Employment 2025 Comparisons

Dutch employment law protects the employee extensively. Therefore, no distinction is made between blue-collar and white-collar workers as all employees are protected under Dutch employment law.

If the terms blue- and white-collar workers are being used, they refer to the type of work employees do, with blue collar referring to jobs that require more manual labour and white collar referring to primarily office jobs. However, these terms do not imply a different employee status or different kind of protection for the employees. Employment laws apply to all employees and are mandatory, meaning that deviations are not permitted. Certain provisions may be deviated from if permitted by a collective labour agreement. Additionally, some rules are more flexible for employees who earn more than three times the statutory minimum wage, such as those relating to holiday pay and working hours. Furthermore, the rules regarding dismissal are less strict for temporary agency workers.

Whether an employment agreement is in place depends on the presence of the three elements: work, remuneration and authority. Parties may enter into an agreement and explicitly declare that the agreement is not an employment agreement. However, if the aforementioned three elements are present, Dutch courts and tax authorities may rule that there is an employment agreement in place and that Dutch employment law applies to the agreement between the parties. The qualification of the employment agreement is therefore not only dependent on what parties agree upon, but also on the factual circumstances of work that is performed. This is an ongoing discussion in the Netherlands and more information on this can be found under the Netherlands Trends and Developments chapter of this guide.

Establishment of the Employment Agreement

An employment agreement may be concluded either orally or in writing. However, according to Article 7:655 of the Dutch Civil Code the employer is legally required to provide the employee with written information about several essential terms of employment.

General Information

The written information provided by the employer must include at a minimum:

• names and addresses of both the employer and the employee;
• location(s) where the work will be performed – if there is no fixed workplace, the agreement must state that the employee may be required to work at various locations;
• job title; and
• clear description of the associated duties and responsibilities.

Duration and Termination

Regarding the duration and termination of the employment agreement, the written information provided by the employer must specify the following:

• starting date of employment – for fixed-term agreements, the duration of the agreement must be stated explicitly;
• if a probationary period applies, its duration and conditions must be clearly indicated; and
• the applicable notice periods or how these periods are calculated.

Dutch law limits the use of consecutive fixed-term agreements. If an employee enters into three successive fixed-term agreements (with no more than six months between each), or if the total duration of fixed-term agreements exceeds 36 months, the last agreement will automatically convert into a permanent (indefinite) employment agreement. These rules are not only applicable to consecutive agreements with the same employer, but also to agreements with different employers where there is reasonable continuity in the work performed. A collective labour agreement may deviate from these rules and establish shorter limits.

Leave Entitlements

The written information provided by the employer must specify the employee’s entitlement to paid vacation and explain how these days are calculated. Any other types of paid leave and their calculation methods must also be included in the written information.

Remuneration and Compensation

Regarding the remuneration and compensation of the employee, the written information provided by the employer must contain the following:

• employee’s remuneration, including gross salary, any allowances or variable components;
• method and frequency of payment;
• if applicable, any performance-related pay – in such cases, the expected volume of work per day or week and the required working time must be specified; and
• whether the employee participates in a pension scheme, along with any applicable conditions.

Working Hours and Schedule

The agreed number of working hours per day or week must be included in the employment agreement. If overtime is applicable, the conditions and compensation must be described. Where working hours are irregular or unpredictable, the agreement must clarify the minimum guaranteed hours, the pay for additional hours, and the days and times when the employee may be required to work.

Special Provisions

If the employment relationship is based on a temporary agency contract or an on-call agreement, this must be clearly stated in the employment agreement, together with the identity of the user undertaking (ie, the third party or host company where the employee performs the work). If a collective labour agreement applies, the employment agreement must make explicit reference to it.

Furthermore, any training and development opportunities provided by the employer should be included in the agreement. The agreement should also specify, where applicable:

• the employee’s right to training provided by the employer; and
• to the extent that the employer is responsible, the identity of the social security institutions to which social security contributions are paid in connection with the employment relationship, as well as the social security protection provided by the employer.

Working hours and conditions are regulated under the Working Hours Act (Arbeidstijdenwet). The permitted working hours depend on the industry and the nature of the work. Typically, employees can work up to 12 hours per day and no more than 60 hours per week. Averaged over four weeks, the weekly maximum is 55 hours, and over sixteen weeks, it is 48 hours per week. The Working Hours Act contains separate rules for minors and pregnant women. Any working hours set out in an individual employment agreement that conflict with the Working Hours Act can be declared null and void.

There are exceptions and additional rules for certain sectors, such as healthcare and transport. These exceptions and additional rules can be found in the Working Hours Decree (Arbeidstijdenbesluit). Collective labour agreements may also provide for deviations from these regulations.

Minimum Wage

Generally, wages are agreed upon freely between employers and employees. However, the Dutch Act on Minimum Wages and Minimum Holiday Allowances (Wet minimumloon en minimumvakantiebijslag) sets mandatory minimum wage and holiday allowance levels, which are updated annually. As of 1 July 2025, the gross statutory minimum hourly wage for employees aged 21 and over has increased to EUR14.40 per hour. If a collective labour agreement applies, it may also include binding salary scales.

Specific Regulations

The Standards for the Remuneration of Top Officials in the Public and Semi-Public Sector Act (Wet normering topinkomens) limits the income and severance payments of senior officials in public and semi-public sectors. Since 2015, their salary cannot exceed that of a government minister, known as the Balkenendenorm. This Act applies to institutions like healthcare institutions, housing associations and educational institutions. For 2025, the maximum gross salary, including holiday pay and bonuses, is set at EUR246,000.

In the financial sector, the Financial Supervision Act (Wet financieel toezicht) regulates bonuses and severance allowances. Although the Act is based on European regulations, in the Netherlands the bonus cap is lower than in other European jurisdictions. The provisions include:

• a cap on variable bonuses to a maximum of 20% of the gross fixed yearly salary – only in exceptional cases may exceptions be made and the European bonus cap of 100% applies;
• the rule that at least 50% of variable remuneration must be based on non-financial criteria;
• a cap on severance payments at one year’s fixed salary; and
• a prohibition on granting guaranteed bonuses.

Bonuses

For sectors, bonuses are not a legal entitlement unless agreed in the employment agreement or a collective labour agreement. The rules below apply to the payment of bonuses.

• Employers must ensure bonuses are awarded fairly, avoiding favouritism or exclusion of certain groups. The General Equal Treatment Act forbids discrimination based on race, gender, religion, nationality, marital status or sexual orientation.
• Dutch case law includes the “acquired rights” principle: if bonuses are paid regularly and without reservation, employees may expect them to continue and therefore also rightfully claim a bonus. To avoid this, employers should explicitly state that bonuses are discretionary and do not create future claims.
• Employers must act responsibly when granting bonuses, ensuring transparency and avoiding arbitrary decisions. Bonuses given on a purely discretionary basis can create unfair situations, possibly leading to legal claims. Employers should be able to explain why some employees receive bonuses and others do not.
• Temporary agency workers are entitled to equal pay, including bonuses, matching that of the hiring company’s employees.

13th Month

A 13th month is an extra gross monthly salary that some employers pay their employees, usually at the end of the year. It is a bonus on top of the regular salary and is often seen as a form of secondary employment condition. There is no legal obligation for the employer to provide the employee with a 13th month. However, pursuant to employment agreements, collective labour agreements, personnel handbooks or the “acquired rights principle”, employees may be entitled to a 13th month.

Vacation

According to the Dutch Civil Code, employees are entitled to a statutory minimum of vacation days equal to four times their weekly agreed working hours. For instance, an employee working 40 hours (5 days) per week must receive at least 160 vacation hours (20 vacation days) annually. Any vacation days granted beyond this minimum are considered “non-statutory” and may be included in the employment agreement or collective labour agreement but are not mandatory by law.

Statutory vacation days generally expire six months after the year they were earned, provided the employer has actively encouraged the employee to take the leave and informed them about the expiration date. If the employer fails to do so, these days will not expire. Non-statutory vacation days usually expire five years after the year they were accrued. The Dutch Supreme Court ruled that the employer’s obligation to inform the employee of the expiring vacation days also applies to non-statutory vacation days.

Vacation dates are typically chosen by the employee. If business needs prevent approval of the requested period, the employer must inform the employee in writing within two weeks of the request. Without timely notice, the employee’s chosen period applies.

In addition to vacation days, employees are entitled to receive a holiday allowance, generally 8% of their annual salary, as long as their salary does not exceed three times the minimum wage. However, in general all employees receive the holiday allowance over the salary they earned, even if that exceeds three times the minimum wage.

Employees who are ill during the year continue to accrue their full vacation entitlement.

Maternity and Birth Leave

Female employees are entitled to at least 16 weeks of full paid maternity leave. During this time, the Employee Insurance Agency (UWV) pays 100% of the employee’s daily wage to the employer, up to a maximum daily amount (currently EUR297.82 gross).

Partners are granted once the number of working hours per week of paid birth leave at 100% of the employee’s daily wage. Based on full-time employment, this is five days of paid birth leave. These days may be taken immediately after the child’s birth but can also be spread over the first four weeks after the child’s birth.

Parental Leave

Employees caring for a child under eight years old have the right to parental leave, up to 26 times their weekly working hours. This leave is unpaid, and no vacation entitlement is accrued during this period. The right to parental leave ends when the child turns eight.

Additionally, employees may take up to nine weeks of partially paid parental leave within the first year after their child’s birth, receiving 70% of their salary, up to a maximum daily amount (currently EUR297.82 gross). The remaining 17 weeks of parental leave remain unpaid. This applies equally to both parents, though partners must take their five days of birth leave separately.

Sickness Leave

Employers must continue to pay employees who are sick for up to two years. During this period, the employer pays 70% of the employee’s salary. In the first year, this amount cannot be lower than the minimum wage; this requirement does not apply in the second year. The 70% calculation excludes any salary above the maximum daily wage. Many employees benefit from more favourable terms in contracts or collective labour agreements.

Bereavement Leave

On 12 July 2024, a bill that introduces bereavement leave was submitted. If this bill is passed, employees are entitled to five days of paid leave in family situations involving minor children where one of the parents or a minor child has died. The bill has not yet been considered by the House of Representatives. It is therefore unclear whether the bill will be passed and, if so, when the bill will enter into force.

Non-Disclosure

Employees are expected to keep confidential information private and protect the employer’s reputation, even if no explicit agreement exists. Employment agreements may include a confidentiality clause to safeguard sensitive information about the company, its clients or market position.

There are no specific legal formalities for such clauses, but they must clearly specify what information is confidential. It is advisable to include a penalty clause for violations, which must be written, capped relative to salary, and narrowly defined. Confidentiality clauses cannot be used to block lawful whistle-blowing.

Employees are not permitted to make unfair public accusations against their (former) employer. Should an employee’s comments cause damage, the employer can claim compensation.

Employee Liability

Generally, employees are not liable for damages caused while performing their duties, unless the harm was caused intentionally or through deliberate recklessness.

Furthermore, according to the Dutch Civil Code, employers are responsible for their employees’ actions within the scope of employment; this means that employers generally bear liability for damages caused by their employees during work.

Non-compete clauses are only valid if agreed upon; they must be in writing and specify the restricted activities, geographic area and duration. The employee must be at least 18 years old when signing the agreement.

The restrictions should be limited to what is reasonably necessary to protect the employer’s legitimate business interests. Typically, a duration of one year is considered appropriate. The scope of the restrictions depends on the industry and the employee’s role. Non-compete clauses cannot be used to indefinitely bind employees to the company.

Non-compete clauses are generally prohibited in fixed-term employment agreements unless the employer can justify a significant business interest for including such a clause, which must be explicitly stated in the contract. This significant business interest must exist both at the moment of signing the agreement and the moment the employer enforces the non-compete clause.

Employers may enforce non-compete clauses in court and claim damages if breached. Usually, a penalty clause is included, requiring the employee to pay a predetermined amount if they violate the agreement. Employers may also take legal action against a new employer who knowingly hires someone breaching a non-compete clause.

Courts can reduce or refuse to enforce non-compete clauses. The clause may become partially or fully invalid if the employee’s job duties change significantly and unforeseeably at the moment of signing the non-compete. If the clause restricts the employee’s ability to work elsewhere, courts may order the employer to compensate the employee during that period. Employers can also choose to release the employee from the clause, ending their obligation to pay compensation. However, this is uncommon in the Netherlands.

A bill introduced on 4 March 2024 by the government seeks to tighten rules around non-compete clauses. If passed, it will limit the maximum duration to one year, require a clear and justified geographic scope, and oblige employers to prove a “compelling business interest” for the clause, even in permanent contracts. Employers would also be required to pay compensation equal to 50% of the employee’s last monthly salary for each month during which the employer enforces the restriction against the employee after the termination date of the employment agreement. These rules would also cover non-solicitation clauses. The bill has not yet been considered by the House of Representatives. It is therefore unclear if the bill will be passed and, if so, when the bill will enter into force.

Employment agreements can include a non-solicitation clause, which prevents the employee from approaching the employer’s clients or colleagues both during and after their employment.

A non-solicitation clause has the same requirements as a non-compete, meaning the employee must be at least 18 years old when signing the non-solicitation clause and, where an employment agreement is for a definite period of time, the non-solicitation clause must include a significant business interest for including such a clause. Furthermore, the non-solicitation clause may not be too restrictive.

The employer has the right to enforce this clause in court and claim damages if it is breached. Often, the contract includes a penalty clause that obliges the employee to pay a specified amount to the employer if the non-solicitation clause is violated. Nonetheless, courts may choose to reduce or refuse enforcement of the clause.

The General Data Protection Regulation (GDPR) applies to the processing of personal data by data controllers or processors operating within the European Union. In the Netherlands, there are additional national rules derived from the GDPR Implementation Act (Uitvoeringswet AVG, or UAVG).

The GDPR allows member states to establish specific privacy rules concerning employment matters. However, Dutch legislators have not yet made use of this option.

The responsible handling of personal data is a core requirement of the GDPR. The data controller must be able to demonstrate compliance with the GDPR, for example through policy documents, agreements and other evidence. Other key principles that are set out in the GDPR and that apply to the processing of personal data are:

• lawfulness;
• fairness;
• transparency;
• purpose limitation;
• data minimisation;
• accuracy;
• storage limitation; and
• security.

Compliance with the GDPR and UAVG is overseen by the Dutch Data Protection Authority (Autoriteit Persoonsgegevens), which can impose administrative measures and fines for violations. Maximum fines can reach up to EUR20 million or 4% of the global annual turnover, whichever is higher.

Compliance with the GDPR and UAVG depends on the specific circumstances and requires appropriate documentation, procedures and organisational measures. It is an ongoing process that must be assessed on a case-by-case basis.

Citizens of the European Economic Area (EEA) and Switzerland do not require a work authorisation. For those from outside the EEA and Switzerland, a work permit is usually needed for stays under three months, while a combined residence and work permit – called a single permit – is required for stays longer than three months. Employers must apply for the work permit through the Employee Insurance Agency (UWV) in the Netherlands, meeting conditions such as compliance with the Dutch Working Conditions Act (Arbeidsomstandighedenwet) and ensuring the employee holds a valid residence permit. If the employee plans to stay in the Netherlands for more than three months without a residence permit, the employer must apply for a single permit to the Immigration and Naturalisation Service (IND).

There are streamlined procedures for specific groups, including highly skilled or highly educated foreign workers (typically assessed by salary or educational qualifications), students, artists, and employees transferred within a company to the Netherlands.

All application forms are available only in Dutch. Before applying, all documents must be translated into Dutch, English, German or French. The IND has a maximum of three months to decide on a single permit application.

If an employee who is an EEA citizen is going to work temporarily (less than 24 months) in another EEA country, this employee must be in possession of an A1 certificate. An A1 certificate is a statement that the employee is insured in the country where their work is normally performed. The lending employer must apply for the A1 certificate from the competent authority in the country of origin. If the employee performs work abroad without an A1 certificate, the Dutch Labour Inspectorate (Arbeidsinspectie) may impose a fine on the client, the lending employer or the employee.

When a foreign employee starts working in the Netherlands, the foreign company is generally required to register with the Dutch tax authorities as a withholding agent for wage taxes and, if applicable, social security contributions. This also includes the employer’s contribution to healthcare insurance. However, this registration is not necessary if none of the employees are subject to Dutch wage tax or social security legislation.

Before the employee starts performing work, the employer must fulfil several administrative obligations:

• set up a payroll administration that deducts wage tax and, if applicable, social security contributions;
• register the employee in the payroll administration;
• record the employee’s citizen service number (BSN);
• verify the employee’s identity using a valid passport or ID card and keep a copy on file;
• obtain and file a completed and signed wage tax declaration from the employee;
• determine whether the employee is a tax resident of the Netherlands or another country;
• if necessary, check whether a residence or work permit is required and keep a copy; if the permit is renewed, add the new copy to the file; and
• if applicable, jointly apply with the employee for the 30% ruling at the Foreign Office of the Dutch Tax Authorities. If the application is submitted within four months of the start date, the ruling will apply retroactively from the first day of employment.

In the Netherlands, working from home is not a statutory right. However, according to the Flexible Work Act, employees may submit a written request to (partially) work from home – for example, due to health-related reasons. Employers are obliged to give serious consideration to such a request and may only reject it on valid grounds. Acceptable reasons for rejection include:

• disruption of work processes caused by remote work;
• the nature of the job requires physical presence at the workplace; and/or
• the home workspace does not meet safety or suitability standards.

There are conditions attached to an employee’s right to submit such a request, namely:

• the request must be submitted in writing;
• the company must have at least ten employees;
• the employee must have been employed for at least six months; and
• the request must be submitted no later than two months before the intended start date of working from home.

Employers have a duty of care to ensure a safe and responsible home working environment. This includes reasonably providing the necessary facilities, such as ergonomic chairs, computer monitors, or other work-related equipment. In consultation with the employee, suitable arrangements should be made to prevent physical complaints. The home office should be ergonomically designed with attention to safety, comfort, health and functionality. Employers may offer or reimburse ergonomic tools – such as an ergonomic mouse or proper lighting – tax-free, up to a certain amount.

Providing information is also an essential part of the employer’s duty. Employees must receive education on how to work safely and healthily from home. This includes guidance on proper posture, setting up their workspace, and awareness of risks such as physical complaints or work-related stress. Employers should also inform staff about rules regarding screen use.

Lastly, working from home must be incorporated into the company’s risk inventory and evaluation (RI&E), which forms the foundation of its occupational health and safety policy. Special attention must be given to specific risks associated with remote work, such as increased mental pressure from combining work and private responsibilities. It is advisable to establish targeted policies to address psychosocial workload.

Employees do not have a legal right to a sabbatical. This means that the right to a sabbatical must result from the arrangements made in the employment agreement, collective labour agreement and personnel handbooks.

Employees may choose to take unpaid leave – either full-time or part-time – after consulting with their employer. There are no statutory rules regarding the duration of a sabbatical. However, as unpaid leave is not a legal entitlement, employers are permitted to deny such a request.

Since there is no legal framework for sabbaticals, employers and employees are free to make their own arrangements. It is advisable to record these in writing. Such agreements may include the following aspects:

• conditions that the employee must meet before they may be entitled to a leave;
• the duration of the leave;
• the position the employee will return to afterwards;
• the employment conditions that will apply during the leave, such as the use of a company car, laptop or phone; and
• the arrangements in case of illness during the sabbatical – generally, there is no entitlement to continued salary payments unless explicitly agreed otherwise.

Employers may choose to formalise these agreements in a sabbatical policy, though this is not legally required.

There have been no new developments or implementations in “new work”.

Trade unions play a vital role in representing the interests of individual employees and employee groups. Their primary task is to advocate for the collective interests of workers within specific sectors or industries. Trade unions negotiate with large employers, employers’ organisations or other trade unions regarding employment terms, resulting in the conclusion of collective labour agreements. These agreements can apply to a single company or to an entire industry.

In addition, trade unions provide support in drafting redundancy schemes and offer advice on forced redundancies within organisations. Moreover, through collective labour agreements, they can deviate from certain statutory employment law provisions.

Works Council

Companies with 50 or more employees are required to establish a works council composed of employee-elected members. Companies with fewer than 50 employees may also be required to establish a works council in certain situations, for example when the requirement is stipulated in the collective labour agreement.

Temporary agency workers who have been working for the company for at least 24 months shall be counted as part of the company’s workforce. If this obligation is not met, any interested party, such as an employee or trade union, may initiate legal proceedings to enforce the establishment of a works council. In general, employers await requests from the employees before establishing a works council. If such request is not made, it is not necessary to establish a works council, even if the employer has more than 50 employees. There is no fine for not having a works council, provided that neither the employees nor any interested party has requested it.

The works council has several important rights and duties, including:

• the right to provide advice on significant financial, economic and organisational decisions made by the company; and
• the right to give consent to proposals concerning the establishment, modification or revocation of regulations related to the company’s social policies.

If a company has multiple works councils, it may choose to establish either a central works council or a group works council. This choice should contribute to the proper implementation of the Works Councils Act within these companies.

Employee Representative Body

When a company has between 10 and 50 employees and does not have a works council, it may be required to establish an employee representative body (personeelsvertegenwoordiging). This body must consist of at least three members who are directly elected through a secret ballot.

The Collective Labour Agreements Act (Wet CAO) defines the concept of a collective labour agreement and specifies which parties are authorised to enter into such agreements. A collective labour agreement is a written arrangement between one or more trade unions and one or more employers’ organisations. These agreements set out various terms and conditions of employment, including:

• wages;
• working hours;
• pension schemes;
• holiday entitlements; and
• social provisions.

These agreements are binding for both the employer and employee covered by the collective labour agreement.

There are two types of collective labour agreements:

• for agreements with a minimum character, deviations are only permitted if they are more favourable to the employee than the provisions in a company scheme or individual employment agreement – deviations that are less favourable to the employee are null and void; and
• for agreements with a standard character, any deviations from the terms are invalid and therefore null and void.

If an employer is a member of an employers’ organisation that has concluded a collective labour agreement, the employer is obliged to apply the terms of that agreement to their employees.

Additionally, the Minister of Social Affairs and Employment may declare a collective labour agreement generally binding upon request of the parties involved. This means the agreement applies to the entire sector, regardless of whether an employer is a member of the employers’ organisation that concluded the agreement. If the employer’s activities fall within the scope of the collective labour agreement, they must implement its terms within their company.

Fixed-Term Agreements

A fixed-term employment agreement or an agreement for a specific project ends automatically upon the expiration of the agreed period or completion of the project. For agreements lasting six months or longer, the employer is required to inform the employee at least one month in advance in writing whether the fixed-term agreement will be extended and, if so, under what terms.

Termination of Open-Ended Contracts

An employment agreement for an indefinite period can be terminated in the following ways:

• termination by the employer with permission from the Dutch Employee Insurance Agency (UWV);
• employee’s consent after the employer gives notice – the above-mentioned permission of the UWV is not required;
• termination by court decision;
• termination by mutual consent;
• immediate dismissal for urgent cause; or
• resignation by the employee.

Dismissal via the UWV

In cases of dismissal for economic reasons or long-term incapacity to work, the employer must request permission from the UWV to give notice. The UWV will only grant this permission if there is a reasonable ground for dismissal and redeployment (even after training) is not feasible or reasonable within a reasonable period. The procedure with the UWV usually takes around six to eight weeks. After receiving permission, the employer may give notice, deducting the duration of the UWV procedure from the notice period, provided at least one month of notice remains.

Dismissal via the Court

The subdistrict court may dissolve the employment agreement if a reasonable ground for dismissal exists and redeployment is not possible or reasonable. This may apply in the following cases:

• frequent and disruptive sickness absence;
• incompetence or underperformance (not related to illness);
• culpable actions or omissions;
• serious conscientious objections preventing work;
• severely damaged working relationships;
• a combination of multiple dismissal grounds (cumulative dismissal); and
• exceptional other circumstances.

In the case of cumulative dismissal, the court may award an additional severance payment of up to 50% of the statutory transition payment, in addition to the statutory transition payment itself.

After submitting the request, the employee may submit a statement of defence. A hearing will be scheduled, after which the court decides whether to terminate the contract, taking into account the applicable notice period. The court’s decision can be appealed.

Collective Dismissal

If an employer intends to dismiss 20 or more employees within a three-month period in a single geographical working area of the UWV, this qualifies as a collective dismissal under the Dutch Collective Redundancy (Notification) Act (Wet Melding Collectief Ontslag, or WMCO). In such cases, the employer is legally required to:

• notify the UWV and the relevant trade unions in writing of the intended dismissals; and
• enter into consultations with the relevant trade unions (ie, representative employee organisations).

When determining whether the threshold of 20 employees has been reached, the employer must also include terminations agreed upon by mutual consent, as well as cases where employees resign as a result of substantial deteriorations in their working conditions imposed or proposed by the employer.

Failure to comply with the notification and consultation obligations under the WMCO may have serious consequences. In such cases, an employee may claim to nullify the termination of their employment agreement, effectively rendering the dismissal legally invalid.

Statutory Notice Periods for Employers and Employees

Under Dutch law, the following statutory notice periods apply to employers when terminating an employment agreement:

• fewer than five years of service – one month;
• five years or more, but fewer than ten years of service – two months;
• ten years or more, but fewer than 15 years of service – three months;
• 15 years of service or more – four months; or
• when the employee reaches the state retirement age – one month.

For employees, a standard notice period of one month applies. If a longer notice period is agreed upon, it must be laid down in writing. In such cases, the employer is required to observe a notice period that is twice as long as the employee’s.

Deviation from the statutory notice periods is possible through a collective labour agreement, provided it stays within the legal limits. If the deviation exceeds these limits, the statutory notice period remains applicable. Unless otherwise agreed, the notice period begins on the first day of the month following the month in which notice is given.

Transition Payment

From the first day of employment, including during any probationary period, employees are entitled to a statutory transition payment if their employment agreement is terminated on the initiative of the employer and for reasons other than urgent ones. This payment amounts to one third of the gross monthly salary for each calendar year of service.

The transition payment is currently capped at EUR98,000 gross. If the employee’s annual salary exceeds this amount, the cap is set at one annual salary. Generally, the transition payment is not owed when the employee terminates the agreement, unless the termination results from seriously culpable behaviour on the part of the employer. In such cases, the employee remains entitled to the payment.

Employers may apply for compensation from the government for the transition payment when termination occurs due to long-term incapacity for work (after two years of illness).

Where the employer ceases business operations due to illness or retirement, compensation may also be granted. This arrangement is only available to small businesses (fewer than 25 employees) and applies solely to transition payments owed in the six months preceding UWV approval or termination of the employment agreement. A number of strictly defined conditions must be met for eligibility.

When calculating the duration of employment, successive employment agreements between the same parties (or their legal successors), with breaks of no more than six months between them, are counted as continuous service.

An employer may dismiss an employee with immediate effect if the employee has engaged in such misconduct that the employer cannot reasonably be expected to continue the employment relationship. There must be an urgent reason, in which case the employment agreement can be terminated with immediate effect. This urgent reason must be communicated to the employee without delay, and the dismissal must be conducted immediately and without notice.

In the case of instant dismissal, the employer is not required to observe a notice period. Since the dismissal is based on culpable conduct by the employee, the employer is entitled to compensation equal to the salary that would have been paid during the regular notice period.

If the dismissal results from serious culpable behaviour (which is often, but not necessarily, the case in summary dismissal), the employee will in principle not be entitled to the statutory transition payment. In addition, instant dismissal also means that the employee is likely not to be entitled to unemployment benefits.

In Dutch employment law, a settlement agreement (also referred to as a termination agreement) is used when the employment agreement is ended by mutual consent. In this agreement, the employer and employee jointly set out the conditions under which the employment relationship will be terminated. Although Dutch law does not require a settlement agreement, it is considered best practice. This is partly because an employee who concludes a legally valid settlement agreement generally retains the right to unemployment benefits from the Unemployment Act, as long as the settlement agreement provides that the termination is on the initiative of the employer, the employee cannot be blamed for the reason for termination and no prohibition to give notice applies.

A settlement agreement typically includes the following elements:

• the personal details of both employer and employee;
• the employee’s current position and salary;
• the reason for termination of employment – mostly a neutral ground is included, such as a difference of opinion or reorganisation;
• the date on which the employment agreement will end;
• any severance payment (which may also be zero, in principle is at least equal to the transition allowance);
• whether the employee will be exempt from work until the termination date;
• arrangements regarding payment of outstanding holiday entitlement (possibly deviating from statutory provisions);
• whether the employee remains bound by the post-contractual obligations, such as a non-compete clause or a relations clause;
• the employee’s statutory right to revoke the agreement within 14 days after signing (if not explicitly included, a reflection period of 21 days applies by default); and
• a full and final discharge clause, meaning that, once all terms are fulfilled, neither party has any further claims against the other.

Restrictions on Termination by Employers

An employer is prohibited from giving notice of termination under the following circumstances:

• during an employee’s pregnancy or maternity leave, and up to six weeks after the end of such leave;
• while the employee is a member of a participation body, such as a works council;
• during the period of prospective membership of a participation body (eg, candidates) and up to two years after the end of such membership;
• during the first two years of illness, unless the employee deliberately obstructs their recovery;
• during compulsory military service;
• while the employee is applying for or taking leave, such as parental leave, adoption leave, short-term or long-term care leave;
• because the employee is a member of a trade union;
• due to leave taken for political activities;
• because of the employee’s refusal to work on Sundays; or
• due to the transfer of an undertaking.

These restrictions apply both in procedures before the Employee Insurance Agency (UWV) and the sub-district court. The “during” prohibitions do not apply when the employment agreement is terminated by mutual consent during the probation period, due to an urgent cause, upon reaching retirement age, or in certain limited cases of dismissal for economic reasons. There are no exceptions to the “because of” prohibitions.

Specific Exceptions

The sub-district court may also dissolve the employment agreement if:

• the request for termination of the employment agreement is unrelated to the circumstance covered by the prohibition; or
• there are compelling reasons that justify the termination in the employee’s interest, for example, health reasons.

These exceptions apply only to the “during” prohibitions, such as pregnancy or membership in a representative body. They do not apply to dismissals for economic reasons, unless this results in the complete cessation of the company’s activities.

A dismissal may be wrongful when:

• there is no reasonable ground for the dismissal;
• the employer has not followed the right procedure, such as dismissal without permission of the sub-district court or the Employees Insurance Agency (UWV);
• the notice period has not been taken into account; and
• an instant dismissal is made without urgent reason.

In the event that an employee has been wrongfully dismissed, the employee has two options to seek redress:

• file a request with the sub-district court to declare the termination of the employment agreement null and void, as a result of which the employment agreement continues; or
• request a fair compensation from the sub-district court.

The wrongfully dismissed employee must submit the request within two months after the termination date of the employment agreement. If the wrongful dismissal is related to a breach of the employer’s reassignment obligation, the limitation period begins when the employee becomes aware – or reasonably should have become aware – of the breach. However, this period may not exceed eight months from the termination date.

There is no fixed formula for calculating fair compensation. The amount is determined by the sub-district court based on the specific circumstances of the case. The Supreme Court has identified several factors that may be taken into account, including:

• the potential earnings the employee would have received had the employment relationship continued;
• whether the employee has found alternative employment or is expected to do so, including the anticipated income from such employment; and
• the degree of fault attributable to the employer.

Under Dutch law, discrimination on any ground is prohibited. The Dutch Equal Treatment Act (Algemene wet gelijke behandeling) explicitly prohibits discrimination on the following grounds:

• religion;
• belief;
• political opinion;
• race;
• sex;
• nationality;
• sexual orientation; and
• marital status.

In addition, specific employment legislation prohibits discrimination on other grounds, including:

• age;
• disability or chronic illness;
• the nature of the employment agreement (temporary or permanent); and
• working hours (full-time or part-time).

Direct discrimination on any of these grounds is, in principle, not permitted, unless expressly allowed by law in specific situations.

The prohibition also extends to indirect discrimination, which occurs when an apparently neutral rule or practice leads, in practice, to unequal treatment based on one of the protected grounds. Indirect discrimination – as well as direct discrimination based on age, contract type or working hours – may be justified, but only if the measure is objectively necessary to achieve a legitimate aim and the means are proportionate to that aim.

Any agreement or arrangement between employer and employee that violates anti-discrimination laws may be declared null and void or voidable. In addition, the employee may hold the employer liable for damages resulting from discriminatory conduct or omissions by the employer.

At present, legal proceedings in the Netherlands are generally not conducted digitally.

Employment Forums

In the Netherlands, employment disputes are primarily handled by the sub-district court judge. Although there is no separate employment court, sub-district court judges have substantial experience with employment matters.

In addition, there is a specialised judicial body for employee participation issues: the Enterprise Chamber of the Amsterdam Court of Appeal. This chamber handles cases under the Dutch Works Councils Act (Wet op de ondernemingsraden), including disputes over advisory and consent rights of works councils.

For dismissals based on economic grounds or long-term incapacity for work, employers must obtain permission from the Employee Insurance Agency (UWV). This is an administrative procedure that runs parallel to the judicial route via the sub-district court.

Class Action Claims

Pursuant to the Dutch Civil Code, interest groups or representative organisations can initiate proceedings on behalf of a group of affected individuals to obtain a declaratory judgment.

It is also possible to claim monetary damages through collective action. This is particularly relevant in cases of mass harm, such as large-scale violations of labour rights.

Legal Representation

Rules regarding legal representation vary depending on the court.

• Before the sub-district court legal representation by a lawyer is not mandatory. Parties may represent themselves, although legal assistance is generally advisable.
• In appeal and cassation proceedings (before the Court of Appeal or the Supreme Court), legal representation by a lawyer is required. In cassation cases, representation must be provided by a lawyer admitted to practise before the Supreme Court.
• In proceedings before the Enterprise Chamber, legal representation by a lawyer is standard due to the complex nature of such cases.
• At the UWV, the procedure is administrative rather than judicial. Legal representation is not required but may be beneficial given the need for clear legal and factual argumentation.

Arbitration is a possible method for resolving employment disputes and pre-dispute arbitration agreements are enforceable and valid. However, arbitration is not often used. An important requirement for arbitration is that both parties need to consent to submit the matter to arbitrational court. If arbitration is requested by only one party, the court will need to determine whether the other party is willing to engage in the arbitration process. If the other party is not willing to engage in the arbitration process, the requesting party will need to initiate regular court proceedings.

In principle, each party must bear its own legal costs during proceedings, regardless of the outcome of the case. However, the court has the authority to deviate from this principle and may order the losing party to compensate the opposing party for court fees and attorney’s fees. It is important to note that the reimbursed attorney’s fees are generally lower than the actual legal costs incurred during the proceedings, as the compensable costs are usually calculated based on fixed rates. Only in highly exceptional cases may a court order a party to pay the actual legal costs incurred by the opposing party. Such an order may be considered if a party brings a manifestly hopeless claim and it can be established that there has been an abuse of process. However, this must be specifically requested and substantiated by the opposing party. In practice, courts are very reluctant to grant such claims for reimbursement of the actual legal costs.