The Three Termination Routes
Dutch law provides three lawful routes to terminate an employment contract. At-will termination does not exist in the Netherlands — every termination requires either mutual agreement or approval from a government body.
- Route 1 — Settlement Agreement (vaststellingsovereenkomst): Mutual termination by agreement. Most common route. Employee has 14-day cooling-off period to revoke.
- Route 2 — UWV Dismissal Permit: Used for economic dismissal (redundancy) and long-term illness (after 2 years). Processing time 4–6 weeks.
- Route 3 — Court Dissolution (kantonrechter): Used for performance issues, misconduct, disrupted relationship, and other personal grounds.
The 8 Statutory Grounds for Dismissal
Since the WAB reform in 2020, Dutch law defines 8 specific grounds for dismissal. Employers can also combine grounds (cumulation) under ground (i):
- a) Redundancy: Economic reasons requiring structural workforce reduction
- b) Long-term illness: After 2 years of illness with no reintegration prospect
- c) Frequent absence: Regular short-term illness causing unacceptable operational disruption
- d) Dysfunction: Inability to perform the role despite coaching and warnings
- e) Culpable conduct: Serious misconduct (theft, fraud, violence, persistent refusal to work)
- f) Conscientious objection: Refusal to perform work on moral/religious grounds
- g) Disrupted relationship: Irreparably damaged working relationship
- h) Other circumstances: Residual category for situations not covered above
- i) Cumulation: Combination of two or more incomplete grounds (d, e, g, h) — court may award additional compensation up to 50% of transition payment
Transition Payment Calculation
Every terminated employee (except summary dismissal for urgent cause) is entitled to a transition payment (transitievergoeding):
- Amount: 1/3 of monthly salary per year of service
- Applies from day 1: Even during probation period terminations
- Maximum cap: €94,000 (2026) or one annual salary if higher
- On top of notice period: The transition payment does not replace the notice period salary
Notice Periods
Statutory notice periods depend on length of service:
- 0–5 years: 1 month
- 5–10 years: 2 months
- 10–15 years: 3 months
- 15+ years: 4 months
- Employee notice: always 1 month (unless contract specifies otherwise)
Best Practice: The Settlement Agreement Route
In practice, 80–90% of Dutch terminations are handled via settlement agreement. This route offers advantages for both parties:
- Speed: Can be finalized in days vs. weeks/months for UWV or court routes
- Certainty: Both parties control the outcome
- Reputation: No public court proceedings
- Flexibility: Can include additional arrangements beyond transition payment
- Key requirement: Employee must always have 14 days to revoke the signed agreement
