By Jan Dop.
There have been major changes to employment law in the Netherlands in 2015, and even more changes are yet to come. These changes include strengthening of the legal position of flex workers, and reforming dismissal law. Some of the changes will have serious consequences for the locally hired personnel of Embassies, Consulates and Diplomats. We will discuss these amendments in a series of articles in Diplomat Magazine. Previous articles dealt with fixed-term employment contracts, the tightening of the regulation regarding successive fixed-term contracts, the outlines of the new dismissal law and the new mandatory dismissal procedures. This article – the last in this series – will deal with the compensation after dismissal.
Transition compensation
In the event the employment contract has lasted at least for two years, the employer, in contrast to the current situation, must pay a so called transition compensation to the employee in the event of a dismissal on the employer’s initiative (by giving notice, setting aside of the contract by the subdistrict court and even if the contract ends by operation of law), unless one of the exceptions mentioned under ‘No or lower compensation’ will apply. This new rule applies to both fixed-term and indefinite employment contracts and also to employment contracts for an indefinite period. If the employee terminates the employment contract as a consequence of imputable acts or omissions of the employer, the employer must also pay a transition compensation.
Calculation of transition compensation
The amount of the transition compensation depends on the length of employment (1/3 of the monthly salary per year of service over the first ten years of service and ½ of a month’s salary over the subsequent years). The transition compensation is subject to a maximum of EUR 75,000 or one year’s salary if that is higher. By or pursuant to order in council it can be determined that the costs incurred for finding another job (for instance, training costs or outplacement) can be deducted from the transition compensation.
No or lower transition compensation
The employer does not have to pay a transition compensation if the employment contract expires when the pensionable age has been reached (or ends before the age of 18 years). No transition compensation or a lower transition compensation is due in the event the employment contract comes to an end as a consequence of imputable acts or omissions of the employee.
Exception for older employees
Up until 1 January 2020, there will be transitional arrangements for older employees entitling them to higher transition compensation. Employees 50 years or older with an employment contract of 10 years or longer with the same (or successive) employer, are entitled to one month’s salary per year of service over the period following their 50th birthday (the maximum of EUR 75,000 will remain effective though). These transitional arrangements do not apply to employers with less than 25 employees.
Fair compensation
If the dismissal is due to imputable acts or omissions of the employer, the court can award the employee a fair compensation in addition to the transition compensation. The subdistrict court is free to determine the amount of fair compensation that has to be paid.
Jan Dop, LL.M. is partner and Head of the Embassy Desk at Russell Advocaten (embassydesk@russell.nl). More information about the expertise at Russell Advocaten for Embassies, Consulates and Diplomats can be found at: www.russell.nl.
