The Netherlands has some of the most structured employment protections in Europe. If you’re a foreign employer with Dutch staff, you can’t simply give notice and walk away. Termination is governed by the Civil Code (Burgerlijk Wetboek, Book 7) and the Work and Security Act (Wet Werk en Zekerheid), and the process is enforced by the courts and UWV (the Employee Insurance Agency). Getting it wrong exposes you to reinstatement orders, financial penalties, and voided dismissals. This guide covers what you need to know before ending an employment relationship in the Netherlands.
The two routes to dismissal
There’s no at-will termination in the Netherlands. Every dismissal must go through one of two formal routes, or be agreed mutually. The route you take depends on the reason for termination.
Uwv route: business or medical reasons
If you’re terminating for business economic reasons (such as redundancy or restructuring) or because an employee has been continuously ill for more than two years, you’ll need to file a dismissal request with UWV. UWV reviews the request and either grants or refuses permission to proceed. If permission is granted, you can then give formal notice. This process typically takes several weeks.
Court route: personal reasons
If the reason is personal, such as poor performance, dysfunction, or an irreparably broken working relationship, you file a dissolution request with the subdistrict court (kantonrechter). A judge reviews the case and decides whether to dissolve the contract. The court may also award the employee additional compensation on top of the standard transition payment if it finds the employer acted seriously culpable.
Mutual agreement (vaststellingsovereenkomst)
Employer and employee can also agree to end the contract without going through UWV or court. This agreement, called a vaststellingsovereenkomst (VSO), must be in writing. Once signed, the employee has a 14-day cooling-off period in which they can withdraw without giving a reason. If the separation terms are structured correctly, the employee can still claim UWV unemployment benefits. Because a VSO avoids the formal routes, it’s often the most practical path when both parties are willing.
Summary dismissal: urgent cause
Summary dismissal (ontslag op staande voet) is reserved for serious misconduct such as theft, violence, or fraud. It takes effect immediately, with no notice period and no transition payment. However, the bar is high. You must state the grounds in writing at the moment of dismissal or immediately afterward, and the reason must be genuinely urgent. The employee has two months to challenge the dismissal before a court. If the court finds the grounds insufficient, the dismissal can be annulled and you may owe back pay and compensation.
Probation periods
Probation rules in the Netherlands are strictly defined. During a valid probation period, either party can end the contract immediately with no notice and no payment.
The maximum probation period is one month for fixed-term contracts and two months for indefinite contracts. Probation clauses are only valid for contracts lasting six months or more. A probation period written into a shorter contract has no legal effect.
Notice periods
Once dismissal permission is granted (via UWV or court), the employer must give statutory notice. The minimum notice periods by years of service are:
- Less than 5 years: 1 month
- 5 to 10 years: 2 months
- 10 to 15 years: 3 months
- 15 years or more: 4 months
For employees giving notice, the statutory period is always 1 month, regardless of tenure.
Notice periods can be extended by individual contract or collective agreement. However, the employer’s contractual notice period can’t exceed six times the employee’s notice period.
Transition payment
When you terminate an employee or choose not to renew a fixed-term contract, you’re required to pay a transition payment (transitievergoeding). This applies from day one of employment; there’s no minimum tenure threshold.
The payment is calculated at one-third of the employee’s monthly gross salary for each full year of service, with pro-rata calculation for partial years. In 2026, the maximum transition payment is €102,000 gross, or one full annual salary if that figure is higher.
No transition payment is owed if the employee resigns voluntarily or is dismissed for urgent cause. The payment is due on the termination date itself, not at a later stage.
Fixed-term contracts
Fixed-term contracts carry their own obligations. If the contract runs for six months or more, you must give the employee written notice of non-renewal at least one month before the contract expires. Failing to do this doesn’t void the non-renewal, but it does trigger a compensation obligation equal to one month’s salary.
On the question of contract chaining: Dutch law limits how many consecutive fixed-term contracts an employer can offer the same employee. After three consecutive fixed-term contracts, or once the total duration reaches three years, the employment automatically converts to an indefinite contract.
Sick employees
You can’t dismiss an employee during the first two years of illness. This prohibition (opzegverbod) is broadly defined, and a dismissal that violates it is void, not just challengeable. The one exception is company closure, where the business ceases operations entirely.
After two years of continuous illness, you can apply to UWV for permission to terminate, provided you’ve met your reintegration obligations during that period. Dutch law requires significant effort on both sides to find suitable alternative work before dismissal becomes available.
Non-EU employees: ind notification
If the employee holds a work permit or residence permit tied to their role with you, you’re required to notify the IND (Immigration and Naturalisation Service) when employment ends. Failing to do so can affect your standing as a recognized sponsor and may have consequences for future permit applications.
Working with an EOR in the netherlands
Managing Dutch employment directly as a foreign company means registering as a legal employer in the Netherlands, staying current on legislative changes, and handling each termination route correctly. Many foreign employers choose to work with an Employer of Record (EOR) instead. An EOR becomes the legal employer of your Dutch staff, handling payroll, contracts, and termination processes on your behalf while you retain day-to-day management. If you’re evaluating providers, it’s worth comparing EOR services to find the right fit for your team size and hiring plans.
FAQ
Do I have to pay a transition payment if the employee is on a fixed-term contract?
Yes. The transition payment applies when you don’t renew a fixed-term contract, just as it does for indefinite contract terminations. The calculation is the same: one-third of monthly gross salary per full year of service, pro-rated for any partial year.
Can I dismiss an employee who has been off sick for more than two years?
After two continuous years of illness, the dismissal prohibition no longer applies and you can apply to UWV for permission to terminate. However, you need to show that you’ve made genuine reintegration efforts during those two years. If you haven’t, UWV is likely to refuse the request.
What happens if an employee withdraws from a mutually agreed termination during the cooling-off period?
The contract continues as if the agreement was never signed. The 14-day cooling-off period is a legal right the employee can’t waive, so if they exercise it in writing within that window, the vaststellingsovereenkomst has no effect and the employment relationship remains intact.
How long does the UWV dismissal process take?
UWV aims to decide within four weeks of receiving a complete application for business economic reasons. The timeline can extend if UWV requests additional information or if the employee contests the application. Once permission is granted, you still need to observe the applicable notice period before the contract ends.
