If a Dutch employer wishes to dismiss employees due to economic circumstances, then he must select those employees based on the so-called principle of proportionality. For each category and for mutually equivalent positions, the employees with the shortest length of employment in each age category must be proposed as candidates for dismissal.
In principle, in the event of a reorganisation in the Netherlands, an employer must always apply the principle of proportionality. If positions are eliminated in their entirety and new positions are created, then it’s also possible to declare all of the employees who fill those old positions redundant and to have them interview for the newly created positions. In this manner, the proportionality method need not be applied and the employer has the possibility of selecting employees who are most substantively suitable for the particular positions.
Since the musical chairs method often appears more attractive to employers than the proportionality method, this method is sometimes improperly used. For this reason, the UWV WERK (UWV) often looks quite closely at the question of whether the positions have indeed been truly eliminated and have not simply been renamed – for example, into other position names/job descriptions.
A social plan contains regulations and facilities that apply to employees in the event of a reorganisation. For example, a social plan establishes facilities related to re-employment opportunities within or outside the own company, but a social plan can also contain regulations for redundancy. In principle, a social plan comes about in consultation between the employer, the works council and/or the unions.
According to the Dutch Works Council Act (WCA), any entrepreneur with 50 or more employees must set up an employee participation board. Employees can influence policy by means of the employee participation board. In smaller enterprises (between 10 and 25 employees), that influence can be exercised by means of a personnel association. Enterprises with more than 50 employees are required to set up a works council. The employer must ask for the works council’s advice concerning some decisions to be made. The works council has a right of approval on some issues.
Cost reductions often are effected by ways of redundancies. Such reorganisation in the Netherlands requires several statutory requirements. When reorganising a business in the Netherlands, there are many things to keep in mind, and many statutory requirements have to be met. Depending on (among other things) the volume of the company and the employees involved, these rules can be even more complex and detailed. A good preparation on the steps to be taken and a sharp timetable can make reorganising a business an effective to cut costs.
AMS, a Dutch law firm dazed in Amsterdam, is a specialist in reorganization. More information on several subjects related to reorganization and Dutch employment law can be found on our website.
Law firm AMS is based in Amsterdam, The Netherlands. The attorneys have gained a broad experience in advising and litigating for (international) companies and individuals. The Dutch labour lawyers are highly involved with their client’s interests and offer a sharp and transparent fee structure. Should you require more information on Dutch employment law, or should you have any question with respect to litigation in The Netherlands, please feel free to contact us.