How do you terminate an employee in Netherlands in 2026?

The dual-route system shapes every redundancy decision Dutch employers make:

• UWV route (economic grounds, long-term sickness after 2 years): employer files a dismissal application with the Employee Insurance Agency (UWV). The agency notifies the employee, who may file a defence. UWV targets a decision within approximately 4 weeks for unchallenged cases; cases with employee defence or complexity take materially longer. Once UWV grants the permit, the employer has 4 weeks to serve notice or the permit lapses.
• Kantonrechter route (performance, conduct, incompatibility with employer, refusal to work): employer petitions the subdistrict court, which schedules a hearing. The court can dissolve the contract with or without transition payment, and can add fair compensation (billijke vergoeding) if the employer's conduct is seriously culpable. There is no statutory cap on fair compensation in Netherlands; courts determine it case-by-case.

Exceptions where prior approval is not required:

• Mutual agreement: employer and employee agree in writing to end the contract (vaststellingsovereenkomst, VSO). The employee retains the right to rescind within 14 days without giving reasons.
• Termination during a valid probationary period: either party may terminate immediately with no notice and no transition payment.
• Dismissal for urgent cause (dringende reden, i.e. gross misconduct): can be immediate, but the employer bears the burden of proving the urgency in any subsequent court challenge.

Protected categories: dismissal is prohibited or restricted for pregnant employees and those on maternity leave, employees on sick leave during the first two years of illness, employee representatives and trade union members acting in that capacity, and whistleblowers who have made a protected disclosure. Attempting dismissal in these categories without the appropriate route and approval exposes the employer to reinstatement orders and fair compensation on top of transition payment.

1. Choose the dismissal route

   Determine whether the grounds are economic or long-term disability (UWV route) or performance, conduct, incompatibility, or refusal to work (kantonrechter route). Gross misconduct allows immediate dismissal without prior approval but the burden of proof is on the employer.

2. File with UWV or petition the court

   For the UWV route, submit a written dismissal application with the grounds and supporting documents. For the kantonrechter route, file a petition with the subdistrict court, which will schedule a hearing with the employee present.

3. Allow the employee to respond

   The employee has the right to file a written defence with UWV or to attend the kantonrechter hearing. Skipping this step or obstructing the employee's defence is likely to result in the application being rejected or fair compensation being added.

4. Receive approval and serve notice

   Once UWV grants the permit, serve notice within four weeks or the permit lapses. If the court dissolves the contract, the end date is set by the court order, taking the notice period equivalent into account.

5. Calculate and pay transition payment

   Calculate transition payment at the statutory formula rate for every completed and partial year of service, and disburse it within the statutory deadline after the contract ends. Late payment triggers statutory interest automatically.

The statutory maximum is 16 weeks. Contracts may extend this, but the maximum across any agreement is 6 months. If the employer notice period is extended by contract, the employee notice period must be set at no more than half the extended employer period.

Employee resignation notice

The default statutory employee notice period is 30 days (1 month). This can be extended in writing to a maximum of 6 months, provided the employer notice period is at least double the agreed employee period. An employee who does not work out their notice period is liable to the employer for wages equivalent to the notice shortfall.

Notice during probation

During a valid probationary period, either party may terminate the employment contract immediately with 0 days notice. No transition payment is owed and no fair procedure is required. However, if the probation clause is void (for example, because it exceeds the permitted maximum or was not agreed in writing), the full termination protections apply from day one.

The gross monthly salary base includes the fixed monthly salary, the 8% statutory holiday allowance expressed as a monthly equivalent, fixed allowances, and structural variable pay averaged over the preceding 12 to 36 months. Irregular bonuses and expense reimbursements are excluded.

The 2026 monetary cap is €102,000. There is no cap on years of service counted; the constraint is entirely monetary. If an employee's gross annual salary exceeds €102,000, the cap equals that annual salary instead.

Transition payment is due within 30 days of the employment contract ending. Late payment triggers statutory interest automatically from the due date.

Tax treatment

Transition payment is taxable income for the employee in the Netherlands. There is no equivalent of the UK's tax-free ex gratia ceiling. The employer may deduct employer costs incurred for the employee's development or outplacement support from the transition payment in certain circumstances, subject to specific conditions under the Besluit voorwaarden in mindering brengen kosten op transitievergoeding.

No service-years cap

Unlike many European systems, the Dutch formula does not limit the number of countable service years. A 30-year employee earns transition payment on all 30 years, subject only to the monetary ceiling. This makes long-tenure exits materially more expensive than tenure-capped regimes in comparable markets.

The WMCO process in practice:

1. Submit WMCO notification to UWV and trade unions, setting out the reasons for the redundancies, the number and categories of employees affected, the redundancy selection criteria, and any social plan provisions.
2. Trade unions have 30 days to consult and respond. If a trade union reaches a written agreement with the employer, the waiting period may be waived.
3. After the waiting period, individual UWV dismissal permit applications can be filed. Each individual application follows the standard UWV route with its own decision window.
4. Transition payment is owed for every employee terminated under the collective programme, at the individual formula rate, subject to the €102,000 monetary cap.

A failure to notify UWV and trade unions before proceeding with dismissals gives each affected employee the right to annul their dismissal and claim wages for the duration of the WMCO delay, in addition to transition payment.

A VSO allows the parties to agree the exit date, transition payment (at or above the statutory formula), any additional compensation, notice period treatment, outplacement support, reference wording, and non-compete terms. Because no UWV permission or court order is required, the VSO is faster and more flexible than the statutory routes.

Key points for employers structuring a VSO:

• Unemployment benefit (WW) access: an employee who signs a VSO is generally eligible for WW benefit, provided the agreement does not suggest the employee was at fault and the exit date is after the notice period equivalent (i.e. the employer waits the equivalent of the notice period before the last working day, or pays compensation in lieu).
• The 14-day right of rescission: must be included in the VSO text. If omitted, the employee has 3 weeks instead. The employer cannot waive or shorten this window.
• Transition payment as a floor: a VSO may include less than the statutory transition payment amount only in very narrow circumstances. In practice, most VSOs pay at least the statutory formula; paying less risks the employee withdrawing later if eligibility is denied.
• Independent legal advice: unlike UK settlement agreements, Dutch law does not require the employee to obtain independent legal advice, though in practice employees almost always do, and the employer often contributes to those costs as part of the negotiation.

When to use a VSO: performance that has not yet reached the court-petition threshold, senior leadership exits, any situation where speed and confidentiality matter more than cost.

Real HR and legal experts handle your Dutch hires, from the first offer letter through every payroll run and annual vakantiegeld payment. An actual person, not a pooled queue or a bot. There is no setup fee and no exit fee, and employer cost passes through at cost, itemised on every invoice.

The split of responsibilities under EOR for Netherlands terminations:

Dutch employment law is approval-heavy by design, and the dual UWV/court routing means first-time Dutch employers regularly underestimate the process lead time. EOR payroll, contractor onboarding, and entity setup all live on one platform. A Dutch contractor who converts to payroll keeps their record, and that same employee can graduate from EOR to your own Dutch entity without switching systems. Run the Crossover Calculator to see the month the model flips. EOR is the right model for an early Netherlands hire, until it isn't. Start from the Netherlands hiring overview; each guide here takes one layer of Dutch employment law.

Key sources: Business.gov.nl, Dismissal procedures, Business.gov.nl, Transition payment, and UWV (Employee Insurance Agency).