DOING BUSINESS IN EUROPE


Doing business in the EU

Dutch Labour Law: Termination of employment of an employee of pensionable age

Dutch Labour Law. Be prepared and informed.

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Since the introduction of the Dutch Work and Security Act, employers can end the employment relationship without the permission of the Dutch Employee Insurance Agency (UWV)  upon or after reaching the pensionable age (Article 7:669 paragraph 4 Dutch Civil Code).

The employer is not required to pay any transitional compensation (Article 7:673 paragraph 7 sub b Dutch Civil Code) if the employee reached pensionable age.

The pensionable age is the age at which the employee becomes entitled to state pension (AOW),  or any other (deviating) pensionable age as was agreed on by the employer and employee.

That age will often be the age of entitlement to state pension, but it can (if this is objectively justified under the Equal Treatment in Employment (Age Discrimination) Act) be lower than the age of entitlement to state pension, in which case notice of termination can be given at this lower age. The age agreed between the parties can also be higher than the age of entitlement to state pension, in which case notice of termination can only be given when this higher age is reached.

Another important requirement is that the employment contract must have commenced (instead of entered into) before the employee has reached the age of entitlement to state pension or the agreed other age. This means that the above-explained no compensation termination option will not be available if the employment contract has commenced after reaching the age of entitlement to state pension or the agreed other age. This change is relevant to the question of whether a pension dismissal clause should be agreed on.

Where the employment contract of an employee ends as a result of the pension dismissal clause, a new employment contract comes into effect if the employee continues working. The new employment contract has by definition commenced after the age of entitlement to state pension or the agreed other age and the employer can not utilize the no compensation termination option. The employer may offer the employee three fixed-term contracts that end by operation of law. From 1 January 2016, the employer can even offer six contracts within a period of 48 months.

Source: Marjolijn Lips

Andre Beukes LLM

Andre Beukes LLM

André Beukes is an EU Management Consultant to international companies doing business in Europe. He provides clients with practical business support that makes a real difference doing business in the EU. “Put simply, I am here to help you meet your challenges. I believe in the importance of doing things correctly, meaning risks are reduced and problems are avoided.”

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