Expat Dismissal in the Netherlands

As an international employee in the Netherlands, you have the same employment law protections as Dutch employees. But your dismissal involves additional complexities that require specialist attention.

Your rights as an expat during a reorganization

In many cases, employees working in the Netherlands are covered by Dutch employment law, regardless of their nationality. You are entitled to the same protections as Dutch employees: the transition payment, correct application of the reflection principle, redeployment efforts and a 14-day cooling-off period for settlement agreements.

However, dismissal during a reorganization raises additional concerns for expats. Your residence permit may be linked to your employer, your 30% ruling may be at risk, and you may need to decide whether to stay in the Netherlands or return to your home country. These factors also affect your partner and family.

These additional circumstances can strengthen your negotiating position. The international consequences of a dismissal can be a relevant factor in the negotiation over the departure arrangement. These circumstances can be subject of negotiation.

Same rights, additional considerations

As an international employee during a reorganization, you are entitled to the transition payment (one-third of a gross monthly salary per year of service), correct application of the reflection principle, redeployment efforts and a 14-day cooling-off period for settlement agreements. Depending on the group structure and circumstances, the redeployment obligation may also extend to positions within international group companies. This can actually create additional opportunities for international employees.

Expat-specific concerns

  • 30% ruling: retention, transfer or compensation
  • Residence permit and job search period
  • Impact on partner and family
  • Repatriation or relocation costs
  • International pension accrual
  • Equity, RSUs and stock options
  • International tax implications
  • Children's school fees

The 30% ruling upon dismissal

What happens to your 30% ruling?

The 30% ruling is linked to your employer. When your employment ends, the ruling does not automatically lapse, but in many cases you have a search period of up to three months to find a new employer who meets the conditions and can take over the ruling.

Losing the 30% ruling has significant financial consequences. On a gross annual salary of 70,000 euros, losing the ruling can mean approximately 21,000 euros in additional taxable income per year. For many international employees, this is an important negotiation point.

In the settlement agreement, arrangements can be made regarding the end date and garden leave to ensure you have sufficient time to find a new employer who can take over the ruling. Compensation for the loss of the 30% ruling can also be part of the negotiation.

Residence permit and job search period

If your residence permit depends on your employment with a recognized sponsor, termination of your employment has direct consequences for your residence status. In many cases, a search period of up to three months applies to find a new recognized sponsor.

It is essential that the end date in the settlement agreement takes this search period into account. An end date that is too early can jeopardize your residence position. Additionally, your dismissal may have consequences for your partner's residence permit if they hold a dependent residence right.

Impact on partner and family

Dismissal affects not only you but also your partner and family. If your partner holds a dependent residence permit, your dismissal may put their residence right at risk. There may also be consequences for your children's schooling — especially if they attend an international school with high fees that were partly or fully paid by your employer.

In the negotiation, you can arrange for the employer to continue covering school fees for a transition period, or include a budget for transitioning to a different school environment.

Key issues for expats during reorganization

Repatriation and relocation

If you relocated to the Netherlands for your job, repatriation or relocation costs can be part of the negotiation. This applies especially if your employment contract originally included a relocation allowance. Costs for moving, storage, flights and temporary housing can be included in the departure arrangement.

Equity, RSUs and stock options

Many international employees receive part of their compensation in equity, RSUs or stock options. Dismissal can disrupt the vesting schedule, causing you to lose unvested shares. In the settlement agreement, you can negotiate accelerated vesting or compensation for the loss of equity. Cross-border taxation of equity compensation adds additional complexity.

International tax implications

The tax treatment of severance for international employees is complex. It depends on your tax residency, the applicable tax treaty and the period during which you worked in the Netherlands. When leaving the Netherlands after dismissal, specific rules apply for the allocation of taxing rights over the severance payment. We recommend consulting a specialized tax advisor for international tax matters.

Unemployment benefits (WW)

As an international employee, you have the same WW rights as Dutch employees, provided you meet the conditions (26 out of 36 weeks worked). If you return to an EU or EEA country, you may be able to export your WW benefits for up to three months, subject to conditions and UWV approval. Outside the EU, exporting WW benefits is generally not possible.

Pension accrual

Upon dismissal, your participation in the employer's pension scheme typically ends. Accrued pension rights are preserved. International transfer of pension rights is only possible under specific conditions. For each year in which you are not insured for AOW (state pension), a reduction in your eventual AOW entitlement may apply.

Non-compete clause

A non-compete clause can be particularly restrictive for international employees. If the clause is limited to the Dutch market, it may severely limit your ability to continue working in the Netherlands, while returning to your home country may not be a realistic option. Having the clause waived or limited is therefore an important negotiation point.

What can you negotiate?

When an international employee is dismissed during a reorganization, there are more negotiation points than in a standard dismissal. Beyond the usual severance and notice period, you can negotiate:

  • Compensation for loss of the 30% ruling
  • Extended end date to allow sufficient time for job search
  • Repatriation budget or relocation allowance
  • Accelerated vesting of equity or RSUs
  • Continuation of housing allowance during notice period
  • Outplacement support tailored to international professionals
  • Continuation of children's school fee coverage
  • Garden leave for job searching
  • Legal costs contribution

It is important to consider all these points together and not focus solely on the monetary amount of the severance. The total value of the departure arrangement is determined by the full package of agreements.

Why ReorgLegal for expats?

ReorgLegal guides international employees entirely in English. We understand the specific challenges you face and have extensive experience with multinational employers.

Whether it concerns reviewing a settlement agreement, negotiating an exit package or advising on the consequences for your residence permit and tax position: we speak your language and understand your situation.

  • Full guidance in English
  • Experience with international employers
  • Knowledge of expat-specific arrangements
  • Network of tax and immigration advisors
  • Fast response: within 1 hour on business days

Most employers cover legal costs as part of the settlement agreement, which means professional guidance can often be largely covered.

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