1E9Ct5D

Doing business in the Netherlands 19cause for summary dismissal.Dissolution by the CourtThe Court can terminate the employment agreementthrough dissolution. The employer will needa sound reason to have the employment contractdissolved by the Court. Amongst others, restructuringof the company and non-performance of theemployee can serve as reasons. The proceedingswill take approximately 6 to 8 weeks. No noticeperiod is called for; the court sets the terminationdate in its verdict (usually at a date approximately 2weeks after the verdict). The Court can grant a severancepayment to the employee in the case wherethe employment agreement is dissolved. A rule ofthumb for calculating severance (‘Cantonal CourtFormula’) is widely used. It is based on age, years ofservice, salary and circumstances. A rough indicationfor severance due is 1 month’s salary for every yearof service.Furthermore the Cantonal Court Judges may takeinto consideration the employee’s position on the jobmarket, the employer’s financial position and theposition of older employees who are close to theirretirement.No appeal is possible against the decision of theCourt, either to dissolve the employment contractor to grant a severance payment, apart from exceptionalcases in which – in short – the Court has failedto apply the law correctly.NoticeThe employer, who wishes to terminate an employmentagreement for an indefinite period of time,can give notice to the employee observing the noticeperiod – employment agreements for a fixedperiod of time can only end by giving notice if thispossibility is explicitly stated in the employmentagreement. However, in order to be able to do so,the employer must first obtain approval of theUWV (labour office) before serving the notice oftermination, stating the reason(s) for the intendedtermination. The UWV approval procedure will usuallytake about 2 months provided that the reasonsfor termination are clear.After having obtained such approval to terminatethe employment agreement, the notice period maybe shortened by 1 month.The statutory notice period that has to be observedmay vary from 1-4 months, depending of the durationof the employment.An employee whose employment has been properlyterminated (i.e. after consent of the UWV and withdue observance of the applicable notice period) maynevertheless claim damages on the grounds that hehas been unreasonably dismissed (comparable to“unfair dismissal”). There is no general rule for thecalculation of such damages.The Work and Security Act also results in a changeto the dismissal procedure as of 1 July 2015. Therewill be a clearly defined route: dismissal for economicreasons will be via the UWV and dismissal forpersonal reasons is reviewed by the district court. Inall cases the employee has the right to a statutorytransition allowance.In the new situation after an employment contract ofa minimum of two years employees will have theright to a transition allowance intended to be usedfor training and transferring to a different professionor employer. The allowance depends on theduration of the contract and is 1/3 of the monthlysalary per year of service and 1/2 of the monthlysalary for each year of service where the employeewas employed for more than ten years. The maximumallowance is € 75,000 or one annual salary foremployees with an annual salary of over € 75,000.All reasons for dismissal will be included in the newlegislation. The Work and Security Act, furthermore,states for each reason for dismissal a number ofrequirements, which the UWV or the sub districtcourt must test against. If the requirements are notmet, the UWV, in principle, cannot grant any permissionand/or the sub district court cannot dissolveany contract.In contrast to the current situation, the new legislationno longer allows the sub district court to compensatea limited case file with a higher severancepayment. The court may award any additional payment– besides the statutory transition allowance –only in exceptional cases. This payment may underno circumstance be intended to compensate for alimited case file.The new legislation still allows the conclusion oftermination agreements. An employee may alsoassent in writing to the employer’s termination. An