You are involved in an industrial conflict as an employer or an employee. Labour relations have been severely disrupted. Your employee underperforms or your employer is harassing you out of your job. It is also possible that your company is forced to reorganise for economic reasons and you do not want to go through the slow bureaucratic process of applying to the Centre for Work and Income for a permit to dismiss.
In the cases described it is possible to request the Subdistrict Court to dissolve the employment contract. Both employer and employee can submit such a request. The Subdistrict Court can grant the request if the termination is ‘for serious cause, consisting of changed circumstances, which are of such nature that the employment contract should be terminated immediately or after a short period on the grounds of fairness".
If the Subdistrict Court decides to dissolve the employment contract, it might award the employee compensation 'if this appears fair in view of the circumstances of the case'. This is popularly called a 'Golden Handshake'.
When calculating the 'Golden Handshake' amount, the Court allows for the duration of the employment contract, adjusted by the employee's age (factor A), the amount of the gross salary (factor B) and the extent to which either of the parties can be predominantly blamed (factor C). These factors are multiplied by each other.
In establishing the level of imputability, the Subdistrict Court will not apply mathematical precision. The decision depends on the Court's conviction of who is to blame for the situation that has arisen. The imputability factor can be granted in tenths and rounded off amounts will be awarded (if an amount is awarded).
The benefits agency (UWV) will take the Subdistrict Court's decision into consideration in the unemployment benefit assessment. If the Subdistrict Court decides that the employee is predominantly to blame for the situation that has arisen, the employee will be at great risk of losing his unemployment benefit in part or in full. Please also refer to the information under the button 'Unemployment benefit'.
It is wise to engage an expert lawyer to calculate the level of the compensation to be awarded, to assess your legal options and to plead your case before the Subdistrict Court. Call +31 40 284 11 72 or click here and complete our contact form now. The interpretation of each of the factors strongly depends on the circumstances of the case. These have been partly recorded in the so-called 'Recommendations from the Subdistrict Court Circle' and have partly been applied in more detail by established case law.
Pro forma dissolution
If there is an argument, one of the parties will have to request the Subdistrict Court to force a solution that is as advantageous as possible. However, such a procedure can be costly and require a lot of energy. The result is often predictable to some extent.
It is better to reach a mutual solution by negotiating with the other party and by exchanging arguments. You can of course keep in mind what the result could be if you settled the dispute before the Subdistrict Court.
If you reach a satisfactory solution through negotiation with the other party, it is possible to have the employment contract dissolved 'pro forma' by the Subdistrict Court. In that case, the employer submits a pro forma petition and the employee a pro forma defence. These are standard procedural documents that were harmonised in the negotiations. There is then no need for an oral procedure. In most cases, the Subdistrict Court will respect the result of the negotiations in its decision.
Because the statutory requirements to qualify for an employment benefit have been eased somewhat, the Subdistrict Court does not need to be requested to dissolve the employment contract in all cases. Ask your labour law specialist what these cases are and whether your case would qualify. If so, you can enter into a mutual termination agreement. A disadvantage of this is that you are then not entitled to the enforcement of any payments without judicial intervention. In addition, you miss the deduction of a month that is applied when calculating the fictitious notice period.
In the negotiations to terminate the employment contract through a 'pro forma' dissolution procedure, the following aspects should at least be included:
- the date on which the employment contract will terminate
- performance of the tasks until the termination date
- the amount of the dissolution sum
- the question of who will pay for bridging the fictitious notice period (see ‘Unemployment benefit')
- the question of who will pay for the employee's lawyer's fees (see ‘Fees')
- the manner of notification/ confidentiality
- the procedure to be followed at the Subdistrict Court
- the settlement of the outstanding balances of annual leave and holiday pay
- the term within which the amounts due must have been paid
- the manner in which the amounts due will be paid out in a fiscally advantageous manner
- issue of a positive testimonial, if applicable
- continuation or discontinuation of a noncompetition clause, if applicable (see: 'Noncompetition clause')
- granting a full discharge reciprocally
Required data
At least the following documents and data are required for advice, substantive litigation and assistance in settlement negotiations:
- the employment contract (including any supplements)
- collective bargaining agreement, if applicable
- the most recent wage slip
- the employee's age
- the employee's very first date of commencement of employment
- a specified statement of the holidays taken
- all performance and appraisal interview reports
- the correspondence exchanged between parties
