Under Dutch law, an employment contract can be terminated due to business economic reasons only after 1) obtaining a dismissal permit from UWV (a Dutch governmental body), or; 2) via a termination agreement. A termination agreement is often the preferred route, now this can avoid a time-consuming and (therefore) costly UWV procedure. Furthermore, a termination agreement can address other (termination) conditions as well. In some cases, employers will still opt for a UWV procedure, for example, if several employees become redundant due to the same (business economic) reasons.

A termination based on business economic reasons does not necessarily require the company to operate at a loss. A strategic restructuring of the organisation is also possible. In principle, an employer has an entrepreneurial freedom to (re)organize the company in a way that is most effective and efficient. The employer must, however, in all cases be able to explain the background of the organisational change and why it is necessary/efficient from a business economic view to make the position(s) redundant. The UWV not only asks for a detailed explanation in a request for dismissal, but also for underlying documentation (depending on the reorganization ground).

A well-prepared business case and dismissal process, will (highly) smoothen the process. The first blow, is half the battle.

The 𝐢𝐧𝐟𝐨𝐠𝐫𝐚𝐩𝐡𝐢𝐜 below shows a roadmap that provides insight into a (sufficient) redundancy process and the steps to be taken. It is highly advisable to seek additional advice on a case-by-case basis to make the dismissal file sufficient. Please note that the roadmap below contains a simple view on the steps to be taken. For large collective reorganizations (>20 employees), additional steps may be necessary, such as consultation with trade unions.