Dismissal on economic grounds: what should you check?

Check whether the business reason is properly substantiated, the correct employee has been selected and redeployment has been genuinely investigated.

When is a dismissal based on economic grounds?

Dismissal on economic grounds may arise from financial difficulties, a structural reduction in work, restructuring, technological change, relocation or the closure of all or part of a business.

The employer must show that positions will be lost on a structural basis. Without the employee’s consent, this route generally requires permission from UWV, unless a competent dismissal committee under a collective labour agreement applies.

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1substantiate the economic necessity

2apply the correct selection order

3genuinely investigate redeployment

Economic circumstances and restructuring

What must the employer demonstrate to UWV?

1. Necessity: the economic reason and the structural loss of positions must be sufficiently substantiated.

2. Selection: the employer must apply the correct redundancy order, generally using the statutory selection method (afspiegelingsbeginsel) within categories of interchangeable positions.

3. Redeployment: the employer must investigate whether the employee can be placed in another suitable role within a reasonable period, with training where appropriate.

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Selection and redeployment require close attention

Under the statutory selection method, employees in interchangeable positions are divided into age groups. Within each group, the employee with the shortest service will generally be selected first. Exceptions may apply, for example to a unique position or where an entire category of interchangeable positions disappears.

Also check vacancies and other suitable opportunities within the employer’s organisation and, where relevant, within the group to which it belongs.

A settlement agreement instead of a UWV procedure

Employer and employee may instead negotiate termination by mutual consent. Their arrangements are then recorded in a settlement agreement and no UWV decision is required.

Compare any proposal with your position in a possible UWV procedure. Check the stated ground, notice period, statutory transition payment, garden leave, outstanding holiday entitlement, restrictive clauses, legal costs and protection of Dutch unemployment-benefit rights.

Have your proposal reviewed