What is the notice period?

The notice period is the period between the moment of termination and the end of the employment contract. The length of the notice period depends on the duration of the employment and on the party who gives notice (employer or employee). The rules are laid down in Article 7:672 of the Dutch Civil Code.

Does the notice period apply to all types of employment contracts?

Yes, the notice period applies to both fixed-term and indefinite employment contracts. Employers and employees must therefore, in both cases, take into account the statutory or contractually agreed notice period before the employment contract can be terminated. Observing the notice period is also mandatory for temporary contracts that may be terminated mid-term.

Impact of a UWV-dismissal permit on the notice period

If the employer a dismissal permit from the UWV has obtained, something changes regarding the notice period. In this case, the period during which the UWV has processed the dismissal application may be deducted from the notice period—but there must always be at least one month of notice remaining. Any further shortening is only possible if this has been explicitly agreed in the applicable collective labor agreement. This gives both employer and employee clarity about the end date of the employment relationship, even if there is a UWV-procedure preceded it.

Is a dismissal permit from the UWV needed?

Yes, in most cases, a dismissal permit from the UWV is required to terminate an employment contract. Once this permit is granted, the employer may terminate the employment contract, but the statutory notice period is by default shortened by one month. Note: there is always at least one month of notice remaining, even after the reduction. In some situations, the notice period can be shortened further if this is agreed in the applicable collective labor agreement.

Notice period for employees

An employee usually has a notice period of one month. The employment contract or collective labor agreement may specify a longer period, but it may never be longer than six months. If there is a longer period, the employer must observe a proportionally longer notice period themselves.

Note: this period cannot simply be shortened. Shortening the employee’s notice period is only allowed if this is stated in the collective labor agreement that applies between the employee and the employer. The employer’s notice period may also never be shorter than the employee’s. This ensures a minimum level of protection for both parties, even if the collective labor agreement contains different arrangements.

Notice period for employers

The employer must take into account the length of the employment relationship:

• 1 month for employment shorter than 5 years
• 2 months for 5–10 years
• 3 months for 10–15 years
• 4 months for 15 years or longer

The employer’s notice period is therefore a maximum of four months. This period can only be extended in writing if the employer and employee agree to it together. Shortening the notice period is only possible if this is laid down in the applicable collective labor agreement.

If the notice period is applied incorrectly, the dismissal may be invalid or the employee may be entitled to additional pay for the period that was too short.

Shortened notice period with a dismissal permit

If the employer has a dismissal permit from the UWV has been obtained, the notice period may in principle be shortened by one month. Note: there must always be at least one month of notice remaining. In some cases – for example, if a collective labor agreement (CLA) provides otherwise – the notice period can be shortened further. Always check whether additional rules have been laid down in the applicable collective labor agreement (CLA).

What is the transition payment?

The transition payment is a statutory payment that the employee receives upon dismissal, including when a temporary contract. This payment compensates for job loss and helps with the transition to new work.

According to Article 7:673 of the Dutch Civil Code every employee has from the first working day right to transition payment. The amount is 1/3 of a monthly salary per year of service. For part of a year, this is calculated proportionally.

Example calculation

An employee with a gross monthly salary of €3.000 and 6 years of service receives:

6 × (1/3 × €3.000) = €6.000 gross in transition payment.

Common mistakes with the notice period and transition payment

1. Incorrect calculation of the notice period

Many employers miscalculate the notice period. Note that the month only starts to run on the first day of the month after notice. A termination letter dated 15 March means that the employment contract will not end until 30 April given a one-month notice period.

2. Transition payment not paid

Some employers think that no compensation is owed in the case of a fixed-term contract or a probationary period. That is incorrect. The transition payment is owed upon every dismissal, unless the employee has acted in a seriously culpable manner.

3. Ignoring termination prohibitions

In the case of dismissal during illness or pregnancy, a prohibition on giving notice applies. If notice is given anyway, the employee can request annulment of the dismissal and demand reinstatement of pay.

4. No notice period with a settlement agreement

Upon termination via a settlement agreement no statutory notice period applies. Nevertheless, it is wise to take into account the unemployment benefit timelines: the UWV requires that the notice period be respected, otherwise the benefit may be temporarily refused.

Note: after the end of the employment contract, an employee can generally claim unemployment benefits and sometimes a severance payment. Always check carefully whether you are entitled to a benefit upon dismissal and what the conditions are. You can find more information on the special web page of the UWV about benefits after dismissal. This helps you avoid unpleasant surprises and know where you stand financially.

5. Incorrect calculation with part-time or variable pay

The transition payment is calculated on the average wage, including fixed allowances and holiday pay. For variable work or fluctuating hours, an average over the last 12 months is needed.

Employee rights

Employees can, within three months after the end of the employment contract, submit a request to the subdistrict court judge submit if the transition payment is not paid or has been calculated too low. The court can order the employer to pay, possibly with interest and costs.

Rights and risks for employers

Employers are well advised to have the notice period and compensation checked legally in advance. An incorrect calculation can lead to double costs: continued wage payment and compensation. The employment law specialists at Arslan Advocaten help employers avoid mistakes and act in a legally correct manner.

Frequently asked questions about notice period and transition compensation

Do I always have to observe the notice period?

Yes, except in the case of summary dismissal or during the probationary period. Otherwise the dismissal is invalid and wages remain payable.

Am I entitled to a transition payment upon termination by mutual agreement?

Yes, unless otherwise agreed in the settlement agreement. Always have this checked by an employment law attorney.

When must the transition payment be paid?

No later than one month after the end of the employment contract. In case of late payment, the employee may claim statutory interest and an increase.

Am I entitled to compensation upon dismissal during illness?

Yes, after two years of illness you still have the right to a transition payment. See our article on dismissal during illness.

Arslan Advocaten assists with notice periods and transition payments

The employment law specialists at Arslan Advocaten advise employees and employers on notice periods, transition payments and dismissal procedures. Do you want to avoid paying too much or receiving too little? Contact us for immediate legal advice.