While most measures are – thankfully – being lifted faster and faster, many companies have been hit hard by the corona crisis. To keep their heads above water, it may therefore be necessary to reorganise.
For the employment contract with an employee to be validly terminated, there must be reasonable grounds for dismissal. This includes the situation where jobs are lost due to business economic circumstances. In order to terminate the employment contract, prior permission from the UWV will have to be requested.
WHAT EXACTLY ARE BUSINESS ECONOMIC CIRCUMSTANCES?
This can include several situations. These can be found in the UWV’s Implementation Rules. These include:
– Poor or worsening financial situation;
– Work reduction;
– Organisational or technical changes;
– Company relocation;
– Discontinuation of the company’s operations; and
– Expiration of wage subsidy.
The employer will have to make a plausible case in the redundancy application that the measures to be taken are necessary that justify the loss of jobs.
Besides the fact that there must be economic circumstances causing job losses, it is also important to propose the right person for dismissal. Who has to be nominated follows from the reflection principle.
This principle states that employees in interchangeable jobs should be divided into separate age categories. For each age category, it should then be determined how many positions will disappear after which the employees with the fewest years of service in an age category will be the first to be considered for dismissal. Through this principle, the age structure at an employer is least disrupted.
The following age groups apply: 15 to 25, 25 to 35, 35 to 45, 45 to 55 and above 55. The classification should result in each age group contributing to the layoff on a percentage basis, based on ‘last-in-first-out principle’ in each age group.
Other suitable positions in the company must also be sought first; this is called the redeployment obligation. The employer must consider whether the employee can take up another suitable position elsewhere in the organisation (or at a sister company). This is a best-efforts obligation.
The redeployment is linked to a reasonable period of time. This involves looking several months ahead, as it were, and estimating whether it is possible to redeploy the employee during this future period. The duration of this redeployment period is equal to the employer’s statutory notice period.
There may be co-determination obligations in a reorganisation. An employer with 10 to 50 employees is obliged to discuss any decision that may lead to the loss of jobs or change of employment of at least 25% of the workforce in a meeting with the employees and seek their opinion on it.
A number of different rules apply to collective dismissals. There is a collective redundancy if an employer intends to dismiss (a) 20 employees or more (b) within the same UWV work area (c) within a period of three months and (d) at the same business location due to business economic circumstances. In that case, the Collective Redundancy Notification Act (“WMCO”) applies.
The WMCO requires the employer to notify the UWV and the relevant trade unions of the intention to make a collective redundancy. The employer must provide information on the reasons for the dismissal and must provide substantiation (e.g. the annual accounts of the last three years in case of disappointing results). Furthermore, the employer must provide information on the number of foreseen redundant workers, the intended date of termination of the employment contract, the selection criteria and any compensation to be offered (severance pay, notice period and any additional provisions). For an overview picture of this process, see the Legal Graphic on the subject.
The UWV procedure consists of three forms; A, B and C. In short, form A deals with information about the employer, form B with information about the employee and form C with the substantiation of the economic circumstances.
We have tried to give an overview of a reorganisation in five minutes of reading time. Of course, there is much more to this topic and each case requires a specific approach. Are you planning to reorganise or will your job be lost due to a reorganisation? We would be happy to talk further with you in an individual conversation.
Do you have any questions? Then feel free to contact us.