Dismissal and reorganisation in the event of financial problems

Your financial problems are temporary

Do you expect your financial problems to be temporary? For example, because the problems are caused by the weather or political circumstances in the country where you do business. Then you would like to keep your employees for when your company is doing well again. You have various options to ensure that you do not run into financial problems because you have to continue paying your employees.

Special situation: apply for a reduction in working hours

Do you expect to have less work for a maximum of 24 weeks due to a special situation (in Dutch), such as fire or a lightning strike? In that case, you can apply for unemployment benefits for your staff under the Working Time Reduction (WTV) scheme. You will then receive a benefit for the hours that your employees are unable to work. With this benefit you can pay their wages.

Posting your staff

You can lend (post, outsource) your employee to another entrepreneur. This is also known as collegial lending. Your employee will temporarily work for another company while remaining in your employment. You make a secondment agreement together with the entrepreneur your staff will be working for. You must also register this business activity as a lender with the Dutch Business Register. This is called the Waadi registration.

Ask your staff to help

Do you continue to have financial problems, even after you have made budget cuts? You can ask your staff to help by agreeing to temporary lower wages. You may only adjust the salary and other terms and conditions of employment if your employee agrees. And you are not allowed to pressure your staff to agree.

You need to change your business permanently

Do you need to change your business to survive? And is this not possible with the staff you have now? You have several options for dismissing your staff.

Voluntary dismissal: draw up a termination agreement

Talk to each employee about voluntary dismissal (in Dutch). If they agree, you draw up a termination agreement together. This contains the termination conditions of the employment contract.

In this situation, where you propose dismissal and your employee agrees, your employee is entitled to unemployment benefits. You are not obliged to pay a transition payment. You and your employee agree on whether you pay a severance payment and how much.

Request permission for dismissal from the UWV

If you are unable to resolve the matter with your employee, you can apply for a dismissal permit (ontslagvergunning) for business economic reasons from the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV). You must be able to demonstrate that:

• dismissal is necessary, due to the poor financial situation of your company
• you are unable to give your employee another, suitable place (in Dutch) in your company

Do you have to fire more than one employee? Rules apply to the order in which you should fire your staff. This is called the 'last in first out' principle (in Dutch). In the event of a reorganisation of 20 people or more, the rules for collective redundancies apply.

Part-time layoff

You may only dismiss an employee for part of his working hours if there is no other option. For example, you have less work, but this work must be done by 2 people. For example, installing sun blinds. You must first offer your employee in writing to continue the contract under the same conditions, but for fewer hours. Then you can apply for part-time dismissal at UWV. Your employee will receive unemployment benefits for the hours that they are fired.

You can no longer pay the salary

Are you in danger of going bankrupt and are you no longer able to pay the salary of your staff? Report your inability to pay, or state of insolvency, as soon as possible. UWV then takes over the wage payments (in Dutch).

Do you not pay your wages on time? From day 4, your employee is entitled to an increase in wages. Your employee can also start a wage claim procedure (loonvorderingsprocedure, in Dutch) against you.

You request deferment of payment

If you request and receive a suspension of payment, the judge will appoint an administrator (bewindvoerder). The administrator is responsible for the salary payments to your staff. Is your company no longer able to pay its staff? Then your employees can apply for a payment due to insolvency (in Dutch) from UWV.

Your company is being taken over

Is your company being taken over? The new owner will also take over the staff and wage payments that are still due. If your company is taken over after bankruptcy, the new owner does not have to take over the staff.

Your business is going bankrupt

If you have been declared bankrupt, a curator (also referred to as the receiver, trustee or administrator) will take over the business operations. The curator can terminate employment contracts without a dismissal permit from UWV. However, the curator must request permission from the magistrate before terminating contracts. If the curator terminates a contract, the employee is still entitled to a salary for a maximum of 6 weeks. UWV takes over the wage payments (in Dutch).