Individual dismissal law

in The Netherlands

Prof Teun JaspersProf Saskia Klosse

Pontignano/Modena 2013

2

Dismissal law in The Netherlands

Themes1. general system

2. legal grounds and objectives3. escape by the f-word1. flexible work relationships 2. consequences for dismissal law

3

General system•Dismissal by the employer

•Two-tier system:

“Administrative procedure” via UWV

“Judicial procedure” via the judge

Preventive test

Dismissal law in The Netherlands

dismissal decree / Guidelines

Dissolution of the contract

Justified reasons

Alternative

Protection by prohibitions

4

Dismissal law in The Netherlands

Grounds for dismissal (mis)conduct of the

employee summary dismissal on an

urgent reason (art. 677 CC)

economic reasons unsatisfactory

performance/ behaviour of the employee

not to be blamed for (incapacity)

to be blamed for (misconduct)

breach of trust

5

Dismissal law in The Netherlands

Table of the use of the two-tier system:

1998 2001 2005 2009

By the judge

40.106

N= 100

45.629

113

67.608

169

26.121

By the CWI/UWV

39.614

100

54.376

137

74.450

188

36.708*

Approval granted

83.7 % 85 % 76 %

Approval refused

5.3 % 7 % 8 %

* Individual: ca 80 %

6

Dismissal law in The Netherlands

Reasons for termination by CWI/UWV:

2003 2005 2009

Economic reasons

Individual

54 % 56 % 84 %

66 %

Sickness-disability 25 % 22 % 11 %

other 6 % 7 % 5 %

Collective dismissal

Economic reasons

15 % 15 % 18 %

7

Dismissal law in The Netherlands

Assessment of the (grounds of) dismissal by UWV

burden of proof upon the employer

“economic dismissal”

incapacity of the employee

after investigation of alternatives

incapacity due to illness or handicap

no possibility for replacement in a suitable job

in case of collective: seniority principle (mitigated)

8

Dismissal law in The Netherlands

Prohibition of dismissal

General prohibition of dismissal: lacking the approval/permit of the UWV

Specific prohibitions (art. 670 & 670a CC):

1.During sickness (the first two years)

2.Pregnancy

3.Membership of works council

4.Trade union membership

5.Parental leave

9

Dismissal law in The Netherlands

Sanctions unjustified dismissal

“Administrative procedure” via UWV

“Judicial procedure” via the judge

Null & void

Additionally

Severance pay

Notice period:

Compensation?

Or severance pay?

Extra judicial procedure

Dissolution of the contract by court

Extra Severance pay ex aequo et bono

District court formula: SxWxC

10

Dismissal law in The Netherlands

Sanctions Administrative procedure before UWVTermination without the approval of the UWV:

termination null and void continuation of the employment

contract

After getting the approval

termination by notice observance of the notice period

possibility to invoke the apparently unfair dismissal extra compensation (severance payment)

11

Dismissal law in The Netherlands

Dissolution of the contract by the court (art. 685 CC)

two grounds:urgent reasonschange of circumstances

no to be blamed neither to the employer nor to the employee

‘breach of trust’

Subject to the obligation the judge has to make sure a relation to the specific prohibitions of dismissal doesn’t exist if so the request to dissolve has to be refused

Assessing all kinds of circumstances

Severance payment

12

Dismissal law in The Netherlands

(mis)conduct of the employee summary dismissal on summary dismissal on anan

urgent urgent reason (art. reason (art. 677 CC)677 CC)

Subject to:1.Burden of proof: employer

“when an employer points at different facts to justify a summary dismissal, he must prove all (these) facts”: HR 16.6.2006 (X vs Willemsen)

2.Taking into account all circumstances of the case (including personal non-job-related circumstances): HR 8.10.2004 (Vixia vs Gerrits)

13

Dismissal law in The Netherlands

unsatisfactory performance/behaviour of the employee (1) to be blamed for (misconduct)

A whole range of aspects have to be considered:1. the employer is able to provide objective criteria for unsatisfactoryPerformance 2. the employee has been warned3. A procedure of due process has to be followed (interview, reaction of the employee)4. the employer shortly after the alleged unsatisfactory performance, notified the employee of the unsatisfactory performance5. the employer notified the employee in clear wordings and in a proper way, in which respect the employee performed unsatisfactorily6. the employer allowed the employee to improve himself

14

Dismissal law in The Netherlands

unsatisfactory performance/behaviour of the employee (2) to be blamed for (misconduct)

A whole range of aspects have to be considered:7. the employer and the employee made a realistic plan in improving the employee’s performance, and the employer offered guidance, including job training and/or occupational retraining8. the employee made efforts in improving himself or, in contrast, neglected reasonable instructions in this respect9. the employee fulfilled a role model within the company;10.the dismissal must be considered as disproportionate based on the employee’s age, years of service and chances on the labour market.

15

Dismissal law in The Netherlands

Highlights of the current discussion in the

Netherlands1.The two-tier system

because of its complexity an out dated system

2. The system (as developed in case law) on the severance payments and the methods used

3. The question of the objectives and legal grounds for a sustainable system of dismissal law

as part of a body of law aiming at protection of the employee as contributing to a well or even better

functioning of the labour market the F-word: flexibility

16

Dismissal law in The Netherlands

Proposals for a change: Two tiers system kept BUT

substantial procedural changes abolition of the free choice of the

employer Difference between

Individual dismissal based on individual behaviour

to be heared and decided by the judge (on request of the employer)

Collective /economic dismissaland dismissal due to longstanding disability

notice by employer only after an advice of the administrative authority introduction of the possibility of appeal

17

Dismissal law in The Netherlands

New Approach

Security of work in stead of job security

Mobility of the employee

For the sake of a better functioning of the labour market

SASKIA KLOSSEUNIVERSITY OF MAASTRICHT

INDIVIDUAL DISMISSALSTHE DUTCH CASE

TOTAL WORKING POPULATION: 7.4 MILLION

Permanentcontract 71%

Temporarycontract 16%

Self-employed14%

FOCUS

• Fixed term contracts

• Temporary agency work

• Service contracts

FIXED-TERM CONTRACTS

• Regular dismissal protection rules do not apply

• Stepping stone towards more stable and secure employment

• No material restrictions to the use of fixed-term contracts

FIXED-TERM CONTRACTSCHAIN RULE

Permanent contract after:

•A succession of three fixed-term contracts or•Successions exceeding a period of three years

•Interruptions of less than three months are allowed

(Art. 7: 668a BW)

FIXED-TERM CONTRACTSLOOPHOLES

•Break the chain with interruption of more than three months

•Let the contract expire in time

•Deviation by collective agreement

TEMPORARY AGENCY WORK

• Employment contract between the agency and the worker

• Service contract between the agency and the user undertaking

(Art. 7: 690 BW)

TEMPORARY AGENCY WORKLOOPHOLES

Agency clause

•Worker can resign with immediate effect

•If service contract ends, the employment contract ends as well

•Agency clause loses its force after 26 weeks, unless deviation by collective agreement

(Art. 7: 691 BW)

TEMPORARY AGENCY WORKLOOPHOLES

SERVICE CONTRACTS

Own account worker = self-employed person

• No employment protection

• No complicated dismissal procedures

• No severance payments

• No social security contributions

SERVICE CONTRACTS

Prior permission to terminate a service contract when:

•The service provider is to conduct the work personally

•for one or two clients

•is not assisted by more than two other persons

•and the work is not ancillary (i.e. more than five hours a week during more than 3 months)

(Art. 1 (2) (b) BBA)

SERVICE CONTRACTS

“Essence precedes appearance”:

• Name of the contract is not decisive; factual implementation is also important

• Opens the window for qualifying the contract as an employment contract

• Access to the full range of employment and dismissal protection

(HR 14-11-1997, NJ 1998/149, Groen/Schoevers)

Social Pact