Employer Obligations During the Initial Two Years
Under Dutch employment law, an employer cannot terminate an employee’s contract due to illness (sick leave) during the first two years of incapacity. This protection allows employees time to recover and reintegrate into the workforce while ensuring fair treatment. Throughout this period, the employer is legally required to continue paying wages and must actively facilitate the employee’s return to work. These reintegration efforts may include workplace adjustments, modifications to the employee’s role, or offering alternative positions within the company. If the employer fails to comply with reintegration obligations, the Employee Insurance Agency (UWV) may impose a wage sanction, extending wage payments for up to an additional year.
Summary:
- Employers must continue wage payments for the first two years of illness (sick leave) .
- Employers must assist with reintegration, including job modifications or alternative roles.
- Failure to meet reintegration obligations may result in UWV-imposed wage sanctions.
Dismissal Procedures After Two Years
If an employee remains unable to return to work after two years despite reintegration efforts, the employer may initiate the dismissal process. There are two primary methods for dismissal: a mutual settlement agreement (Vaststellingsovereenkomst – VSO) or a dismissal permit from the UWV.
A Settlement Agreement (VSO) is a mutually agreed termination contract between the employer and the employee. This agreement must be in writing and should detail all dismissal terms, including severance pay (transition payment). The advantage of a VSO is that it allows both parties to negotiate terms suited to their specific situation, making the process more flexible and often less confrontational.
If a mutual agreement cannot be reached, the employer must apply for a dismissal permit via UWV. The UWV will assess whether the employer has met all reintegration obligations and whether the employee remains incapable of performing their role. If the permit is granted, the employer may proceed with the dismissal in compliance with Dutch employment law.
Summary:
- VSO (Settlement Agreement): A mutually agreed termination contract offering negotiation flexibility.
- Dismissal Permit (via UWV): A legal process requiring proof of fulfilled reintegration efforts.
Transition Payment (Severance Pay)
Upon dismissal after two years of illness, the employee is generally entitled to a transition payment (severance pay). This payment is calculated based on the length of employment and the employee’s salary. Employers may apply for compensation from the UWV for the transition payment made to employees dismissed due to long-term illness (sick leave) , provided they meet certain conditions.
Summary:
- Employees dismissed due to long-term illness (sick leave) are entitled to severance pay.
- The payment is based on employment duration and salary.
- Employers may apply for compensation from the UWV.
Exceptions to Dismissal Protection
Although Dutch employment law strongly protects employees from dismissal during the first two years of illness, certain exceptions apply. If an employee refuses to participate in reasonable reintegration efforts or declines suitable alternative work without valid justification, the employer may have grounds for dismissal. Additionally, dismissals are permitted in cases such as company bankruptcy, termination during the probationary period, or serious misconduct unrelated to the illness.
Summary:
- Dismissal is possible if the employee refuses reintegration efforts.
- Dismissal may occur due to bankruptcy, probationary period termination, or misconduct.
Legal Considerations for Employers
Employers must strictly comply with Dutch employment law when dismissing an employee after two years of illness (sick leave) . Failing to follow legal procedures may result in claims of unfair dismissal, financial penalties, and legal disputes. Given the complexity of the process, employers are strongly advised to seek legal counsel before proceeding with termination.
Summary:
- Employers must comply with Dutch dismissal laws.
- Unfair dismissal claims may result in legal and financial penalties.
- Legal guidance is highly recommended before terminating an employee.
Frequently Asked Questions (FAQs)
What legal steps should an employer take after two years if the employee cannot return to work?
The employer can either negotiate a mutual settlement agreement (VSO) with the employee or apply for a dismissal permit from the UWV, demonstrating that all reintegration efforts have been exhausted.
Can an employer dismiss an employee during the first two years of illness (sick leave) ?
No, Dutch law prohibits employers from terminating an employee’s contract due to illness during the first two years. This period allows for recovery and reintegration efforts.
What happens if the employer fails to meet reintegration obligations during the two-year illness (sick leave) period?
If the employer does not fulfill reintegration responsibilities, the Employee Insurance Agency (UWV) may impose a wage sanction, requiring the employer to continue wage payments for up to an additional year.
Is the employee entitled to a transition payment after dismissal due to long-term illness (sick leave)?
Yes, employees dismissed after two years of illness are generally entitled to a transition payment, calculated based on the duration of employment and salary. Employers can apply to the UWV for compensation of this payment under certain conditions.
Are there exceptions to the prohibition of dismissal during the first two years of illness?
Yes, exceptions include situations such as company bankruptcy, termination during a probationary period, or serious misconduct unrelated to the illness (sick leave). Additionally, if an employee refuses reasonable reintegration efforts, dismissal may be possible.
Dutch employment law ensures structured and fair procedures for dismissing employees after two years of illness. Employers are required to make substantial efforts toward reintegration before considering dismissal, while employees are entitled to protections and compensation to prevent unfair treatment. By following the correct legal framework, employers can ensure a lawful and just dismissal process while mitigating risks associated with employment termination.
