Instant dismissal (also called summary dismissal) is an appealing topic in Dutch employment law. In the event of gross misconduct on behalf of the employee, the employer can “fire” the employee immediately and without severance compensation. And even better (for the employer): the employee should pay damages to the employer. This requires immediate and diligent action from the employer. Instant dismissal is not without risk: if not all requirements are met, there can be significant financial exposure for the employer.
WHAT ARE THE REQUIREMENTS FOR INSTANT DISMISSAL?
In order to dismiss an employee with immediate effect the employer should:
- Have an urgent cause to dismiss (mostly gross misconduct);
- Give notice immediately;
- Provide the employee with an explanatory letter.
URGENT CAUSE TO DISMISS
This should concern gross misconduct that makes it unacceptable (for the employer) to continue the employment agreement. A good example is employee fraud. The personal circumstances of the employee are relevant. Gross misconduct (for instance a drunk employee) in principle leads to an urgent reason to dismiss. However, if an addiction is the cause of the behavior, the personal circumstances (medical reasons) can prevent the employer to dismiss the employee. However, instant dismissal is (in principle) also possible in the event the employee is not personally liable for the behavior: the bottom line is that the gross misconduct cannot be tolerated by the employer and this exceptional situation justifies an instant dismissal.
DISMISSAL OBSTACLES (OPZEGVERBODEN) NOT APPLICABLE
Dismissal obstacles like illness, pregnancy or membership of a works council (which normally would prevent the employer from being able to terminate the employment) are not applicable in the event of an instant dismissal.
IMMEDIATE ACTION REQUIRED
The employer has to investigate the situation properly before dismissing the employee. The employee must be heard: if he’s denied that opportunity, it can affect the legitimacy of the dismissal. The investigation has to be swift but diligent. If too much time passes after the discovery of the unacceptable behavior, the dismissal will not be considered “without delay” and therefore be not valid.
DISMISSAL LETTER
The employer provides the employee with a dismissal letter containing the cause for the dismissal. An oral statement is not sufficient: the employer will have substantial problems in terms of evidence as to the cause(s) of the dismissal.
MAJOR CONSEQUENCES FOR THE EMPLOYEE
The consequences of an instant dismissal for the employee cannot be overestimated. The employee cannot make a claim for unemployment benefits (WW), except if he manages to successfully challenge the dismissal. There is (with some exceptions) no obligation on behalf of the employer to pay a severance compensation to the employee.
POSSIBILITIES FOR THE DISMISSED EMPLOYEE
An employee confronted with an instant dismissal has to act swiftly as well. Within 2 months after the dismissal, a request needs to be filed at the Court. The employee has two options:
- Annulment of the dismissal & reinstatement in his job; or
- Claiming a “billijke vergoeding” (which is a considerably higher severance compensation, in order to compensate the employee for the consequences of the wrongful dismissal).
Frequently Asked Questions (FAQs) about instant dismissal in Dutch employment law
1 WHAT QUALIFIES AS AN “URGENT CAUSE” FOR INSTANT DISMISSAL?
Dutch employment law mentions some examples of urgent causes. This list however is not exhaustive. For instance, theft is not in the list, but (obviously) is an urgent cause for dismissal.
Policies of the employer are very relevant. If undesired behavior of the employee is incorporated in an employee handbook, instant dismissal is possible even in the event of minor offences. A notorious example is a cleaner at Amsterdam Schiphol Airport who ate a small bag of peanuts that was left over after a flight. Because the policies of the employer were crystal clear (eating of left overs during work never allowed), the employee could be instantly dismissed.
If an employer strongly rejects certain behavior, it pays to incorporate prohibitions in staff regulations or an employee handbook. In principle, this makes it possible to enforce the rules with an instant dismissal.
2 HOW IMPORTANT ARE THE INDIVIDUAL CIRCUMSTANCES OF THE EMPLOYEE?
Personal circumstances can be very important. Even in the event of theft, something that almost always warrants an instant dismissal, there are exceptions based on personal issues. For example, if an employee has a lot of service years and steals something very small, this may not result in a valid dismissal. The situation for an employee with just one service year can be different, although the behavior is exactly the same.
3 IS LIABILITY ON BEHALF OF THE EMPLOYEE REQUIRED FOR AN INSTANT DISMISSAL?
No, it’s not necessary that the employee is liable. An instant dismissal can sometimes take place without any liability on behalf of the employee. What matters is that the behavior is absolutely unacceptable for the employer. In this (rare) event, there can be a valid instant dismissal. However, the employer must pay a severance compensation (transitievergoeding). After all, the employee is not liable and needs to be compensated for the consequences of the dismissal. This odd (and rare) situation has appeared a number of times in Court cases.
4 WHAT AMOUNT OF COMPENSATION NEEDS TO BE PAID IN THE EVENT OF A WRONGFUL TERMINATION?
If the instant dismissal is determined invalid by the Court (and the employee does not seek reinstatement) a special severance compensation (“billijke vergoeding”) needs to be paid. All circumstances of the case are relevant in determining the amount. The financial loss of the employee as a consequence of the dismissal is the most important factor. An older, high earning employee can for instance claim several annual salaries: it might be unlikely that he will find other employment at his job level. The highest severance compensation is more than EUR 1.000.000. This consisted all salary and missed pension accrual until the pension date of the employee.
5 IF THE EXPOSURE IS SO SERIOUS, WHY DO EMPLOYERS STILL DO INSTANT DISMISSALS?
Employers can have good reasons to fire an employee with an instant dismissal. A lot of employers have a “zero tolerance” policy as to unacceptable behavior. Hence if there is a case of fraud or theft, they use instant dismissal to get rid of the employee. This also serves as an example to other employees, that will hopefully abstain from the unwanted behavior in the future.
Furthermore, instant dismissal is used to force a breakthrough to get rid of an employee, in a situation that normally wouldn’t warrant a dismissal. The conflict will escalate. A dynamic can develop in which a situation that warrants a dismissal is created. This however is a risky strategy, given the substantial exposure (see 4).
As an alternative, a request can be filed at the Court on the basis of (the same) gross misconduct, while suspending the employee. If the Court agrees that there is gross misconduct for which the employee is to blame, the dismissal can take place without any severance compensation.
6 WHAT ARE THE POSSIBILITIES FOR THE EMPLOYER THAT DISMISSED AN EMPLOYEE INSTANTLY?
In the event of a successful instant dismissal, the employer can file a request for damages at the Court against the employee. First of all, the employer can request an amount equal to the applicable notice period. If the applicable notice period is for instance 2 months, the employer can claim 2 monthly salaries from the employee.
In addition, the employer can claim the actual damages suffered. Therefore, it’s required the employee acted intentionally or deliberate recklessness. For instance, if the employer can claim damages from the fraudulent employee who acted with intend.
7 WHICH DIFFERENT COMPENSATIONS CAN THE EMPLOYEE CLAIM AFTER A WRONGFUL TERMINATION?
There are 3 cumulative severance compensations the employee can claim on the basis of wrongful termination.
First, there is the obligation to pay a “transition compensation” (transitievergoeding) to every employee that doesn’t bear gross liability as to the dismissal. This amounts to 1/6 monthly salary for every 6 months of service, including holiday allowance. For an employee with 21 service years, this means 7 monthly salaries.
Furthermore, the employee can claim an additional compensation (billijke vergoeding). This can be a very substantial amount (see question 3). This additional compensation raises the stakes.
Finally, the employee can request a third compensation because the employer did not observe the notice period: the fixed compensation (gefixeerde schadevergoeding vanwege onregelmatige opzegging). For instance: with 15 or more service years, the statutory notice period is 4 months. Due to the instant dismissal, no notice period is observed. If the Court considers the dismissal invalid, the employer has to pay the 4 months salary of the notice period.
8 CAN THE EMPLOYER ENHANCE THE CASE FOR DISMISSAL, AFTER INSTANTLY DISMISSING THE EMPLOYEE?
Yes. If the employee starts Court proceedings against the employer in order to challenge the dismissal, the employer can request a “conditional dissolution/termination” (voorwaardelijke ontbinding) of the employment agreement. The desired outcome of this is that, if the Court deems the instant dismissal invalid (the condition), the Court can still terminate the employment agreement. A request like this serves as an “insurance policy” for the employer: if the employee misconduct is not sufficient for an instant dismissal, or if the instant dismissal was late, such a request can save the day for the employer.
9 WHAT IF THERE ARE MULTIPLE REASONS FOR THE DISMISSAL?
An employer can have multiple reasons to dismiss an employee: for instance multiple cases of theft. Or fraud combined with verbal aggression towards colleagues. The employer should mention all reasons in the dismissal letter and make clear that all these reasons both individually and combined constitute grounds for instant dismissal. Incorrect wording can result in serious evidentiary problems in Court. Drafting the dismissal letter is therefore a very critical process.