Redundancy—it’s a word no employee wants to hear, but it’s something companies need to consider during tough times. Whether it’s due to financial struggles, restructuring, or technological changes, redundancy is a reality. If your employer starts this process, knowing your rights is non-negotiable.
Redundancy in the Netherlands (or “ontslag wegens bedrijfseconomische redenen”) follows strict guidelines set by Dutch labor law and the UWV (Uitvoeringsinstituut Werknemersverzekeringen). Employers can’t just let you go because they feel like it. There’s a framework in place to ensure fairness. Let’s dive into what redundancy means and the 5 key things you, as an employee, should focus on.
🚨 What is redundancy, according to Dutch law?
In simple terms, redundancy happens when your job is eliminated for legitimate business reasons. For example:
- The company is financially struggling.
- There’s less work available (declining market demand).
- The organization is reorganizing or downsizing.
Under Dutch law, the employer must justify why your role, specifically, is no longer needed. The UWV oversees this process to make sure it’s fair. This isn’t a free-for-all—there are rules!
It’s important to understand that this is a different process than if you’re offered a Mutual Termination Agreement (or Settlement Agreement). You can find more information in our blog post on terminations in the Netherlands.
🎯 5 Things to focus on during a redundancy process
- Check the Validity of the Process
Your employer must follow a formal procedure. For redundancies due to business reasons, this often involves getting approval from the UWV or negotiating with a works council. Ask your employer for clarity and ensure all steps are being followed. If something feels off, consult with a labor expert. - Know Your Notice Period
The redundancy process doesn’t mean you’re out the door immediately. Dutch labor law specifies notice periods depending on how long you’ve worked at the company. Check your contract—this is your right, and it ensures a smoother transition. - Claim Severance Pay
Under the Dutch “Transitievergoeding” scheme, employees are entitled to severance pay if they’re let go. This applies to most redundancies, and the amount depends on your years of service. Don’t leave money on the table! The formula to calculate the amount of the statutory severance pay is ⅓ of your monthly salary per year worked. - Ask for a Social Plan
Many companies offer a social plan as part of redundancy. This might include extra financial compensation, training budgets, or outplacement services to help you find a new job. Ask if this is available—it can be a game-changer. - Know Your Unemployment Benefits (WW)
If you lose your job, you might qualify for WW-uitkering (unemployment benefits). Make sure to check your eligibility with the UWV. Start the application early—it’s better to have your ducks in a row.
How does the selection for economic layoffs work?
When layoffs are due to business challenges, employers must follow specific rules to determine who is let go. This process, known as the “Last In, First Out” principle, is designed to ensure fairness and maintain a balanced age distribution within the company. However, there are exceptions, especially if a collective labor agreement (CAO) applies, which may include its own rules and involve review by a CAO committee.
Reasons for economic layoffs
Economic layoffs often happen for the following reasons:
- Financial troubles.
- Long-term decline in workload or revenue.
- Reorganization to improve efficiency.
- Shutting down parts of the business.
- Technological shifts, like automation.
- Business relocation.
Before letting permanent employees go, employers must first terminate the contracts of external hires like temporary workers, freelancers, and payroll employees.
Layoff order: who’s first?
As horrific as this principle might sound, employers must stick to a specific sequence when deciding who to dismiss, even for permanent staff. Here’s the order:
- Temporary workers with contracts lasting less than 26 weeks.
- Workers who are already eligible for retirement.
- On-call workers with irregular hours.
After that, the Last In, First Out principle applies within age groups.
Age groups and layoff decisions
Employees with similar roles are grouped by age. For each group, the employee with the shortest tenure is let go first. The age categories are:
- 15–25 years
- 25–35 years
- 35–45 years
- 45–55 years
- 55+ years
The goal is to keep the age structure stable even after the layoffs.
Exceptions to the rules
Employers can skip the standard process in specific situations, such as:
- Business closure: If the entire business or location shuts down.
- Unique roles: A position held by only one employee is eliminated.
- Entire job category gone: A type of job is phased out entirely.
- CAO exceptions: If a CAO outlines different dismissal rules.
For up to 10% of layoffs, companies can nominate employees outside of the standard process if allowed by their CAO.
Special considerations
Critical employees: Workers with rare skills vital to the business can be retained, but employers must provide documentation during the dismissal process.
Protected groups: Employees with disabilities, illnesses, or protected statuses (e.g., pregnancy) may be exempt from layoffs.
A chance to return
If you’re laid off due to economic reasons but the workload picks up within 26 weeks, the company must offer you the chance to return to your previous role. This is called the rehiring condition.
Unique rules for some workers
For industries like healthcare or employees hired through payroll and staffing agencies, different rules may apply. These specifics are outlined in the Dutch Dismissal Regulation.
If 20 or more employees in a single work area are affected, the rules for collective dismissal must also be followed, ensuring transparency and fairness.
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