Ending an employment relationship in the Netherlands requires careful legal planning and strict procedural compliance. Dutch law does not permit at-will termination, and employers must follow a defined process before a dismissal can take effect. Failing to obtain the required approval or apply the correct procedure can invalidate the termination and expose the company to continued salary obligations and potential legal claims.
Under the Dutch Civil Code (Burgerlijk Wetboek), most employer-initiated terminations require prior approval from the UWV (Employee Insurance Agency) or the subdistrict court before they can take effect. In addition, nearly every dismissal triggers a statutory transition payment based on the employee’s years of service. If the correct procedural route is not followed, the dismissal can be declared void, leaving the employee still legally employed and entitled to full back pay.
Understanding global compliance and termination law in the Netherlands is critical; this is not an at-will system. Every dismissal requires a legally recognized ground, the correct procedural route, and full settlement of statutory payments. This guide will help you navigate these requirements.
Termination laws in the Netherlands
The Netherlands does not follow an at-will employment system. Employers cannot terminate an employment contract without a valid legal ground. Under Article 7:669 of the Dutch Civil Code, dismissal must be based on one of the recognized grounds, and depending on the ground, the employer must obtain prior approval from either the UWV or the subdistrict court before notice can be given.
Miss the approval requirement, and the termination is void. If the employee misses the correct dismissal route, they can challenge it in court. The governing statute under employment laws in the Netherlands is the Dutch Civil Code (Burgerlijk Wetboek), specifically Book 7, Title 10. The Work and Security Act (Wet Werk en Zekerheid, WWZ) introduced the current framework in 2015, and the Balanced Labour Market Act (Wet Arbeidsmarkt in Balans, WAB) amended it further in 2020.
Termination with just cause and wrongful dismissal in the Netherlands
Immediate dismissal (ontslag op staande voet) is permitted only for serious misconduct constituting an urgent cause, meaning conduct so severe that the employer cannot reasonably be expected to continue the employment, even temporarily. Examples include theft, fraud, deliberate property damage, or gross misconduct.
Dutch courts interpret the urgent cause requirement strictly. If the employer cannot prove the urgency and seriousness of the cause, the dismissal is wrongful. The employee may then claim reinstatement or substantial equitable compensation (billijke vergoeding) on top of the transition payment.
Probationary period in the Netherlands
A probationary period is only valid if agreed in writing and must not exceed two months for permanent contracts (one month for fixed-term contracts of six months to two years; no probation is permitted for fixed-term contracts under six months).
Termination during probation is more flexible, but still subject to limits:
- Either party can terminate immediately without prior UWV or court approval
- Termination cannot be based on a discriminatory ground
- No transition payment is owed for probationary dismissals
How Multiplier handles termination and offboarding in the Netherlands
Termination in the Netherlands is procedural, documentation-heavy, and highly scrutinized. Multiplier manages the entire process to ensure compliance from start to finish.
When you submit a termination request:
- Legal review: Our in-country experts assess the case against Dutch Civil Code requirements before any employee communication
- Route determination: We determine whether the termination requires UWV approval, a court petition, or whether a settlement agreement is the appropriate route
- Transition payment calculation: We calculate the full transition payment based on years of service and all fixed salary components, including the 2025 statutory cap of €98,000
- Documentation: We prepare the vaststellingsovereenkomst (settlement agreement) or the UWV dismissal file with all legally required language, including the 14-day reflection period
- Regulatory filings: We submit a UWV application or coordinate the court petition as required
- Final settlement: We coordinate compliant payment within statutory deadlines
No communication is sent to employees until the compliance review is complete, minimizing legal risk at every step.
Types of termination
How you end an employment relationship in the Netherlands matters. The rules, timelines, and costs depend on the type of termination.
Voluntary resignation
Employees can resign at any time, but must follow the agreed notice period stated in their contract. If not specified, the statutory notice period is usually one month.
The resignation should be in writing. Employers cannot waive notice unilaterally unless both sides agree.
Employees are entitled to:
- Outstanding salary
- Accrued holiday allowance (vakantiegeld)
- Unused vacation days
They are not entitled to a transition payment (severance) or unemployment benefits if they resign voluntarily.
Involuntary termination without cause
Employers cannot terminate employment freely. They must have a valid legal ground and follow one of two routes:
- Approval from the UWV (for economic reasons or long-term illness) or
- Approval from a court (for performance, misconduct, or relationship issues)
Employees dismissed are entitled to:
- Notice period (worked or paid in lieu)
- Transition payment (statutory severance)
- Accrued holiday allowance and unused leave
The transition payment is typically 1/3 of a monthly salary per year of service.
Involuntary termination with just cause (Summary dismissal)
This is immediate dismissal due to serious misconduct (e.g., theft, fraud).
In such cases, the employer does not need to provide:
- Notice period
- Transition payment
The employee only receives:
- Outstanding salary
- Accrued holiday allowance
- Unused vacation days
This is high risk. Dutch courts are strict, and if the dismissal is invalid, the employer may face penalties or reinstatement.
Mutual separation agreement
This is the most common route in practice.
Both parties agree to end the contract through a settlement agreement (vaststellingsovereenkomst).
Key features:
- Notice period is often included or compensated
- Transition payment is usually paid (sometimes negotiated higher)
- Employee keeps eligibility for unemployment benefits (if structured correctly)
- Employee has a 14-day reflection period to withdraw
This option is flexible and avoids formal procedures.
Mandatory notice periods
Statutory notice periods in the Netherlands are based on the employee’s length of service and apply to the employer. The notice period starts at one month and increases with tenure, up to a maximum of four months.
For example, an employee with 10 years of service is entitled to a two-month notice period, while employees with 15 or more years are entitled to three to four months, depending on tenure.
Employee notice periods are typically one month, unless otherwise agreed in the employment contract. If a longer notice period is agreed for the employee, the employer’s notice period must be at least double.
Payment instead of notice
Payment instead of notice is permitted in the Netherlands, but it is less common than in Brazil. Employers often require employees to remain employed during the notice period, especially if the termination follows formal approval from the UWV or a court.
However, in mutual separation agreements, it is common to compensate for (part of) the notice period instead of requiring the employee to work.
During the notice period
Employees are generally expected to continue working during the notice period.
There is no statutory entitlement to reduced working hours or fixed days off to search for a new job. That said, employers may allow time off in practice, especially during longer notice periods or as part of a negotiated exit.
Notice period rules by length of service in the Netherlands
Use the table below to verify your obligations before issuing any termination communication:
Length of service | Employer notice period | Employee notice period | Payment in lieu permitted? | Notes |
During probation | None | None | N/A | Probation must be agreed in writing; no transition payment |
Less than 5 years | 1 month | 1 month | Via a settlement agreement only | Payment in lieu is not permitted if UWV or court route is used |
5 to 10 years | 2 months | 1 month | Via a settlement agreement only | Notice runs to end of calendar month |
10 to 15 years | 3 months | 1 month | Via a settlement agreement only | CAOs may extend employer notice obligations |
15 to 20 years | 4 months | 1 month | Via a settlement agreement only | — |
20+ years | 4 months (statutory maximum) | 1 month | Via a settlement agreement only | 4-month statutory cap regardless of additional tenure |
Minimum notice periods are governed by Article 7:672 of the Dutch Civil Code. Employee notice may be extended to a maximum of six months by agreement, provided the employer’s period doubles in parallel. Always verify the applicable CAO before initiating any termination.
Severance pay and redundancy
Under the Dutch Civil Code, severance pay in the Netherlands (transition payment/transitievergoeding) is owed to every employee whose contract is terminated at the employer’s initiative, whether through UWV, a court petition, non-renewal of a fixed-term contract, or, in some cases, a settlement agreement. This is required and applies regardless of the reason for termination.
These obligations form a core part of employee benefits and compensation in the Netherlands, and must be factored into every termination decision.
Eligibility
A transition payment is owed when:
- An employee is dismissed at the employer’s initiative (for any reason except urgent cause where the employee is at fault), or
- A fixed-term contract is not renewed at the employer’s initiative
Employees who resign are generally not entitled to a transition payment unless the resignation was caused by culpable employer conduct.
Calculation formula (Netherlands)
Severance in the Netherlands is primarily based on the statutory transition payment:
- Transition payment = one-third of gross monthly salary per year of service, calculated proportionally for partial years
- All fixed salary components must be included
- Variable components are included if they are structural
The 2025 cap is €98,000 gross, or one annual salary for higher earners.
There is no minimum service period, accrual starts from day one.
Equitable compensation (billijke vergoeding)
In addition to the transition payment, courts may award additional compensation in cases of serious employer fault:
- Awarded for seriously culpable employer conduct
- Determined case by case
- No statutory cap applies
Taxation
Severance payments in the Netherlands are treated as regular income:
- Transition payments → taxed as ordinary employment income
- Employers must withhold wage tax at the applicable rate
There is no separate favorable tax treatment; the transition payment is fully taxable.
Employee offboarding checklist for the Netherlands
The Netherlands requires careful procedural compliance at termination. Missing any of the following steps creates legal exposure. Work through this list sequentially:
Step 1: Determine the dismissal route and document the grounds
Before any employee communication, confirm the correct dismissal route, UWV, court petition, or settlement agreement, and document the legal grounds. For performance dismissals, the employer must have a dossier showing documented warnings, improvement conversations, and support offered. For business economic dismissals, the business case and selection criteria must be documented.
Step 2: Notify the works council (where applicable)
If the company has a works council, it must be consulted before significant restructuring decisions. For collective redundancies under the WMCO, the works council must be involved before UWV and trade union notification.
Step 3: Submit a UWV application or court petition (where required)
For business economic dismissals, submit a UWV application. For personal grounds, file the court petition. Do not communicate termination to the employee until approval is granted.
Step 4: Issue the termination notice or settlement agreement
For UWV-approved dismissals, issue the written notice of termination observing the correct notice period. For settlement agreements, prepare the vaststellingsovereenkomst, include all required clauses, and give the employee the 14-day reflection period in writing.
Step 5: Conduct the exit interview and handover
Not legally required but strongly recommended. Document responsibilities, transfer client relationships, and complete knowledge handover before exit.
Step 6: Retrieve company assets
Collect all equipment and obtain a signed acknowledgment of return. For remote employees, arrange tracked return logistics in advance.
Step 7: Revoke IT and system access
Disable access to email, internal systems, and client platforms on the last working day. Time this carefully for employees handling sensitive data or customer relationships.
Step 8: Issue final documents and process settlement
The employee must receive:
- A written statement confirming the end of employment and the grounds
- The final payslip with itemized settlement breakdown
- Holiday pay certificate (vakantiegeld)
- Confirmation of transition payment calculation and payment
Final pay and settlement
For compliant final settlements and broader payroll in the Netherlands, timing is regulated under the Dutch Civil Code. Missing payment deadlines exposes the employer to statutory interest and potential damages claims.
Timeline
All final pay and transition payment amounts must be processed:
- Outstanding salary: on the regular payroll date
- Transition payment: within one month of the end of the employment contract
- Accrued holiday pay: paid out at termination
Unused leave (mandatory payout)
Accrued but untaken statutory annual leave (minimum four weeks per year under Dutch law) must be paid out at termination. Non-statutory leave entitlements follow the employment contract or CAO.
Permissible deductions
Employers may deduct:
- Salary advances already paid
- Study costs covered under a study cost repayment clause
- Legally mandated deductions
Deductions from the transition payment are only permitted in limited circumstances — for example, transition costs already paid by the employer for the benefit of the employee can be offset against the transition payment if agreed in writing in advance.
Why this matters
Dutch labor courts enforce these requirements strictly. Transition payment errors, miscalculating the base, excluding fixed allowances, are the most common source of post-termination claims.
Wrongful dismissal protections
Dutch law provides enhanced protection to certain employee categories. These employees cannot be dismissed without cause during protected periods, regardless of business need. Violating these protections exposes employers to void dismissals and significant financial liability.
Protected categories under Dutch law
- Pregnant employees and those on maternity leave: Dismissal is prohibited during pregnancy and for six weeks after maternity leave ends, regardless of the employer’s knowledge of the pregnancy.
- Employees on sick leave: During the first two years of sick leave, dismissal for illness is prohibited (opzegverbod tijdens ziekte). The employer must pursue reintegration under the Poortwachterswet.
- Employees on parental leave: Dismissal during parental leave is prohibited.
- Works council members: Dismissal requires prior approval from the relevant trade union.
- Employees who raised a complaint: Dismissal connected to a whistleblowing claim may be challenged as void.
Discrimination protections
Dutch law prohibits discriminatory dismissals based on factors such as gender, race, age, disability, religion, nationality, or sexual orientation.
If a dismissal is deemed discriminatory, courts may order:
- Reinstatement, or
- Compensation, which may include uncapped equitable compensation
Consequences of wrongful dismissal
If an employer fails to comply with termination laws in the Netherlands, courts may order:
- Reinstatement to the original role
- Back pay covering the entire period since dismissal
- Payment of the statutory transition payment
- Additional equitable compensation
Dutch courts, particularly the subdistrict court (kantonrechter), strictly enforce both substantive and procedural compliance. Failures such as skipping approval from the UWV or omitting the mandatory reflection period in a settlement agreement are treated as seriously as wrongful dismissal itself.
How Multiplier handles termination in the Netherlands
The Netherlands’ Civil Code creates a dense procedural framework that catches foreign employers off guard, particularly those used to at-will employment markets where a two-week notice and a final paycheck close the matter cleanly.
In the Netherlands, the same action requires selecting the right dismissal route, obtaining prior UWV or court approval, observing the statutory notice period, calculating the transition payment correctly, and including mandatory clauses in any settlement agreement.
Multiplier’s employer of record (EOR) service manages the entire termination process. Our Netherlands-based legal team reviews each termination request, confirms the legal basis and correct route, and calculates every component of the transition payment, including the 2025 cap and proportional accrual for partial years.
We prepare the settlement agreement or UWV file, coordinate works council consultation, and manage WMCO notifications where collective redundancy thresholds apply. Final settlement is processed within the statutory one-month window.
Companies using Multiplier avoid the most common pitfalls: selecting the wrong dismissal route, omitting the reflection period clause, miscalculating the transition payment, and missing the WMCO notification. The process is managed end-to-end; you make the business decision, and we handle the legal execution.
Navigate the Netherlands’ complex termination laws with confidence. Book a demo with Multiplier today.
FAQs
What is the biggest legal risk when terminating employees in the Netherlands?
Selecting the wrong dismissal route or missing the prior approval requirement. Terminating without UWV or court approval renders the dismissal void; the employee remains legally employed and is entitled to full back pay.
How does the transition payment work in the Netherlands?
Every employee dismissed at the employer's initiative is entitled to one-third of a gross monthly salary per year of service, with a 2025 statutory cap of €98,000 or one annual salary. Accrual starts from day one; there is no minimum service requirement.
Can employers terminate employees in the Netherlands without going through the UWV?
Only for urgent cause dismissals, probationary dismissals, and mutual settlement agreements. For business, economic, or personal grounds, UWV or court approval is mandatory.
What deadlines must employers follow for final settlement in the Netherlands?
Transition payment: within one month of contract end. Outstanding salary: on the regular payroll date. Unused statutory leave: paid out at termination. Missing the transition payment deadline triggers statutory interest.
How does Multiplier reduce termination risks in the Netherlands?
Multiplier verifies the correct route, calculates accurate transition payments, prepares compliant settlement agreements with the reflection period clause, and manages UWV and WMCO notifications.
What must a valid settlement agreement include under Dutch law?
A valid vaststellingsovereenkomst must be in writing, state that the termination is not the employee's fault (to preserve WW eligibility), include the statutory 14-day reflection period, specify the agreed termination date, and set out the transition payment or agreed severance amount.
Can Multiplier handle disputes after termination in the Netherlands?
Yes. Multiplier's in-country legal team manages responses to court petitions and labor claims.
