Doing Business in the Netherlands 2012 - American Chamber of ...

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Notwithstanding summary dismissal, early termination of a fixed-term employment contract, by giving notice, is not possible unless parties agreed to a premature notice period. Without such a clause, the court in a substantive dissolution procedure may rule that the employer must compensate the employee financially (in an amount equal to the salary for the remaining time period of the agreed-upon fixed term). If an employer enters into consecutive fixed-term employment contracts with the same employee, the last employment contract entered into will terminate by operation of law (without the need for a notice of termination upon obtaining approval from the UWV as set out above) provided that the total number of employment contracts entered into does not exceed three and the total duration of these fixed-term employment contracts does not exceed 36 months (e.g., three contracts of one year each or two contracts of 18 months each). If more than three fixed-term employment contracts are concluded between the same parties at intervals not exceeding three months, or if the total duration of consecutive employment contracts, at intervals not exceeding three months, is three years or more, the last employment contract will qualify as an employment contract for an indefinite period. Consequently, the employer will have to obtain prior approval from the UWV to give a notice of termination of employment. During the economic crisis, temporary arrangements have been made to extend the opportunity to renew fixed-term employment contracts of employees under the age of 27. Only after a period of four years of consecutive fixed-term employment contracts or as of the fifth consecutive fixed-term employment contract, the employment contract of an employee under the age of 27 will qualify for an indefinite period. This temporary arrangement in principle applies until 1 January 2012. However, the measure can be extended until 1 January 2014. In deviation of the aforementioned general rules on renewal of fixedterm employment contracts, a single fixed-term employment contract cannot qualify as an employment contract for an indefinite period, 122 Baker & McKenzie
Doing Business in the Netherlands 2012 regardless of its duration. Furthermore a fixed-term employment contract of three years or longer may be extended once for a fixed period of not more than three months immediately after the initial fixed-term contract expires, without resulting in an employment contract for an indefinite period and therefore without resulting in the obligation to give a notice of termination. 14.3.3 Manifestly Unreasonable Dismissal Even if an employer has terminated an employment contract with due observance of the notice period after obtaining prior approval from the UWV, the employee can still start so-called manifestly unreasonable dismissal proceedings to claim damages, on the basis that the (financial) consequences of the termination are unreasonably harsh for the employee (in view of the severance payment, if any, awarded by the employer and the likelihood that the employee will find suitable employment elsewhere) compared to the interests of the employer in dismissing him/her. The court will assess on the basis of all circumstances of the case at hand whether a dismissal is manifestly unreasonable. The mere fact that the employee has been dismissed without granting financial compensation generally does not immediately cause a dismissal to be manifestly unreasonable. In determining compensation, the court does not apply a fixed formula. The court has – to a significant degree – the freedom to assess the nature and extent of the dismissal and a subsequent compensation. Furthermore, the court is entitled to estimate the amount of compensation if this cannot be determined accurately. 14.3.4 Termination by Mutual Consent All employment contracts may be terminated at any time by mutual consent between the employer and the employee, with or without observance of the statutory or agreed-upon notice period and with or without payment of compensation to the employee. It is important for the employer to ensure that the employee’s consent to the agreement Baker & McKenzie 123
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Editorial Contributions Robert van
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Innovative ways to inform you Doing
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1 The Netherlands Doing Business in
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Steady-Course Policy Doing Business
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2 Legal Forms of Doing Business Doi
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2.3 Branch versus Subsidiary Doing
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4 The Subsidiary 4.1 Incorporation
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8 Commercial Contracts 8.1 General
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9 Real Estate 9.1 Ownership Doing B
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18.9 Tax Incentives Doing Business
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19.1.6 Rates Doing Business in the
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19.3 Dividend Withholding Tax Doing
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21 Investment Incentives Doing Busi
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22 Financial Regulations 22.1 Excha
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23.3.3 Product Liability Doing Busi
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24.13 Arbitration Doing Business in
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Tax Corporate & International Tax H
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