Collective dismissal
Written by:
Hein Kernkamp
The Collective Redundancy Notification Act (WMCO)
Collective redundancies are decisions by employers to lay off a group of employees. The EU Directive 98/59/EC aims to improve protection for workers affected by decisions of this kind. It sets out rules on the information and consultation of workers’ representatives before collective redundancies are made, as well as provisions on practical support for the employees who are laid off.
Under the Directive, any employer contemplating collective redundancies must hold consultations in good time with the workers’ representatives, with a view to reaching an agreement. These consultations must, at the minimum, cover means of avoiding collective redundancies or reducing the number of workers affected, and of mitigating the consequences, in particular by recourse to accompanying social measures aimed at redeploying or retraining those workers made redundant. The Directive has been implemented in Netherlands law, in the Collective Rudundancy (Notifiaction) Act.
The Collective Redundancy (Notification) Act contains rules that an employer must comply with if economic circumstances necessitate the employer to a collective dismissal. The rules in this law, introduced in 1976 under the older Directive and updated since then, must be observed. Failure to do so could result in the judge reversing a redundancy where the rules of the Collective Redundancy (Notification) act have not been observed. Below you will find a number of frequently asked questions and their answers.
When is there a collective dismissal?
There is collective redundancy if:
- The employer intends to terminate the employment contracts of 20 or more employees within a period of 3 months.
- The layoffs are for economical reasons.
- The employees who are made redundant work within the same working area as defined in the WMCO.
What working areas are defined in the WMCO?
There are six work areas:
- Friesland, Groningen and Drenthe
- Overijssel and Gelderland
- North Brabant and Limburg
- South Holland and Zeeland
- Flevoland and Utrecht
- North Holland
The WMCO therefore only applies if the 20 or more layoffs fall within one work area.
Who should be notified of the collective dismissal?
- The employer must report to UWV and the unions with members within the company of the intention to fire employees collectively.
- The employer should consult the unions about the planned layoffs, which entails so much that the plans should be discussed.
- If applicable, the employer also consults the works council (OR).
How does the collective dismissal go after the notification?
First of all, the employer will explain to the unions why the redundancies are necessary. If the unions agree and state that job cuts are indeed necessary, this is sufficient and the UWV no longer needs to investigate the economic reasons. The UWV still tests the dismissal order and also assesses the possibilities for reassignment.
Who are eligible for dismissal?
The rules applied by the UWV are strict. The reflection principle is mandatory when determining the dismissal order. This means that per interchangeable, comparable and equivalent function, a classification is made by age group (15 to 25 year olds, 25 to 35 year olds, 35 to 45 year olds, 45 to 55 year olds and 55 year olds and older ).
Within this age group, the last people hired were fired first (last in, first out). The redundancies should be distributed among the age groups in such a way that the age structure of the staff after the dismissal round remains as equal as possible to the age structure before.
What is a Social Plan?
A Social Plan is an arrangement that records the consequences for employees affected by a reorganization or reorganization. An important part of every Social Plan is the severance payment included therein. Social plans have no special legal basis and can vary in form from a one-sided offer from an employer to an agreement between the employer on the one hand and the works council and / or unions on the other. The advantage of a jointly drawn up Social Plan is that it increases the progress of the reorganization and the predictability of the outcome.
Are there any other rules to observe?
The collective labor agreement may contain different rules, for example with regard to the question when there is a collective dismissal. Also note whether the provisions of the SER Merger Code of Conduct and the Works Councils Act apply.
More information
If the rules laid down in the Directive and law are not observed, employers will face complications, amongst which a procedure before the Enterprise Chamber of the Court of Appeal of Amsterdam by the Works Council. So yes, consult a lawyer before you commence with a collective dismissal. If you have any questions regarding reorganization, redundancies and collective dismissals, you can of course contact us. We like to help you. It is not without reason that our motto is: "Your problem, our concern."
More information?
Hein Kernkamp will gladly help you further.
