When companies experience financial challenges, it can be important to take action. One of the options a company has is to reduce costs. A company’s workforce is often one of the largest expenditures. That is why companies tend to look at reorganization as a mean to overcome financial troubles.
In the Netherlands there are certain procedures and rules that companies wanting to reorganize need to follow.
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The first step that a company considering a reorganization is required to take is to simply not renew contracts for temporary employees and agency workers. A company is always free in its choice to prolong an employment contract or not – there is no special procedure to be followed for this. In case of a reorganization a company is required to look at reducing temporary staff before looking at terminating permanent employees.
Keep in mind that employees with a temporary contract have a right to a transition fee from the first day they started working.
Are you experiencing a reorganization? The specialists on blended.law can always help out in this situation. Wondering why you should work together with these specialists? Read about this in our blog!
The next step would be to look at terminating the contracts of permanent employees.
In the Dutch legal system, a permanent employment contract can be terminated with permission of the Netherlands Employees Agency (UWV) or through court proceedings.
In case of a reorganization the UWV procedures is in fact the only way. Companies are obliged by law to report an intended mass dismissal to the UWV. The UWV will give permission for the termination of the permanent contracts if certain conditions are met, such as:
This procedure is however very time consuming and expensive. This is way 9 out of 10 employers choose to offer their employees a termination proposal. Want to know more about this way of letting permanent employees go? Read about it here!Termination proposals
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