Personnel: How to terminate a permanent employment contract

In which cases is an employer allowed to dismiss an employee with a permanent employment contract? What does he have to take into account? And what rules apply to employees who intend to terminate their employment?

Termination by employer

As an employer, you can only terminate a permanent employment contract provided that (1) there is a reasonable ground and (2) the employee’s suitable reassignment  is not possible or not reasonable. A reasonable ground is deemed to exist in case of the following:

• Economic reasons
• Long-term incapacity for work
• Frequent sickness absence
• Inadequate performance
• Culpable conduct
• Refusal to perform work for reasons of conscience
• Impaired employment relationship; and
• Other circumstances

The employer can terminate the employment contract with the employee in different ways, such as:

• With the permission of UWV for economic reasons or long-term incapacity for work
• Via a request for termination submitted to the subdistrict court any of the other reasons
• Via termination with mutual agreement
• Dismissal with immediate effect; and
• By termination during the trial period

If the employment contract lasted at least two years, in dismissal cases the employer – with some exceptions – must pay transitional compensation to the employee.

If the employer terminates the employment contract without reasonable ground, agreement of the employee, urgent reason or permission of UWV, within a period of two months the employee can request the court to annul the termination. As a consequence of the annulment the termination is considered never to have taken place. Then, the employment contract simply continues and the employee is entitled to salary he missed out on in the period between the termination and the annulment.

Termination by employee

For the termination of the employment contract, employees do not need to request permission from UWV or submit a request for the contract to be dissolved to the subdistrict court; they can simply resign without giving reasons.

Notice period

On termination of the employment contract a notice period must be observed, except for dismissal with immediate effect or termination during the trial period. In case of termination by the employer the statutory notice period depends on the length of employment, as shown in the table below. In the employment contract or collective agreement a different period of notice can be agreed upon.

In the event of termination by the employee a period of notice of 1 month shall apply, notwithstanding the length of employment, unless otherwise provided for in the employment contract or collective agreement.

More information

Would you like to learn more about terminating an employment contract? Or do you have any other questions regarding your staff? We will gladly assist you, please contact Russell Advocaten: