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Can I be dismissed during a reorganization? Dutch law

 

 

"Dismissal during a reorganization in the Netherlands, FREE initial advice"

Companies are constantly evolving. They develop new products, phase out old ones, or partially move their production processes to other countries (outsourcing). Furthermore, companies are affected, either positively or negatively, by the economic climate. Sometimes this leads to hiring new personnel, but in tough economic times, it may result in employee layoffs.
The need for personnel can also decrease during a merger, corporate restructuring, or technological development (automation).

A company's organization must be able to adapt to changing circumstances, including modifying its workforce. If the size of the workforce needs to be reduced, it is referred to as reorganization dismissal.
Consequences of reorganization for employees

Reorganization at an employer does not always entail dismissal (redundancy). Other changes in the employment relationship are also possible, such as:

  • Reduced working hours;
  • Change of position;
  • Change of workplace and working hours;
  • Assistance in finding a new job (outplacement).

dismissed during a reorganization in the Netherlands

Dismissal during a reorganization through the Employee Insurance Agency (UWV)

If an employer finds it necessary to dismiss employees, they can apply for dismissal through the UWV Employee Insurance Agency. In the case of reorganization dismissal, the employer is required to seek permission from the UWV. Initially, the employer cannot go to the labor court for this purpose. However, both the employer and the employee have the right to appeal the UWV's decision at the labor court.
However, some employees are subject to a 'dismissal ban,' such as sick and pregnant employees. These employees cannot be dismissed in such cases, and the UWV will refuse permission.
What does the employer need to prove in the case of reorganization dismissal?
The employer must demonstrate to the labor court or the UWV:

  1. The business-economic necessity of the dismissal.
  2. The correct application of the 'reflection principle.'
  3. Efforts made to reassign the employee (redeployment effort).

Explanation:

Regarding business-economic necessity:

The business-economic necessity for dismissal can be categorized into areas such as poor financial situation, reduced workload, organizational changes, technological changes, termination of (part of) business activities, and business relocation. Each category imposes specific requirements on the employer's dismissal request. It is beyond the scope of this text to mention all specific requirements, but you can always seek assistance from our organization, Ontslagspecialist.

Regarding the reflection principle:


The reflection principle is a mandatory selection method that every employer must apply in cases of business-economic dismissal. This method determines which employees are eligible for dismissal and which are not. For further explanation of the reflection principle, you can click on: reflection principle. Deviating from the reflection principle is rarely allowed, except in cases where a particular employee is deemed 'indispensable.'
The reflection principle replaced the 'last in, first out' principle, which has not been in effect since 2006.

Regarding redeployment effort:


During a reorganization dismissal, an employer must explain the actions taken to redeploy the employee within the company or elsewhere (e.g., in a different role, department, or location). Furthermore, the employer increases the chances of the dismissal request being granted by demonstrating the measures taken to support the employee in finding another job.

Marginal review of the reason for dismissal during a reorganization


While the UWV must assess whether the reason given by the employer for the reorganization dismissal is weighty enough, it will only conduct a 'marginal' review of this reason. The UWV allows the employer a significant degree of freedom to shape their organization as they see fit, including their workforce.
An employee's argument that at least 5 employees in a particular role are needed in their department, while the employer believes that 4 employees in that role are sufficient, is therefore unlikely to be successful. The UWV does not want to interfere with the employer's decision-making.
However, this employer's freedom does not absolve them of responsibilities towards their employees. For example, in the case of a business relocation within the Netherlands, the employer should at least offer employees the option to continue their work at the new location. If the relocation is to a foreign country, it may not always be a viable option for employees to move along.

Social Plan in case of collective dismissal


If more than 20 employees are dismissed simultaneously, it constitutes a collective dismissal. In such cases, a Social Plan is often created, which includes provisions for the financial consequences of dismissal and assistance in finding new employment. Every departing employee is entitled to the provisions outlined in the Social Plan.

The employer initiates the Social Plan. Smaller employers (with fewer than 50 employees) can unilaterally create a Social Plan. They are not obligated to negotiate the content of the Social Plan with the Works Council (OR) and labor unions.
Larger employers must involve the OR in negotiations regarding the Social Plan. They can also include labor unions in the negotiations, which is mandatory according to some collective labor agreements (CAOs).

Dismissal by mutual agreement


The Social Plan is a collective dismissal arrangement that applies to multiple employees. However, on an individual basis, a dismissal arrangement during a reorganization can also be agreed upon. In such cases, the employee and employer negotiate the termination of the employment contract and the conditions to be applied. The dismissal compensation is an important component in these negotiations. The agreed-upon compensation is then documented in a settlement agreement or termination agreement.
It is crucial that the negotiated terms do not undermine the employee's unemployment benefits. Therefore, it is highly advisable to seek professional guidance during negotiations and the documentation of the negotiation results. This often results in a higher dismissal compensation. You can always contact our organization, Ontslagspecialist, for assistance.

Dismissal compensation in case of reorganization


If a Social Plan is in place, it usually specifies whether the employee is entitled to dismissal compensation and how it should be calculated. Even in cases of dismissal by mutual agreement, dismissal compensation can be negotiated. The previously used judicial formula for calculating compensation, which was common before July 1, 2015, can still serve as a guideline for parties when determining the amount of dismissal compensation.
If the employer terminates the employment contract with the employee after obtaining permission from the UWV, the employee typically has the right to a transition payment. Please note that the UWV's permission is valid for 4 weeks from the date of issuance. Within that period, the employer must use the permission to terminate the employment contract; otherwise, the termination is not legally valid, and the employee can claim that the employment contract continues, including the associated salary.

Can I be dismissed during a reorganization? What can Ontslagspecialist do for you?

At our organization, Ontslagspecialist, we have lawyers and legal experts with extensive experience in reorganization dismissals, most of them with over 20 years of experience.
Like no other, we can determine your rights and options and assist you throughout the dismissal procedure. This includes:

  • Assessing your legal position;
  • Negotiating with your counterparty, particularly regarding dismissal compensation;
  • Properly applying for dismissal with the UWV on behalf of employers;
  • Defending employees in proceedings at the UWV;
  • Initiating an appeal process at the labor court.

Make sure to handle your dismissal case correctly from the start. Therefore, in case of a reorganization dismissal, contact Ontslagspecialist directly at (00 31 ) (0)20 6160 120 or email us.

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