A Guide to Employee Termination in the Netherlands

Terminating an employee in the Netherlands requires careful navigation of one of Europe’s most protective labor law frameworks. Dutch employment law mandates strict compliance with documented grounds, formal approval processes, and statutory notice periods.

Global employers may struggle to understand when they can dismiss employees and what action to take. However, misunderstanding any of the steps required can lead to delays, conflicts, and legal risks.

Our article gives you a practical step-by-step process to follow for managing employee terminations in the Netherlands. It draws on Deel’s experience as one of the world’s leading Employer of Record (EOR) services in supporting international teams with employment contracts, dismissals, and offboarding across Europe.

Step 1. Confirm there are valid legal grounds for termination

Dutch labor law operates on a fundamental principle: you cannot terminate employment at will. Every dismissal must have “just cause” — a legitimate and documented reason that meets the standards set by the Dutch Civil Code.

This framework divides valid termination grounds into two main categories: economic and non-economic reasons.

1. Economic grounds: Circumstances beyond the employee's control, such as company restructuring, bankruptcy, or position redundancy due to operational changes
2. Non-economic grounds: Situations related directly to the employee and including serious misconduct, long-term incapacity lasting over two years, or an irreparably damaged working relationship

Poor performance alone does not constitute sufficient grounds for dismissal in the Netherlands. Dutch law requires you to demonstrate that you provided the employee with adequate support, performance improvement plans, and a reasonable opportunity to meet job expectations.

Step 2. Assess whether termination by mutual consent is possible

The next question is whether the employment relationship can end by mutual consent. This route involves you and the employee agreeing to terminate the contract rather than proceeding through a formal dismissal process.

Strict requirements apply for a mutual termination to be legally valid in the Netherlands. You must record the agreement in writing and have it signed by both parties. Verbal agreements and informal understandings won’t carry any legal weight if the employee challenges the termination later.

A compliant mutual termination agreement should include:

• A clear statement that both parties agree to end employment
• Specific termination date
• Details of the settlement agreement
• Confirmation of final salary and any outstanding compensation
• Agreement on reference letters or recommendations
• Confidentiality and non-disparagement clauses (if applicable)
• Explicit acknowledgment of the employee’s two-week withdrawal right
• Confirmation that the employee had the opportunity to seek legal advice

Dutch law also provides employees with a mandatory two-week cooling-off period after signing the agreement. They may withdraw their consent at any point during this time without giving you a reason.

Step 3. Consider whether to manage termination through an Employer of Record (EOR)

If you don’t have a legal entity in the Netherlands and your team doesn’t have hands-on experience with Dutch employment law, navigating terminations can be challenging. It’s worth deciding early whether to hire workers directly or employ them through an EOR service.

An EOR acts as the legal employer of any workers in the Netherlands. While you continue to manage their day-to-day work, the provider is responsible for applying local employment law correctly. This includes payroll, benefits, and HR compliance — such as strict adherence to Dutch termination requirements.

Additionally, an EOR absorbs all the legal risk from Dutch terminations as the employer on paper. Authorities should treat your organization as a separate and unrelated entity.

For companies using Deel EOR, this support comes through a fully owned Dutch entity. Our team manages the entire employment process from end to end, so businesses don’t have to build and maintain HR expertise in the Netherlands. This gives you the flexibility to scale your international workforce up and down without exposing your business to unnecessary risks.

Step 4. Obtain the required approval for dismissal

Most involuntary dismissals require external approval before they can proceed in the Netherlands. Only a small number of situations allow dismissal without prior approval.

Here are the different routes you must take depending on your grounds for termination:

Dismissal via the UWV

Dismissals based on economic grounds or long-term illness must be approved by the Employee Insurance Agency (UWV).

Dutch law is very specific about what counts as economic grounds. The termination must be linked to redundancy, restructuring, or business closure.

Employers must submit a formal application showing that the legal grounds are met and that all procedural requirements have been followed. The UWV reviews the evidence, may request further information, and issues a binding decision on whether the dismissal can go ahead.

Dismissal via the sub-district court

Dismissals based on poor employee performance require approval from the sub-district court (kantonrechter). You must file a petition asking the court to dissolve the employment contract and demonstrate that you have legal grounds. The court assesses not only the grounds themselves, but also whether you acted reasonably and proportionately in the circumstances.

Summary dismissal

Companies may dismiss employees with immediate effect for serious grounds like theft, fraud, or severe insubordination. However, you must be prepared to justify the urgency of your decision later to the authorities.

Termination during a valid probationary period also doesn’t require prior approval, provided the probation clause is included in the employment contract.

Step 5. Apply the correct notice period and contract terms

Once you’ve obtained approval or reached a mutual agreement, you must comply with statutory notice periods that protect employees from abrupt job loss. The statutory minimum notice period in the Netherlands is one month and increases progressively with length of service, ensuring long-term employees receive more advance warning.

Here’s a summary of the requirements:

Additionally, if the contract specifies a notice period longer than the statutory minimum, the employer’s notice must be at least twice the length. For example, if an employee is required to give two months' notice, the employer must provide at least four months. This rule ensures that employers cannot impose lengthy notice obligations on employees while reserving shorter periods for themselves.

Fixed-term contracts also require notice. Dutch law states you must provide employees with one month’s notice if you don’t intend to renew, or they’re entitled to compensation equivalent to the salary they would’ve received during that time.

Step 6. Document the termination process thoroughly

Maintain documentation to justify your grounds for termination to the Dutch authorities in case you are challenged. Here are some examples of the types of paperwork you are likely to need for each type of dismissal:

Throughout any termination process, also maintain records of all communications with the employee, including emails, meeting notes, and formal letters. Even if the Dutch authorities don’t request them, they may support your case.

EORs like Deel can help you collect and store all the documents in our secure Cloud system. Our platform also has Slack integrations to make it easier to keep track of in-app messaging with terminated employees.

Step 7. Handle transition payments

Most involuntary terminations also trigger a statutory transition payment (transitievergoeding). This payment is based on the employee’s gross monthly salary and length of service and can represent a substantial material cost, particularly for long-term employees. You need to account for this obligation early when assessing termination options.

The Netherlands has a free calculator tool that enables you to check whether you owe a transition payment and check the amount.

Step 8. Manage legal risk

Terminating an employee in the Netherlands carries real legal and financial risk. If the process is mishandled, dismissals can be delayed, overturned, or become significantly more expensive than anticipated. You must factor these risks into termination decisions from the outset.

Employees are entitled to challenge dismissals they believe are unjustified or procedurally incorrect. Successful claims may result in reinstatement with back pay or substantial compensation awards. Courts typically assess not only the dismissal grounds but also how you handle the process, including fairness, proportionality, and compliance with procedural rules.

To reduce legal and financial risk, employers should:

• Consult Dutch labour law specialists before initiating dismissal procedures
• Maintain complete, up-to-date documentation throughout employment
• Follow fair and proportionate processes for performance and conduct issues
• Obtain all required approvals before confirming termination
• Communicate clearly, respectfully, and professionally with employees
• Calculate and pay all statutory entitlements accurately and on time
• Consider mediation or mutual consent where appropriate

EORs with global payroll capabilities can take care of final payments. For example, Deel calculates the correct amounts, transfers them to the employee in their preferred currency, and maintains records for compliance.

Reduce termination risk in the Netherlands with Deel

Handling employee terminations in the Netherlands comes down to making the right decisions at the right times. Employers who identify the correct route — whether that’s mutual consent, formal termination, or summary dismissal — and follow the required steps are less likely to face compliance issues.

For international employees, navigating this process without local infrastructure can be challenging. Deel EOR provides essential support by taking on all the legal and administrative complexity.

Here’s how Deel EOR helps you with terminations:

• Access to an owned entity in the Netherlands
• In-country expertise
• Court approval process support
• Transition payment management
• Compliant offboarding
• Final payroll
• 24/7 multilingual assistance

Need help managing Dutch terminations? Speak with Deel to see how our EOR can support dismissal processes end-to-end.