RWV Advocaten - Are you allowed to dismiss an employee during the coronavirus crisis?

28 April 2020

If you’re an employer running a business, there’s a good chance that you’re going through troublesome times at the moment. The coronavirus crisis could well have severely depressed your sales – perhaps even to zero or thereabouts. At the same time, there’s not been any let-up in your outgoings, including your wage costs. You may have put in a claim for wage relief under the government’s NOW job retention scheme for employers.

Are you allowed to dismiss an employee during the coronavirus crisis? And if so, how should you proceed?

This is an article by our partner RWV Advocaten.

If you’re an employer running a business, there’s a good chance that you’re going through troublesome times at the moment. The coronavirus crisis could well have severely depressed your sales – perhaps even to zero or thereabouts. At the same time, there’s not been any let-up in your outgoings, including your wage costs. You may have put in a claim for wage relief under the government’s NOW job retention scheme for employers.

Under the terms of the NOW scheme, employers are obliged to do their best to maintain their wage costs at the same level and not to ask the Employee Insurance Agency (UWV) for permission to lay off staff during the crisis period. This is because the aim of the NOW scheme is to minimise the number of staff who are made redundant.

But what if, even before the coronavirus reached the Netherlands, you were already planning to reorganise your business on economic grounds? Are you still allowed to put your reorganisation plan into effect? Can you sign settlement agreements with the staff concerned (known in Dutch as a vaststellingsovereenkomst, this is a contract containing arrangements made by the employee and the employer about the termination of employment)? And are you still allowed to submit a ‘request for termination of employment’ (ontbindingsverzoek) to a court for staff whose work is not up to standard or with whom there has been a breakdown in relations? Read on, and I’ll explain.

Undertaking a reorganisation while the NOW scheme is in force

Any grant that you can apply for under the NOW scheme is intended to cover your wage costs in March, April and May 2020. The government is planning to announce before 1 June whether the scheme will be extended.

The terms of the NOW scheme state that employers are not entitled to ask the UWV, during the period in which they receive a grant, to terminate the employment of one or more members of their staff. More specifically, this means that you are not allowed to submit an application for the dismissal of staff to the UWV during the period from 17 March up to and including 31 May 2020. This also applies even if you were already planning to reorganise your business before the coronavirus crisis.

If you do submit an application for dismissal (ontslagaanvraag) to the UWV, this will affect the size of your NOW grant. In short, the value of the wage costs of the staff whose dismissal you are requesting – plus a 50% penalty – will be deducted from the grant. This will be done even if the UWV decides to reject your application for dismissal.

You should bear in mind that the UWV will indeed process any application for dismissal that you submit. It is up to you to decide whether, in the circumstances, you do in fact need to dismiss the staff in question, to work out what effect this will have on the size of your grant, and to decide whether this is acceptable. The alternative is to wait until 1 June before submitting your application for dismissal (or until 1 September, if the government decides to extend the NOW scheme by a further three months).

Are you still allowed to sign a settlement agreement?

The NOW scheme states only that employers may not submit an application for dismissal to the UWV. The NOW scheme does not forbid you from signing settlement agreements with your staff about terminating their employment on economic grounds. In other words, this is something you are still allowed to do. You should, however, remember that you are still obliged to do your best to maintain your wage costs at the same level in March, April and May. Should the government decide to extend the NOW scheme, you will then be obliged to try and keep your wage bill at the same level during the extension period. This is something to bear mind when setting the date on which the contract of employment is to be terminated.

What if you want to terminate a contract of employment on other grounds?

You may anyway have been planning to submit a ‘request for termination of employment’ (ontbindingsverzoek) to a court, for example on the grounds that your employee’s work was not up to standard, or that there had been a breakdown in working relations between you and the employee in question. You can still do this. A request to set aside an employment contract is one of the cases classified as urgent by the courts, which means that a court will hear the case. Bear in mind, though, that the hearing in court may not be the same as usual. The court may decide to hear the case in the form of oral proceedings using a video link, or alternatively to conduct the hearing entirely in writing.

As a further point, even in these uncertain times, you should still try and keep your staff documentation up to date and complete. For example, you may have embarked on an improvement plan (verbetertraject) with certain members of your staff. In that case, you should try and keep the plan moving forward, even if they are working from home. Clearly, this may be difficult in certain situations: for instance, if the aim of the plan is to improve your employees’ behaviour and attitude, this is not an aspect you are going to be able to judge from a distance. In that case, it may be worth extending the duration of the improvement plan.

Like to know more about the NOW scheme or dismissal procedures?

Whether you’d like further information or whether you have any other queries about the legal aspects of the coronavirus crisis in relation to your business and your staff, please don’t hesitate to contact one of the lawyers from our employment law practice. You can also put your questions to our Coronavirus Help Desk. We’ll be only too glad to help.