Reorganization in the Netherlands

What happens during a reorganization?

A reorganization (reorganisatie) is a structural change within a company that typically results in positions being eliminated, merged or redefined. Dutch law imposes clear obligations on employers when restructuring their workforce.

Dismissal on economic grounds falls under the so-called a-ground of Article 7:669 of the Dutch Civil Code. This means the employer must demonstrate that positions are structurally eliminated due to economic circumstances. The employer cannot simply choose who to let go — the selection process, the procedure and the terms of departure are all subject to legal requirements.

For expats working in the Netherlands, a reorganization raises additional questions around residence permits, the 30% ruling and international tax consequences. Understanding your rights under Dutch employment law is essential to protect your position and negotiate fair terms.

Your rights during a reorganization

Correct application of the reflection principle
Redeployment efforts by your employer
Right to a transition payment (transitievergoeding)
Reasonable notice period
Room to negotiate departure terms
14-day cooling-off period for settlement agreements
Advisory rights of the works council

The reflection principle (afspiegelingsbeginsel)

When multiple employees hold the same or interchangeable positions, Dutch law prescribes a specific method for selecting who will be made redundant. This is the reflection principle — designed to prevent arbitrary selection and protect workforce diversity.

Interchangeable positions

The first step is to identify which positions are interchangeable. Positions are considered interchangeable if they are comparable in terms of content, required knowledge, skills, competencies, level and remuneration. Positions that appear different on paper may still be interchangeable if the actual work is similar.

Age categories

Employees in interchangeable positions are divided into five age brackets: 15-24, 25-34, 35-44, 45-54 and 55+. Redundancies must be distributed across these brackets so that the age composition of the workforce remains as balanced as possible after the reorganization.

Last in, first out

Within each age bracket, the employee with the shortest tenure is selected first for dismissal. This is the last-in-first-out principle. The employee who was most recently hired within the age group is the first to be considered for redundancy.

Exceptions

The reflection principle does not always apply. It does not apply to unique positions, non-interchangeable roles or when an entire function category is eliminated. In specific circumstances, the employer may deviate from the principle — for example, for employees with essential specialized knowledge or skills.

The dismissal procedure

Via UWV (Employee Insurance Agency)

When the employer wishes to terminate an employment contract on economic grounds, permission must be obtained from UWV. The application must demonstrate why eliminating positions is necessary, that the reflection principle has been correctly applied and that redeployment is not possible.

As an employee, you have the right to submit a written defense against the dismissal application. UWV then assesses whether all legal requirements have been met. A UWV procedure typically takes several weeks. If UWV refuses the permit, the employer can turn to the subdistrict court (kantonrechter) within two months.

After termination with UWV permission, you can request the subdistrict court within two months to reinstate the employment or award a fair compensation (billijke vergoeding).

Via a settlement agreement (VSO)

In many reorganizations, the employer offers a settlement agreement (vaststellingsovereenkomst) rather than going through the UWV procedure. This is a mutual agreement to end the employment relationship.

A settlement agreement can be concluded faster than a UWV procedure. However, you are never obligated to sign. After signing, you have a statutory 14-day cooling-off period during which you can withdraw your consent without giving a reason. If your employer fails to inform you in writing about this right, the period extends to 21 days.

It is essential that the agreement is properly drafted to protect your unemployment benefit (WW) eligibility. The agreement must clearly state that the initiative for termination came from the employer and that there is no culpable unemployment.

Employer obligations

Redeployment obligation

Before proceeding with dismissal, the employer must investigate whether you can be redeployed to a suitable position. This applies within the organization itself and at other companies within the group. The redeployment obligation is an obligation of effort — the employer must demonstrate that a genuine search was conducted.

Works council advisory rights

The works council (ondernemingsraad) has advisory rights under the Works Councils Act (WOR). The employer must submit the intended decision for advice. If the employer deviates from the advice, a one-month suspension period applies before the decision can be implemented.

Collective redundancy (WMCO)

When an employer intends to dismiss 20 or more employees within three months, the Collective Redundancy Notification Act (WMCO) applies. The employer must notify UWV and consult with trade unions. Failure to comply with the WMCO may, depending on the circumstances, have consequences for the validity of the dismissals.

Transition payment

When dismissed by your employer, you are entitled to a transition payment (transitievergoeding). This amounts in principle to one-third of a gross monthly salary per year of service, with partial years calculated on a pro rata basis. The transition payment often serves as the starting point for negotiations. Depending on the circumstances — such as a social plan, procedural risk or your position in the labor market — there may be room for additional arrangements.

Common pitfalls during reorganizations

Dismissal protection

Not every employee can be dismissed during a reorganization. Dutch law provides specific dismissal prohibitions (opzegverboden) that protect certain categories of employees. Employees who are ill cannot generally be dismissed during the first two years of incapacity. Pregnant employees and those on maternity and childbirth leave also have additional protection.

Members of the works council and candidate members enjoy dismissal protection as well. This protection continues for two years after the end of their works council membership.

The existence of a dismissal prohibition does not prevent a reorganization from taking place, but it does mean that the employer generally cannot dismiss these employees as long as the prohibition applies.

Social plan

In larger reorganizations, a social plan is often drawn up, sometimes in consultation with trade unions or the works council. A social plan contains additional arrangements beyond statutory rights, such as enhanced severance, outplacement support, retraining opportunities and job-to-job programs.

A social plan is not legally mandatory but is commonly expected in collective redundancy situations. If a social plan applies, it is important to verify that its conditions are correctly applied to your individual situation.