dismissal on an urgent reason (art. 677 CC) Subject to: 1.Burden of proof: employer “ when an employer points at different facts to justify a summary dismissal, he must prove all (these) facts”: HR (X vs Willemsen) 2.Taking into account all circumstances of the case (including personal non-job-related circumstances): HR (Vixia vs Gerrits)

13 Dismissal law in The Netherlands unsatisfactory performance/behaviour of the employee (1)  to be blamed for (misconduct) A whole range of aspects have to be considered: 1. the employer is able to provide objective criteria for unsatisfactory Performance 2. the employee has been warned 3. A procedure of due process has to be followed (interview, reaction of the employee) 4. the employer shortly after the alleged unsatisfactory performance, notified the employee of the unsatisfactory performance 5. the employer notified the employee in clear wordings and in a proper way, in which respect the employee performed unsatisfactorily 6. the employer allowed the employee to improve himself

14 Dismissal law in The Netherlands unsatisfactory performance/behaviour of the employee (2)  to be blamed for (misconduct) A whole range of aspects have to be considered: 7. the employer and the employee made a realistic plan in improving the employee’s performance, and the employer offered guidance, including job training and/or occupational retraining 8. the employee made efforts in improving himself or, in contrast, neglected reasonable instructions in this respect 9. the employee fulfilled a role model within the company; 10.the dismissal must be considered as disproportionate based on the employee’s age, years of service and chances on the labour market.

15 Dismissal law in The Netherlands Highlights of the current discussion in the Netherlands 1.The two-tier system  because of its complexity  an out dated system 2. The system (as developed in case law) on the severance payments and the methods used 3. The question of the objectives and legal grounds for a sustainable system of dismissal law  as part of a body of law aiming at protection of the employee  as contributing to a well or even better functioning of the labour market  the F-word: flexibility

16 Dismissal law in The Netherlands Proposals for a change:  Two tiers system kept  BUT substantial procedural changes  abolition of the free choice of the employer  Difference between  Individual dismissal based on individual behaviour  to be heared and decided by the judge (on request of the employer)  Collective /economic dismissal and dismissal due to longstanding disability  notice by employer only after an advice of the administrative authority  introduction of the possibility of appeal

17 Dismissal law in The Netherlands New Approach Security of work in stead of job security Mobility of the employee For the sake of a better functioning of the labour market

SASKIA KLOSSE UNIVERSITY OF MAASTRICHT INDIVIDUAL DISMISSALS THE DUTCH CASE

TOTAL WORKING POPULATION: 7.4 MILLION

FOCUS Fixed term contracts Temporary agency work Service contracts

FIXED-TERM CONTRACTS Regular dismissal protection rules do not apply Stepping stone towards more stable and secure employment No material restrictions to the use of fixed-term contracts

FIXED-TERM CONTRACTS CHAIN RULE Permanent contract after: A succession of three fixed-term contracts or Successions exceeding a period of three years Interruptions of less than three months are allowed (Art. 7: 668a BW)

FIXED-TERM CONTRACTS LOOPHOLES Break the chain with interruption of more than three months Let the contract expire in time Deviation by collective agreement

TEMPORARY AGENCY WORK Employment contract between the agency and the worker Service contract between the agency and the user undertaking (Art. 7: 690 BW)

TEMPORARY AGENCY WORK LOOPHOLES Agency clause Worker can resign with immediate effect If service contract ends, the employment contract ends as well Agency clause loses its force after 26 weeks, unless deviation by collective agreement (Art. 7: 691 BW)

TEMPORARY AGENCY WORK LOOPHOLES Chain rule does not apply in the first 26 weeks Extension by collective agreement, for example, to first 78 weeks After 78 weeks, a second phase starts Permanent contract then may come in reach after a succession of 8 fixed-term contracts or two years (Art. 7: 691 BW)

SERVICE CONTRACTS Own account worker = self-employed person No employment protection No complicated dismissal procedures No severance payments No social security contributions

SERVICE CONTRACTS Prior permission to terminate a service contract when: The service provider is to conduct the work personally for one or two clients is not assisted by more than two other persons and the work is not ancillary (i.e. more than five hours a week during more than 3 months) (Art. 1 (2) (b) BBA)

SERVICE CONTRACTS “Essence precedes appearance” : Name of the contract is not decisive; factual implementation is also important Opens the window for qualifying the contract as an employment contract Access to the full range of employment and dismissal protection (HR , NJ 1998/149, Groen/Schoevers)

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