Fired on a permanent contract: you can't just do that

A permanent contract is also known as the open-ended employment contract. It is the most stable basis you can have as an employee. This contract indicates that your contract is for an indefinite period of time and has no end date attached to it.

As indicated, there is no end date specified within this contract. So basically, the employment relationship continues until you or the employer decides to terminate it. 

For you as an employee, this form of contract offers stability and protection. You don't have to deal with the question "will my contract be renewed?".

You do have this with temporary contracts. Your employer is not allowed to fire you on a permanent contract. However, there are some soils on which you can be fired with a permanent contract.

The main difference between a permanent and a temporary contract is the dismissal protection that you have with a permanent contract and not with a temporary contract.

With a temporary contract, your employer can simply decide not to renew your contract as the end date approaches. However, your employer must give you at least a month's notice. This is also called the obligation to give notice named.

With the obligation to give notice, you as an employee have the time and space to look for a new job. Your employer does not have to follow any special procedures or give you a reason why your contract will not be renewed.

Dutch labour law offers extensive protection to employees on permanent contracts. These protections are laid down in the Civil Code (contained in Code 7, Title 10)

Current dismissal legislation is largely shaped by the Work and Social Security Act (2015) and the Labour Market in Balance Act (2020).

The simple answer is: yes, you can be fired with a permanent contract. It is often a misconception that you have complete security and cannot be fired. But this is not true.

As mentioned, your employer must meet a number of important conditions. For instance, there must be a ground for dismissal and the correct procedures must be followed.

With a permanent contract, there are a number of grounds for dismissal that can still get you fired. For example, your employer must: 

1. Have a legally valid reason for dismissal

2. Having this reason tested by the UWV or the subdistrict court

3. Following the correct procedures here

4. Respecting the statutory notice period

5. In most cases, a transitional compensation and severance pay pay

The law distinguishes different dismissal routes depending on the reason for the dismissal:

• At economic reasons or long-term disability your employer must go to the UWV.

• For other reasons, such as dysfunction or one disrupted working relationship, your employer must go to the subdistrict court.

• On discharge with mutual agreement (settlement agreement) no consent is needed, but you, the employee, must agree to the terms of the dismissal.

This layered protection makes the Netherlands a country with relatively strong worker protection internationally.

Compared to, for example, countries like the United States, where 'at-will employment' is the norm, Dutch labour law offers much more security for employees on permanent contracts.

In legal jargon, the most common ground for dismissal is the business economic reason. In simple terms, this means that your organisation indicates that the company is doing poorly financially.

The company has to reorganise, people are flying out and departments are being closed.

Your employer cannot just bring this up and the following are important:

• your employer must be able to prove that there is actually a bad financial situation.
• It is not possible to redeploy you to another suitable position somewhere within a reasonable period of time.

First, the company will often engage with employees to look at a dismissal by mutual consent.

Can't work this out as employee and employer? Then the employer will have to go to the UWV to request permission for your dismissal. The latter will then assess whether economic necessity has been sufficiently demonstrated. 

An important aspect in company redundancies is the principle of attrition. This means that it cannot be arbitrarily determined who will be laid off, but that within similar positions, layoffs should be distributed proportionally across different age groups.

This ground applies if you are regularly ill. This puts the business operations at risk and that is the reason why, according to your employer, there is no other route than to dismiss you. In doing so, your employer must be able to prove the following:

• You call in sick very regularly and at unpredictable moments
• Your absence causes business operations to be compromised
• It is not an incident, it is to be expected that you will continue to be sick all the time in the future too
• Your employer has already taken all kinds of measures to reduce absenteeism, but to no avail

For this ground for dismissal, your employer will have to go to the subdistrict court. This can be avoided by entering into a mutual agreement dismissal.

Culpable conduct and negligence involve serious misconduct on your part as an employee. For example:

• Refusal of work without a reason
• You have misused all kinds of company assets, for example racing forklifts in the factory, causing huge damage
• You behaved very aggressively towards your immediate colleagues
• You have seriously and persistently violated the rules within the company

For this reason, your employer must always be able to prove that the behaviour makes the continuation of your employment no longer reasonably possible. For your dismissal, your employer will have to go to the subdistrict court.

Since the introduction of the Labour Market in Balance Act in 2020, there is also the ground for dismissal: the cumulation ground as a reason for dismissal. Here, several reasons, which in themselves are not sufficient for dismissal, may together provide sufficient grounds. For example, a combination of slight dysfunction and a slightly disturbed working relationship.

Although the cumulation ground does provide for dismissal, for you as an employee it often means that you are entitled to additional compensation upon dismissal. An employer will have to go to the subdistrict court for this ground for dismissal. A subdistrict court can award additional compensation of up to 50% of the transitional compensation for this ground for dismissal, on top of the regular transitional compensation your employer has to pay.

If your employer wants to dismiss you, there are three options: dismissal through the UWV, dismissal through the subdistrict court, or dismissal by mutual agreement.

Which route your employer should take depends on the reason for dismissal. We have discussed those above.

The dismissal procedures are as follows:

The UWV handles dismissal requests based on business economic reasons or on long-term disability (more than two years). The procedure is as follows:

1. Your employer will submit an application for dismissal to the UWV;

2. You will have the opportunity to defend against the dismissal request;

3. The UWV assesses whether the reason for dismissal is sufficiently substantiated;

4. If the UWV approves the application, your employer will get a dismissal permit;

5. Your employer can then terminate your contract. The statutory notice period still applies here;

6. Your employer may deduct the procedural time at the UWV from the notice period, but at least one month's notice must remain;

The UWV procedure takes 4 to 6 weeks on average. It is a written procedure, which means there is no hearing. If you disagree with the UWV's decision, you can start proceedings with the subdistrict court within two months of the dismissal.

For all other grounds for dismissal, such as dysfunction, culpable conduct or a disrupted working relationship, your employer must go to the subdistrict court. The procedure is as follows:

1. Your employer files a petition with the subdistrict court

2. You will have the opportunity to submit a defence (this is also called a 'statement of defence')

3. An oral hearing (hearing) at the subdistrict court follows

4. The subdistrict court judges whether the reason for dismissal is sufficiently substantiated

5. If the subdistrict court grants the request, your employment contract will be dissolved

Unlike with the UWV, where your employer still has to give notice after permission, the decision of the subdistrict court is immediately effective, but also final: your employment contract is dissolved on the date set by the court. You can appeal against this decision, but it has no suspensive effect on the dismissal. In short, your dismissal is final and can only be reversed with an appeal.

The most common method of dismissal in practice is dismissal by mutual consent. All information on this form of dismissal can be found here. With dismissal by mutual consent, you and your employer agree to terminate the employment contract, without the intervention of UWV or subdistrict court.

This is recorded in the settlement agreement, also known as the termination agreement.

Have you received your settlement agreement? If so, it is always advisable to have it checked by an experienced lawyer.

With us, that is entirely possible free of charge and without obligation. This way, you will still have clarity on your dismissal within 24 hours.