Collective Layoff in the Netherlands

When does a collective layoff apply?

A collective layoff occurs when an employer intends to dismiss twenty or more employees within the same UWV work area within a period of three months for economic reasons.

The Collective Redundancy Notification Act (Wet Melding Collectief Ontslag, or WMCO) imposes additional obligations on employers beyond standard dismissal law. This law is based on European Directive 98/59/EC on collective redundancies and is designed to provide extra protection for employees during large-scale reorganizations.

When counting toward the threshold of twenty employees, terminations through settlement agreements may also be included when they take place at the employer's initiative as part of the reorganization. Only dismissals for economic reasons count. Dismissals on personal grounds are excluded.

The WMCO procedure consists of three core obligations: notification to UWV, notification to the relevant trade unions, and a waiting period of at least one month before individual dismissal applications can be processed.

WMCO employer obligations

Written notification to UWV
Simultaneous notification to relevant trade unions
Minimum one-month waiting period
Consultation with unions on alternatives and social plan
Consultation with the works council (advisory rights)
Compliance with the reflection principle
Disclosure of reasons, numbers, categories and selection method

The WMCO procedure step by step

The WMCO prescribes a specific procedural framework that the employer must follow during a collective layoff. Non-compliance can have legal consequences for the dismissal process and may, depending on the circumstances, affect the validity of the dismissals.

1

Notification to UWV and unions

The employer must simultaneously notify UWV and the relevant trade unions in writing of the intended collective layoff. The notification must include the reasons for the layoff, the number of employees to be dismissed, the positions and categories affected, the selection method used, and the intended timeline.

2

One-month waiting period

After notification, a waiting period of at least one month applies. During this period, UWV will not process individual dismissal applications. The waiting period gives trade unions the opportunity to consult with the employer about alternatives to dismissal and the terms of a social plan. The waiting period ends earlier when the unions formally declare that the consultation obligation has been fulfilled.

3

Union consultation

The employer is required to consult with trade unions about ways to avoid or reduce the collective layoff and about measures to mitigate the consequences for employees. In practice, this consultation often results in a social plan with additional arrangements beyond statutory rights.

4

Individual dismissal procedures

After the waiting period, the employer can submit individual dismissal applications to UWV or offer settlement agreements to employees. The reflection principle, redeployment obligation and all other standard dismissal law requirements continue to apply in full.

The social plan

What is a social plan?

A social plan is an arrangement that sets out the terms under which employees leave the organization during a collective layoff. It typically covers severance, outplacement, retraining, job-to-job guidance and additional benefits.

The social plan is usually negotiated between the employer and trade unions. The works council may play an advisory role. A social plan is not legally mandatory but can be binding when it forms part of a collective labor agreement (CAO) or collective arrangement. In practice, a social plan is often drawn up in larger collective layoff situations.

The content of a social plan varies per reorganization. Financially strong employers typically offer a severance above the statutory transition payment. For employers in financial difficulty, the plan may be more limited.

Individual negotiation

Even when a social plan applies, you can often negotiate individual terms. A social plan can be binding when it forms part of a CAO, has been declared applicable through your employment contract or is otherwise collectively binding. In other cases, it is not automatically binding on individual employees.

Many social plans include a hardship clause for employees who are disproportionately affected by the standard arrangement. This provides opportunities for employees in exceptional circumstances, such as those with long tenure, limited labor market prospects or specific personal situations.

It is advisable to have the social plan reviewed by a legal professional and to investigate whether it is correctly and fully applied to your situation. In some cases, you may be able to negotiate individual terms that are better than what the social plan provides.

What does a social plan typically include?

Severance formula (often based on tenure, age and salary)
Outplacement support and budget
Retraining and upskilling opportunities
Job-to-job guidance programs
Garden leave arrangements
WW supplement
Legal costs contribution

Consequences of WMCO non-compliance

Annulment of dismissal

If the employer fails to comply with WMCO obligations, the consequences can be severe. Depending on the circumstances, an employee may invoke the voidability of the dismissal within six months of WMCO non-compliance. This can result in the employment contract being revived and salary claims arising.

UWV will generally only process individual dismissal applications after the WMCO obligations have been met. This applies to both the notification requirement and the consultation obligation.

Transition payment in collective layoffs

Every employee dismissed in a collective layoff is entitled to the statutory transition payment, which amounts in principle to one-third of a gross monthly salary per year of service, with partial years calculated on a pro rata basis. If a social plan applies, the severance in the social plan may exceed the statutory transition payment. Whether there is room for a higher payment depends on the employer's financial position, the social plan, procedural risk and your individual circumstances.

Works council role

In addition to WMCO obligations, the works council has advisory rights under Article 25 of the Works Councils Act (WOR) on reorganization and collective layoff decisions. The employer must submit the intended decision to the works council for advice.

If the employer makes the decision without works council advice, or deviates from the advice without adequate justification, the works council can appeal to the Enterprise Chamber of the Amsterdam Court of Appeal. The Enterprise Chamber can require the employer to withdraw or suspend the decision.

Expat-specific considerations

As an expat facing a collective layoff, you may have additional concerns beyond what Dutch employees face. The impact on your 30% ruling, residence permit, international tax obligations and potential relocation costs all require careful attention. These elements should be addressed in your settlement agreement or individual arrangement.

Your position during a collective layoff

During a collective layoff, you have more rights and options than you may realize. The WMCO procedure, the reflection principle and any applicable social plan each provide leverage to strengthen your position. It is important to have these possibilities assessed in time.