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 are likely to lose their positions between March and June 2020. If a recent McKinsey report is anything to go by, the future of the European job market is not so good-looking. Up to 59 million workers could lose their jobs in Europe as the pandemic continues to bite. That is roughly 27% of the total workforce in the European Union and the United Kingdom.

While coronavirus continues to cause a worldwide economic downturn, governments across Europe stand ready to protect the rights of workers. Most countries in this continent have put in place special rules to help control the dismissal of employees. The Netherlands, for instance, has already put into force the Dutch Collective Redundancy (Notification) Act (Wet melding collectief ontslag or WMCO) to help regulate the collective dismissals of employees.

This guide explores everything about collective redundancies or dismissals in the Netherlands.

What Is the Collective Redundancy?

Collective redundancy is a situation where a minimum of 20 workers from the same organisation are to be dismissed within three months. Usually, these workers must be from within the jurisdiction of one of the legal departments of the Employment Authorities (Uitvoeringsinstituut Werknemersverzekeringen or UWV).

Most of the time, collective dismissals happen when a company needs to restructure as they try to mitigate losses. Because of the large scale of the termination, the Act has laid out rules to govern collective redundancy in the Netherlands. These laws require employers to fulfil specific requirements before carrying out collective redundancies.

Collective Redundancy or Dismissal Procedure

When an employer decides to conduct a collective dismissal in the Netherlands, there are several obligations that they must fulfil. The first and most important thing is to report their plan to the trade unions and the Employee Authorities. Failure to do this often leads to the annulment of the redundancies.

The second thing that an employer needs to do is to consult with the trade unions. This consultation mainly aims to establish whether the collective dismissal can be reduced or avoided through other options such as cuts in working hours or pay. During this time, the employer must also discuss with the trade unions on the possibilities of alleviating the adverse effects of the collective redundancy. This may include coming up with a redundancy programme or a social plan.

Often times, the UWV only approves an application to carry out a collective redundancy only if an employer has reported and consulted with trade unions and works council (where possible). Upon approval, the employer can only dissolve or terminate the employment contracts 30 days after they have reported their intention. However, this may not be necessary if the trade unions declare in writing that the employer consulted them and that they approve the dismissals.

Information Disclosed When Reporting Collective Redundancy

Before redundancy consultations, the employer must disclose to the relevant authorities a few things about the proposed redundancies. These include:

• The reasons
• The numbers and descriptions of affected employees
• The total number of affected workers employed at the institution
• The criteria for choosing staff for dismissal
• The duration over which collective redundancy will take place and how it will be executed
• The formula used to calculate any redundancy compensation

Notifying Redundant Employees

Whether the dismissals are compulsory or involve mutual approval, the employer must follow a strict procedure that requires reporting and consulting with the relevant authorities. After that, the employer must then notify workers to be dismissed well in advance. It is important to note that an employer should not give employees notice of dismissal before the conclusion of the process. Perhaps, this is because it might imply that the reporting and consultations are only are a mere procedural obligation.

Selection Criteria for Collective Redundancy

Several factors determine the UWV’s approval of applications for collective dismissal. These often include:

• Reason for the collective redundancy
• The selection method used, and
• The outcome of any trade union/works council consultations

When selecting employees for collective dismissal, an employer is required to use a balancing principle (afspiegelingsbeginsel). This means that the employer must classify employees with the same functions into different categories based on age. Employees with the least years of service per category fall in the first dismissal group.

How Long Does the Process Take?

Although a collective dismissal procedure must start 30 or 90 days before notifying redundant staff, there is no statutory time for how long the process should last. In most cases, factors like the number of proposed redundant employees as well as the size of the organisation determine the length of the consultation process.

What Happens If an Employer Fails to Follow the Right Procedure?

Of course, organisations carry out collective dismissals due to various economic reasons. During such times, an employer may miss out a few things or deliberately fail to follow the correct process. The affected employees may complain to an employment tribunal in such cases. This should happen within 90 days after the last of the redundancies.

If the tribunal considers the complaint as legit, it has the powers to make a declaration to that effect and even offer a protective award. The award requires the employer to pay the workers’ remuneration for a protected period which starts on the date when the first dismissals took place.

Need Help?

As employers continue to respond to the current economic downturn with temporary furloughs and permanent lay-offs across Europe, it is possible to miss out a few legal obligations. But there is no need to worry. Our firm can be of great help at any stage of the collective redundancy process. Reach out to us to discuss your specific situation.