Social plan

Do you run a company in the Netherlands? Major changes such as business restructuring, relocation, downsizing, or bankruptcy can have serious consequences for your staff. If you have to dismiss some of your staff, you could establish collective arrangements and provisions for both remaining and departing personnel in a social plan.

With a social plan, you can minimise forced redundancies and increase your chance of getting a dismissal permit if necessary (in Dutch).

Social plan not compulsory

A social plan is not required by law. Usually, the CAO (Collective Labour Agreement) contains provisions with regard to drawing up a social plan. If you do not have a social plan, you must be able to show your works council (ondernemingsraad, OR) what measures you will take with regard to your staff while restructuring.

When to draw up a social plan

You can use a social plan if you have to dismiss people. If this involves 20 people or more, it is called a collective dismissal. You must report a collective dismissal to the Employee Insurance Agency (Uitvoeringsinstitiuut Werknemersverzekeringen, UWV) and your employees' trade unions. You must also consult the trade unions regarding a social plan. You can also draw up a social plan if you intend to dismiss only a few employees.

Contents of a social plan

The social plan contains the agreements you must observe in case of dismissal or transfer of employees. For employees who will be made redundant, the social plan describes matters such as the transition payment or a substitute allowance if this is arranged for in the CAO. In case of transferral, the social plan specifies other matters, such as workplace changes when relocating.

The CAO can also determine what should be included in your social plan.

Parties involved

You negotiate a social plan with:

• the trade unions, the union members need to approve of the social plan
• the works council, this should be previously agreed upon with your employee in their employment contract

You can also decide to draw up a social plan by yourself. Your employee needs to accept the arrangements in the social plan before it can take effect.