Individual dismissal law in The Netherlands

1. Pontignano/Modena 2013 Individual dismissal law in The Netherlands Prof Teun Jaspers Prof Saskia Klosse

2. Dismissal law in The Netherlands Themes 1. general system 2. legal grounds and objectives 3. escape by the f-word 1. flexible work relationships 2. consequences for dismissal law

3. Dismissal law in The Netherlands General system • Dismissal by the employer • Two-tier system: Protection by prohibitions Alternative “Administrative procedure” via UWV “Judicial procedure” via the judge Justified reasons Dissolution of the contract dismissal decree / Guidelines Preventive test

4. Dismissal law in The Netherlands Grounds for dismissal  (mis)conduct of the employee  summary dismissal on an urgent reason (art. 677 CC)  economic reasons  unsatisfactory performance/ behaviour of the employee  not to be blamed for (incapacity)  to be blamed for (misconduct)  breach of trust

5. Dismissal law in The Netherlands Table of the use of the two-tier system: * Individual: ca 80 %

6. Dismissal law in The Netherlands Reasons for termination by CWI/UWV:

7. Assessment of the (grounds of) dismissal by UWV  burden of proof upon the employer “economic dismissal”  incapacity of the employee after investigation of alternatives  incapacity due to illness or handicap no possibility for replacement in a suitable job Dismissal law in The Netherlands in case of collective: seniority principle (mitigated)

8. Dismissal law in The Netherlands • Prohibition of dismissal • General prohibition of dismissal: lacking the approval/permit of the UWV • Specific prohibitions (art. 670 & 670a CC): • During sickness (the first two years) • Pregnancy • Membership of works council • Trade union membership • Parental leave

9. Dismissal law in The Netherlands Sanctions unjustified dismissal “Judicial procedure” via the judge “Administrative procedure” via UWV Extra judicial procedure Notice period: Compensation? Or severance pay? Dissolution of the contract by court Null & void Extra Severance pay ex aequo et bono Additionally Severance pay District court formula: SxWxC

10. Dismissal law in The Netherlands Sanctions Administrative procedure before UWV Termination without the approval of the UWV: termination null and void continuation of the employment contract After getting the approval termination by notice observance of the notice period possibility to invoke the apparently unfair dismissal extra compensation (severance payment)

11. Dismissal law in The Netherlands Dissolution of the contract by the court(art. 685 CC) two grounds: urgent reasons change of circumstances no to be blamed neither to the employer nor to the employee  ‘breach of trust’ Subject to the obligation the judge has to make sure a relation to the specific prohibitions of dismissal doesn’t exist  if so the request to dissolve has to be refused Assessing all kinds of circumstances Severance payment

12. (mis)conduct of the employee •  summary dismissal on an urgent reason (art. 677 CC) • Subject to: • Burden of proof: employer • “whenanemployer points at different factstojustify a summary dismissal, he must prove all (these) facts”: HR 16.6.2006 (X vs Willemsen) • Taking into account all circumstances of the case (including personal non-job-related circumstances): HR 8.10.2004 (VixiavsGerrits) Dismissal law in The Netherlands

13. Dismissal law in The Netherlands unsatisfactory performance/behaviour of the employee (1)  to be blamed for (misconduct) A whole range of aspects have to be considered: 1. the employer is able to provide objective criteria for unsatisfactory Performance 2. the employee has been warned 3. A procedure of due process has to be followed (interview, reaction of the employee) 4. the employer shortly after the alleged unsatisfactory performance, notified the employee of the unsatisfactory performance 5. the employer notified the employee in clear wordings and in a proper way, in which respect the employee performed unsatisfactorily 6. the employer allowed the employee to improve himself

14. Dismissal law in The Netherlands unsatisfactory performance/behaviour of the employee (2)  to be blamed for (misconduct) A whole range of aspects have to be considered: 7. the employer and the employee made a realistic plan in improving the employee’s performance, and the employer offered guidance, including job training and/or occupational retraining 8. the employee made efforts in improving himself or, in contrast, neglected reasonable instructions in this respect 9. the employee fulfilled a role model within the company; 10.the dismissal must be considered as disproportionate based on the employee’s age, years of service and chances on the labour market.

15. Highlights of the current discussion in the • Netherlands • The two-tier system • because of its complexity •  an out dated system • 2. The system (as developed in case law) on the severance payments and the methods used • 3. The question of the objectives and legal grounds for a sustainable system of dismissal law • as part of a body of law aiming at protection of the employee • as contributing to a well or even better functioning of the labour market  the F-word: flexibility Dismissal law in The Netherlands

16. Proposalsfor a change: • Twotiers system kept BUT substantialprocedural changes • abolition of the free choice of the employer • Differencebetween • Individualdismissalbased on individualbehaviour • tobeheared and decidedby the judge (on request of the employer) • Collective /economicdismissal • and dismissaldueto longstanding disability •  noticebyemployeronlyafteranadvice of the administrativeauthority •  introduction of the possibility of appeal Dismissal law in The Netherlands

17. Dismissal law in The Netherlands New Approach Security of work in stead of job security Mobility of the employee For the sake of a better functioning of the labour market

18. Individual DismissalsThe Dutch case Saskia Klosse University of Maastricht

19. Total working population: 7.4 million

22. Focus • Fixed term contracts • Temporary agency work • Service contracts

23. Fixed-term contracts • Regular dismissal protection rules do not apply • Stepping stone towards more stable and secure employment • No material restrictions to the use of fixed-term contracts

24. Fixed-term contractsChain rule Permanent contract after: • A succession of three fixed-term contracts or • Successions exceeding a period of three years • Interruptions of less than three months are allowed (Art. 7: 668a BW)

26. Fixed-term contractsLoopholes • Break the chain with interruption of more than three months • Let the contract expire in time • Deviation by collective agreement

27. Temporary Agency Work • Employment contract between the agency and the worker • Service contract between the agency and the user undertaking (Art. 7: 690 BW)

28. Temporary Agency WorkLoopholes Agency clause • Worker can resign with immediate effect • If service contract ends, the employment contract ends as well • Agency clause loses its force after 26 weeks, unless deviation by collective agreement (Art. 7: 691 BW)

29. Temporary Agency WorkLoopholes • Chain rule does not apply in the first 26 weeks • Extension by collective agreement, for example, to first 78 weeks • After 78 weeks, a second phase starts • Permanent contract then may come in reach after a succession of 8 fixed-term contracts or two years (Art. 7: 691 BW)

31. Service contracts Own account worker = self-employed person • No employment protection • No complicated dismissal procedures • No severance payments • No social security contributions

32. Service contracts Prior permission to terminate a service contract when: • The service provider is to conduct the work personally • for one or two clients • is not assisted by more than two other persons • and the work is not ancillary (i.e. more than five hours a week during more than 3 months) (Art. 1 (2) (b) BBA)

33. Service contracts “Essence precedes appearance”: • Name of the contract is not decisive; factual implementation is also important • Opens the window for qualifying the contract as an employment contract • Access to the full range of employment and dismissal protection (HR 14-11-1997, NJ 1998/149, Groen/Schoevers)

34. Social Pact