Dismissal in the Netherlands and Spain – how does it work?

Termination of the employment contract

There are a number of important differences between employment law in the Netherlands and in Spain regarding the dismissal. That is why it is important for you to you seek advice in advance, as well as the assistance of an labour lawyer. In this post, we will explain the main differences among dismissals between the Netherlands and Spain.

How exactly does dismissal work in the Netherlands?

In the Netherlands, an employment contract can be terminated in several ways. A fixed-term employment contract is usually terminated as of right. 

It is also possible for the employee and the employer to agree jointly on the termination of the employment contract (for a definite or indefinite period). But it can also happen that they do not reach an agreement. In such cases, the employment contract can be dissolved at the request of either the employer or the employee. It is also possible for one of the parties to terminate the employment contract.

Option 1. Termination of the employment contract by the judge

Provided there is good cause, both the employee and the employer can apply to the district judge for termination of the employment contract. If, at the end of the procedure, the judge considers that the employment contract should be terminated (e.g. because an employee does not perform his or her duties properly, because of imputable conduct or a disturbed employment relationship), he or she will record this in writing in a court decision (in Dutch: beschikking). The judge may determine that one of the parties must pay compensation to the other party on termination of the employment contract.

Option 2. Termination by the employer

In the Netherlands it is possible to terminate an employment contract by giving notice in advance. If it is the employer who wishes to terminate the employment contract, he must first apply for authorisation from the competent authority for termination: the UWV (Employee Insurance Supervisory Authority). In the Netherlands, this authorisation is popularly known as “ontslagvergunning” (permission to dismiss). The employee, on the other hand, does not need to ask for such permission to terminate an employment contract. However, it must be noted that the notice period must be observed.

The UWV will only grant leave if the employee has been on sick leave for more than two years or if there are economic reasons for the employer. In the case of sick leave (during the first two years) there is a prohibition on termination by notice.

Option 3. Mutual agreement

It is also possible to conclude a contract of termination (contract for fixing rights; in Dutch: vaststellingsovereenkomst). This is a contract that is concluded on a voluntary basis, so that both the employer and the employee must agree to it. In this case, agreements can be made on, for example, notice periods, exemption from activities, remuneration or restrictive clauses, such as a non-competition clause. If the text of the rights-fixing contract complies with the Dutch requirements in this respect, the employee’s entitlement to unemployment benefit can be safeguarded as far as possible.

Option 4. Disciplinary dismissal

In the Netherlands there is also the possibility to dismiss an employee with immediate effect in case of imputable conduct (e.g. theft). This is a disciplinary dismissal. In this case, strict conditions apply too, so it is important that you seek advice in good time.

How does dismissal work in Spain?

There are times when companies have to take the difficult decision to dismiss workers either because they have engaged in behaviour that justifies dismissal or because the company is faced with an economic situation that prevents it from maintaining employment levels. Therefore, there are two different types of dismissal: disciplinary dismissal and objective dismissal.

Option 1. Disciplinary dismissal

Disciplinary dismissal is the type of dismissal based on conduct attributable to the employee and constituting a punishable offence. It is the most serious sanction that the employer can impose on the employee and generally lacks severance pay. The law establishes a series of punishable conducts by disciplinary dismissal:

· Failure to comply with (reasonable) instructions
· Serious verbal or physical offences to the employer or other persons
· Transgressing or abusing good faith 
· Wilful and continued decline in work performance
· Drug addiction or drunkenness affecting work performance
· Discriminatory and racially motivated harassment of the employer or other persons in the company
· For other causes set out in the Collective Bargaining Agreement applicable to the company’s activity

However, even if the employee has carried out any of the behaviours described above, it is essential that they are accredited and that this is done through the correct procedure. If this procedure is not followed, the worker would have all the facilities provided for in the Collective Bargaining Agreement applicable to the company’s activity.

Option 2. Objective dismissal

Objective dismissal is a dismissal that is made in order to ensure the viability of the company at the cost of reducing the number of employees. For this type of dismissal, one of the following reasons must be given:

·                    Inaptitude of the worker for the specific job

·                    Lack of adaptation of the worker to technical modifications in the job position

·                    Economic, technical, organisational or productive reasons (reduction of work).
 If several workers are affected, there may be a collective dismissal. 

This type of dismissal entails the payment of 20 days’ severance pay per year worked. For this type of dismissal there are a series of steps that must be taken that are strictly established by law, because if they are not complied with, there is sufficient cause to challenge the dismissal and for a court to declare the dismissal unjustified without the need to go into the reasons given by the company.

Specialized in Spanish and Dutch labouw law

For this reason, if you find yourself in the situation of having to reduce the workforce of a company in order to save it, we recommend that before taking any decision you contact a labour lawyer from OTIS Advocaten who will advise you and guide you on the correct way to proceed in order to avoid future problems.