No collective redundancy without taking necessary steps first
Whether it is the coronavirus pandemic or not, if your organization is struggling a collective redundancy may be one of the last options left. Many rules apply, which can be found in the ‘Wet melding collectief ontslag’ (Collective Redundancy Act), abbreviated as ‘WMCO’. We recommend you get yourself informed of the rules if your organization is planning on dismissing 20 employees or more any time soon.
The dismissal of multiple employees is called a collective redundancy if the following criteria are met:
- your organization will terminate the employment of 20 or more employees within a period of three months;
- the employment is terminated for business economic reasons;
- the employees to be dismissed are working in one of the six areas of employment mentioned in the WMCO.
If an employee agrees with the employer within the aforementioned period of three months to terminate his/her contract by mutual consent, the respective termination of employment also counts toward a collective redundancy according to the WMCO. The same can be said for the dismissal of a payroll employee. In the event of a collective redundancy, all dismissals must be reported in writing to the UWV (Netherlands National Institute for Employees’ Insurance and Regulations) and the respective trade unions.
You do not have to reach an agreement with the trade unions on the dismissals in question; simply reporting the collective redundancy suffices. Usually, the dismissals must be reported to the works council as well.
The UWV can be notified of the collective redundancy through the form ‘Melden voornemen tot collectief ontslag’, which can be found on the website www.uwv.nl. A completed form, together with corresponding attachments, can then be uploaded via the employer’s portal (‘werkgeversportaal’ in Dutch). You can log in to the employer’s portal using the online authentication and authorization system ‘eHerkenning’.
In principle, once the UWV has received a completed reporting of the collective redundancy, you have to wait one month before:
- a judge can dissolve the respective employment contracts;
- you can terminate the respective employment contracts;
- you can finalize any termination agreement with the respective employees.
However, if you have received a written declaration by the trade unions stating that they have been informed of and consent to the planned collective redundancy, this one month waiting time does not apply.
Which information is required when reporting a collective redundancy?
When reporting a collective redundancy to the UWV, the following information must be provided:
- the reason for the collective redundancy;
- the number of employees to be dismissed, sorted according to job position, age and gender;
- the number of employees hired by your organization;
- the planned date for the dismissals;
- the selection criteria;
- if applicable, calculations of redundancy pay;
- the way in which the employment contracts will be terminated;
- whether or not the organization has a works council and, if this is the case, when this council will be informed of the collective redundancy.
The WMCO only applies to dismissals for business economic reasons. Frequently occurring examples of business economic reasons which can lead to dismissals are a bad or worsening financial position or a reduction in available work, but also a reorganization for reasons other than a shortage of finances.
If a planned collective redundancy is not reported to the UWV, the latter can decide not to process the requests for dismissal. In that case, dismissed employees (including those dismissed through a termination agreement) can decide to have the dismissal canceled afterwards, thereby reinstating themselves. It is therefore important the collective redundancy is reported correctly.