Expats and Dutch Employment Law

Which law applies to an employment contract with an expatriate? Easily asked, not easily answered. It may be the law of the Netherlands. It may be another law, such as the law of the head office of the employer. It may be a combination of legal systems. The answer depends on the what has been agreed and on the manner in which the parties have executed the agreement. With the mere passing of time the results of this analysis may change. The Dutch rules of Private International Law should be applied to the particular situation and that can sometimes lead to some surprising results. This makes the conclusion of contracts between employers and expats more complicated than ordinary contracts of employment, and the same goes for the resolution of disputes. If confronted with a dispute, we suggest that you hire a competent lawyer at an early stage. Together with you he can identify the court that will be competent to hear the matter and it can be established wich law is applicable to the employment contract.

Severence payment

Under the rules of Dutch employment law, employees are relatively well protected. Expats should realize that they cannot claim the benefit of all legal safeguards that have been put in place for Dutch residents. Untill recently a rule (developed in case-law) was used to determine whether the full dismissal protection should be applied to foreign employees. If the employee was not likely to remain on the Dutch labour market, the dismissal protection would not apply, even though Dutch law had been declared to be applicable to the employment contract. If the foreign employee could show that he had ties to the Dutch labour market (for example because he owned a house or had a family in The Netherlands), the Dutch labour market would be deemed to be involved in the dismissal and the protection system would have to be aplied.

Recent case-law (HR 24 februari 2012, LJN BU8512) shows that the Superior Court puts more emphasis on the protection of employees against unfair dismissal, regardless of whether they are permanent residents or foreigners working in The Netherlands. Since this recent development, expats that are working in similar conditions as their Dutch colleagues will more likely fall under the scope of the BBA and therefore the extensive rules for termination of the employment will have to be applied to their contracts as well.

However, if the situation of the expat importantly differs from that of his colleagues, the expat may not be so well protected. Expats in such situations should realise that the possibility exists that their employment contracts can be terminated in accordance with the terms agreed in the contract, without the need to ask for a permit or to pay anything more by way of redundancy compensation than exactly that what has been agreed between the parties. It is therefore essential to establish if your employer has an expat policy in place. If not in place, it is recommended to negotiate the terms of termination and relocation, such as arrangements for severance payment, housing, moving costs, etcetera when negotiating the original employment contract.

When an expat is dismissed, he or she may, depending on the circumstances of the dismissal, be entitled to compensation, even if this has not been specifically agreed in the contract. If brought before a Dutch court, the judge will have to decide whether or not the expat qualifies for compensation. First it must be established which law applies to the contract and what the exact consequences of that law are. Under Dutch law, the judge will look at whether there is ‘apparent unreasonable dismissal’.

It is not usual that disputes are fought over in open court. Usually parties negotiate the terms under which the contract will be terminated and reach an amicable settlement. However, it is not advisable to sign a termination agreement until you have sought legal advice from an employment lawyer. There is no obligation on the part of the employer to factor in the cost of a lawyer in your redundancy package, but it is very often granted as part of the settlement if so requested by you. We can assist you here and help you to maximise the compensation package.

Unemployment insurance benefit (WW)

After dismissal an expat may be entitled to unemployment benefit in the Netherlands (WW). If an expat is covered under the WW-benefit scheme, the authorities will first verify whether or not the expat has become unemployed as a result of his own doing: ‘culpably unemployed’. In such a case, the expat may forfeit his rights to any unemployment benefit. This is the case when the expat has voluntarily resigned for no good reason or where he has been fired with immediate effect, for instance in case of serious misbehaviour or in case of fraud or theft.

If the expat will move to another country within the EU where he will claim unemployment benefits, he will need a form from the UWV showing his working history and entitlements build up in The Netherlands, to apply for benefits with the foreign benefits institution.

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Further information

It is advisable to consult us before taking any major decision with regard to signing a contract, dismissal or changing employers. For further information regarding Dutch Employment Law, please contact our contact person of the Labour and Employment Law Practice Group.

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