If business economical reasons force an employer to lay off one or more employees, the rules of the Netherlands Redundancy Scheme must be observed, including the prescribed order of dismissal. Before filing a petition before UWV (the Dutch Unemployment Agency), the employer should apply the very specific rules that determine which employees are eligible for dismissal. How does that work?
The first step to be taken is to establish the workforce in an overview of all employees, including external employees. This overview must be divided into interchangeable function categories. Interchangeable functions are functions that are similar in terms of:
The workers should also be divided into five groups:
External employees: seconded employees, temporary workers, self-employed workers and hired employees from another company location.
employees of state pension age.
employees with a zero-hour call-up contract.
employees with a fixed-term contract whose contract ends within 26 weeks.
employees with a permanent employment contract and employees with a fixed-term employment contract that lasts longer than 26 weeks.
There is a ranking between the groups of employees. Within a category of interchangeable jobs in which jobs are lost, the employment relationship with the employees of group 1 must first be ended. Only then will employees from the other groups become eligible. For those redundancies, the order of dismissal principle should be applied. To do this, employees in groups 2 to 5 with interchangeable positions must divide into age groups:
Subsequently, in accordance with the Dismissal Regulations, it must be calculated how many employees must be dismissed per age group. This is a painstaking task, but the UWV has developed an Excel file for this, which - when correctly filled in - can be used to determine which employees are eligible for dismissal under the dismissal scheme.
No, that is not possible and it is not wise. This is the way in which layoffs for business economic reasons are arranged and the law is structured in such a way that there are also genuine sanctions for non-compliance with the principle of reflection, as will be shown below.
This does not alter the fact that there are employees who nevertheless make other choices, for example by cheating with interchangeable positions or by incorrectly nominating employees for dismissal, who are not eligible for this under the prescribed order of dismissal. Sometimes the management knows nothing about it, but an HR officer is applying his 'own' rules, because he thinks he is helping his boss with this. Sometimes it is the other way around and the HR officer has wanted to arrange everything in accordance with the law, but a 'policy decision' is taken from above, which has far-reaching consequences. Whatever the reason does not matter, the serious consequences are the same.
The simplest consequence of not applying the correct order of dismissal is that the UWV does not issue a dismissal permit. If a dismissal permit is granted and the employee is subsequently dismissed, the employee can request restoration of employment from the subdistrict court and insofar as this is not possible, a fair compensation.
In a judgment of the Amsterdam subdistrict court judge of 3 February 2020, the employer is declared to be improperly applying the order of dismissal UWV and condemned to restore the employment contract with retroactive effect to September 1, 2019. In the alternative, insofar as recovery of employment would not have been allocated, a fair compensation of € 1,000,000.00 was claimed by the employee, in addition to a severance payment of more than € 180,000. So perhaps the restoration of employment is the least bad of two evils. The ruling does illustrate that there are risks associated with not correctly observing the order of dismissal UWV.
It should not go unmentioned that there are quite a lot of judgments, both from the subdistrict court and from the Court of Justice, in which claims made by employees are dismissed. Anyway, in addition to the UWV dismissal procedure, those employers also had to litigate in one or more instances against a clearly disappointed employee.
The above shows that firing employees for business economic circumstances should preferably be done carefully. We can help you with that. If you would like to submit your case to us without obligation, you can of course contact us. It is not without reason that our motto is: "Your problem, our concern."
Hein Kernkamp will gladly help you further.