Much (too much?) is expected of an employer when the employer wants to dismiss an employee or deal with a labour dispute in the proper way. What is good employment practice? How do I put this into practice? How can I keep the dismissal costs to a minimum? What are the risks? Where is the balance between the business interests and the employee’s interests? How do I treat the people I dismiss? External advice: legal counsel, unilateral respresentative or mediator?
It is a great challenge for the employer when confronted with a labour dispute, for example, if he wants to dismiss someone, for whatever reason.
The legislation and procedure are clear and there are bookcases filled with case law. You would think this makes the positions clear. However, a lively negotiations practice has developed.
Did you know that…?
Dismissal costs do not only entail the much talked about severance pay but also the costs made by companies to make preparations for a dismissal and the costs incurred because the employee is still entitled to pay but no longer works. Duration and costs will depend on the procedure chosen by the employer. Calculating from the moment the intention is there to dismiss someone an employer needs an average of five months to terminate the employment contract via the subdistrict court judge. On average, this costs € 28,485.
A dismissal permit via the CWI will take five and a half months and will, on average, cost € 13,715. Taking all the types of dismissal into consideration, the average costs in the Netherlands of a unilateral termination is € 957.
If we take a look at the economic sectors and the size of companies then the costs differ greatly (the relationship between the lowest and highest average is 1 : 5.5). In the building sector and the hotel and catering industry the absolute average costs are low while in the industrial sector, education and the civil services they are high. When expressed in terms of monthly earnings the differences are much smaller.
Companies with 100 or more employees make more use of the subdistrict court judge and have one and a half times higher costs than smaller companies. The amount of the one-off severance pay differs greatly. The lowest amount paid in the study was € 200, the highest amount was € 370,000. Of the payments made, almost a quarter (22 %) was for more than € 100,000.
One out of every six employees receives a severance pay of more than one year’s earnings. The total annual costs of unilateral terminations can be estimated at 3.5 to 4 billion euros for Dutch employers. Almost half (47 %) of this can be accounted for by the termination procedure via the subdistrict court judge (see www.advocatenorde.nl).
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