Collective Redundancies or Dismissals in the Netherlands

The reality of the toll coronavirus is taking on the global job market is only beginning to hit home. In Europe alone, the COVID-19 crisis has already idled more than 18 million workers. Sadly, that is just the tip of the iceberg. The International Labour Organization estimates that more than 195 million people around the world could lose their jobs between March and June 2020. A recent McKinsey report offers a sobering look at the future of the European job market, where it is predicted that up to 59 million workers could find themselves without work. That number accounts for roughly 26% of the total workforce in the European Union and the United Kingdom together.

While coronavirus continues to cause a worldwide economic downturn and employers take steps to reduce their labor costs, governments across Europe stand ready to protect the rights of workers. Most Western European countries already have special laws in place to control the dismissal of employees. The Netherlands, for instance, has already put into force the Collective Redundancy (Notification) Act (Wet melding collectief ontslag or WMCO) to help regulate the collective dismissals of employees. Read on to learn more about collective redundancies or dismissals and what they could mean for employees.

What Is Collective Redundancy?

Collective redundancy is a situation where 20 or more employees from the same company are to be dismissed during a three-month period for economic reasons. Whether the situation involves compulsory dismissal or dismissal with mutual approval from the employer and employee is irrelevant. Much of the time, collective redundancies or dismissals occur when a company undergoes restructuring in an attempt to mitigate losses, which may be the case during COVID-19. Under the Collective Redundancy (Notification) Act, employers planning to implement a collective redundancy are required to notify the relevant trade unions and the Dutch Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, or the UWV), among other requirements. In fact, Dutch labor laws impose a strict protocol for carrying out collective redundancies appropriately.

Collective Redundancy or Dismissal Procedure

Consulting Trade Unions

When employers in the Netherlands decide to initiate a collective dismissal, there are several obligations they must satisfy under the law. First and foremost, employers must consult the relevant trade unions. The main purpose of this consultation is to establish whether the collective dismissal can be reduced or avoided through other options such as cuts in working hours or pay, and how to keep the number of dismissals to a minimum. During this consultation period, the employer must also discuss with the trade unions how to possibly mitigate the negative consequences of the collective redundancy for the affected employees.

Notifying Public Authorities

Another important step an employer must take in following a fair collective redundancy process is to notify the public authorities. Once the trade unions have been informed of the intended collective redundancy, copies of the notifications must be delivered to the UWV. In notifying the public authorities, employers must include the reasons for the reduction of work activities, the number of employees that will be made redundant and the proposed date of termination, among other pertinent information. If an employer fails to comply with this duty to report, the dismissals could end up being annulled.

Looking for Alternative Employment

Another important statutory requirement set forth by the Collective Redundancy (Notification) Act is that employers are obligated to search for alternative employment for the employees who will be dismissed, either within the company or with an associated employer if the company is part of a group. The employer must determine whether there are suitable positions that are vacant or that will become vacant in the near future, as part of an effort to reduce the impact of the collective dismissal on the affected employees.

Notifying Redundant Employees

The final step in the collective redundancy process is notifying the employees who will be made redundant. Employers are required to wait one month after reporting the intended collective redundancies before dissolving the employment contracts. If the trade unions have declared in writing that they have been consulted by the employer and are in agreement with the collective dismissals, the one-month waiting period may not apply.

What Happens If an Employer Fails to Follow a Fair Procedure?

A company may decide to carry out a collective dismissal for any number of economic reasons. Whatever the reason, it is important that the employer follows a fair procedure in selecting the redundant employees, consults the relevant trade unions, and notifies the proper authorities before moving forward with the collective dismissal. If the employer fails to comply with the proper procedure, affected employees may file a complaint and could end up receiving a protective award.

Transition Payments for Collective Dismissals

Transition pay was introduced in the Netherlands on July 1, 2015. The payment is a statutory severance requirement in situations where an employer terminates or fails to renew an employee’s employment contract, including a temporary contract. The allowance is meant to be used during the employee’s transition period between jobs and the level of compensation is calculated based on the employee’s average monthly salary and total duration of service. Employees in the Netherlands who lose their jobs as part of a collective dismissal are entitled to transition pay in most cases. Plus, per the new Dutch Balanced Labour Market Act (Wet Arbeidsmarkt in Balans or WAB), which entered into force on January 1, 2020, employees in the Netherlands qualify for transition pay beginning on their first day of employment, rather than after two years, which is what the law previously stated.  

Need Help?

As employers continue to respond to the current economic downturn with temporary furloughs and permanent layoffs across Europe, it is important for employees to understand their rights under European labor laws, including in the case of a collective dismissal or collective redundancy. If you have been laid off or lost your job in Western Europe because of a collective redundancy, our firm can help. Contact us today to discuss your specific situation and find out how best to move forward to ensure that you receive the compensation you deserve.

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