The termination of the employment contracts of more than 25 employees or of 25% or more of the employees of a company is considered a mass lay-off. For such a mass lay-off permission is required from the Director of the Department of Labor and Social Affairs irrespective of the nature of the company’s activities.

The Director must be informed by the employer at least two months prior to the (intended date of) termination of the employment contracts. Simultaneously, or at least within eight days of notifying de Director the employer must provide the Director with a redundancy arrangement (“afvloeiingsregeling”).

The redundancy arrangement should include the (financial) measures the employer has taken or is willing to take to mitigate the consequences of being laid-off for the employees. The Director will base his decision on whether these terminations are reasonable and socially acceptable on the foregoing, in combination with an assessment of the financial position of the company.

Although there are no exact guidelines on how to determine the reasonableness of a redundancy arrangement, we consider that the so called ‘cantonal court formula’ (kantonrechtersformule), a guideline the court will use when asked to dissolve an employment contract, is an important indicator.

No later than six weeks after receipt of the redundancy arrangement the Director will communicate his (written) opinion thereof. An employer is obliged to wait for the Director’s opinion before it may terminate the employment contracts. Should the employer not do so or should it terminate the contracts in spite of a negative advice from the Director then the employees will be entitled to start legal proceedings for damages on the grounds of manifestly unreasonable dismissal.

Another possibility is to institute proceedings for dissolution of (all) employment contracts through the courts. In these proceedings the statutory period of notice is not applicable. The court may be requested to dissolve the agreements at the earliest possible date. The dissolution proceedings will usually take approximately two months. If the court agrees to the dissolution, it will generally dissolve the contracts as of the date of its decision.

Karel Frielink
Attorney (Lawyer) / Partner

(Source: Karel's Legal Blog)

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