An employer may terminate an employment contract only if there is a reasonable ground is and reassignment is not possible (art. 7:669 DCC). In this article, we set out the grounds for dismissal, the routes (UWV or subdistrict court), alternatives (settlement agreement) and important pitfalls listed for you.

the statutory dismissal grounds (overview)

The law lists the following grounds exhaustively. Often, one principal ground is put forward per case; sometimes the judge can cumulative ground (i-ground) apply if multiple grounds are individually insufficient but sufficient in combination.

1. business-economic dismissal (a-ground)
   Reorganization, structural elimination of work, cost reduction, business closure, automation, location closure.

2. long-term incapacity for work (b-ground)
   Illness > 2 years, reintegration obligation complied with, redeployment not possible.

3. underperformance (d-ground)
   Insufficient performance despite timely notification, improvement plan, coaching, and a realistic opportunity for improvement.

4. culpable conduct or omission by the employee (e-ground)
   For example theft, fraud, serious violation of regulations, refusal to work, privacy-/confidentiality breach, aggression.

5. disrupted employment relationship (g-ground)
   Lasting, serious disruption; recovery not to be expected; mediation/measures without result.

6. other grounds (h-ground)
   Residual category for situations that do not fit into the other boxes but still justify termination.

7. cumulative ground (i-ground)
   A combination of, among others, d/e/g can justify dismissal; the judge can a fair increase grant.

In addition, there are: frequent sickness absence with unacceptable consequences (c-ground) and conscientious objections (f-ground).
Summary dismissal is a separate, immediate termination in the event of a urgent reason (see below).

routes for termination

1) termination with permission from the UWV

• When? Economic (a) or long-term incapacity for work (b).

• Requirements: proper economic justification or reintegration file, reflection principle, redeployment investigation, termination prohibitions to be observed.

• After permission: termination with notice period (can be set off).

2) termination by the subdistrict court judge

• When? Underperformance (d), culpable conduct (e), disrupted relationship (g), other (h) or cumulation (i).

• Requirements: well-constructed dossier (performance reviews, improvement plan, warnings, mediation, etc.).

• Consequences: award of transition compensation; possibly also fair compensation in the event of seriously culpable conduct by the employer.

3) termination by mutual consent (settlement agreement)

• When? If the parties want to separate by mutual consultation.

• Note for the employee: reflection period 14 days, neutral wording of the reason, correct final settlement, Unemployment-benefit safe (no culpable unemployment), agreement on transition compensation, release from work, non-compete-/non-solicitation clause, reference.

4) termination without permission (special cases)

• Probationary period: both parties can terminate with immediate effect.

• Summary dismissal: in case of urgent reason (immediate, prompt notification, balancing of interests). High risk of legal proceedings; evidence is crucial.

• Pension/AOW: termination on the AOW-/pension date if validly agreed.

• Bankruptcy: the bankruptcy trustee may terminate with a shortened notice period.

termination by operation of law: fixed term

A fixed-term contract ends automatically on the end date. Note:

• notice requirement for ≥ 6 months (at least 1 month in advance).

• chain rule: after max. 3 temporary contracts or 3 years, in most cases a permanent contract (unless deviated from by a collective labor agreement).

• early termination is only possible if agreed in writing and with the correct procedure/period.

transition payment and other compensation

• Transition payment: owed upon termination/dissolution or non-renewal at the employer’s initiative (also in case of reorganization).

• No transition payment in case of seriously culpable conduct by the employee (subject to fairness).

• Fair compensation: in addition to the transition payment in case of seriously culpable conduct by the employer or unjustified summary dismissal.

• Final settlement: vacation days/pay, overtime, bonus scheme in accordance with agreements.

prohibitions on termination and redeployment

• Prohibitions on termination including during illness (first 104 weeks), pregnancy and maternity leave, member of the Works Council, discriminatory grounds.

• Redeployment obligation: suitable position within a reasonable period (possibly training). Without demonstrable redeployment investigation, the case fails.

practical examples (short)

• poor performance without a plan → termination denied: no concrete improvement plan, no evaluations.

• disrupted working relationship → termination granted: prolonged escalated conflict, failed mediation, recovery unlikely.

• cumulation (i-ground) → termination + extra compensation: combination of moderate poor performance and disruption.

frequently asked questions

Is an employee always entitled to WW with a settlement agreement?
Not automatically. Draft the settlement agreement WW-proof (no urgent cause, neutral reason, correct date/term).

Can I dismiss someone on the spot for theft?
Only if there is an urgent cause and without delay actions are taken and communication is handled. Have the file reviewed immediately.

Do I always have to do a performance improvement plan for underperformance?
Yes, unless the shortcomings are so evident and serious that improvement is not realistic — that is exceptional. Usually required: plan, guidance, evaluations.

What if an employee becomes ill during a UWV process?
Check dismissal prohibitions. The process may be affected or halted; alternatives are reassignment or proceeding later.

help from Arslan Advocaten

We help employers and employees with advice, negotiation and proceedings: UWV files, termination petitions, settlement agreements (VSO’s), transition and fair compensation, and strategic case-file development. Quick brainstorm? Get in touch via the website; we’ll think along right away and determine the best course of action.