Can I dismiss permanent employees due to a reorganisation?

“Mag ik werknemers met een vast contract ontslaan vanwege reorganisatie” in the Netherlands translates to a clear legal question: dismissal is only possible if there is a substantiated business-economic reason and the correct legal route is followed. A permanent contract protects employees from arbitrary termination, but it does not make redundancies impossible when positions genuinely disappear. In practice, the outcome depends on documentation, serious redeployment efforts and selecting employees using mandatory rules. This article explains the key steps and how outplacement can support a careful transition.

When is redundancy dismissal allowed for permanent contracts?

A permanent employee can be dismissed in a reorganisation if the legal ground is “business-economic reasons” (bedrijfseconomische redenen). Typical triggers include structural loss of work, cost reductions, closing a site, or removing a layer in the organisation. The crucial point is that the job/position disappears, not that the employer wants to remove a specific person. That distinction drives the required evidence and the selection method.

Under Dutch dismissal law, redundancy dismissal is usually handled via the UWV (Employee Insurance Agency). UWV assesses whether the economic necessity is sufficiently supported and whether the employer complies with the applicable rules. This route differs from personal grounds such as underperformance; it focuses on organisational design and staffing levels.

It helps to define the change precisely: what will change, which activities will disappear, and how many positions are eliminated per group of interchangeable roles. If the concept is unclear internally, first align on what a reorganisation is and when it qualifies as a reorganisation in practice.

• The reason must be business-economic and provable (not person-focused).
• The position must structurally disappear or be genuinely restructured.
• Selection must follow fixed rules (often the reflection principle).
• Redeployment must be seriously explored and documented.

Which route applies: UWV procedure or settlement agreement?

In reorganisations there are two common routes: termination via dismissal through UWV or termination by mutual consent via a settlement agreement (vaststellingsovereenkomst, often abbreviated as VSO). The foundation is similar in both: you must be able to explain why the position disappears and why this employee becomes redundant. The difference is procedure, timing and how tailor-made arrangements are recorded.

The UWV route is formal and review-based. The employer requests permission to terminate; after approval, the employer can give notice while respecting the statutory notice period. UWV looks at necessity, selection rules and redeployment efforts. This route offers clarity but requires consistent documentation and careful communication.

The VSO route is often faster and allows customised arrangements, such as garden leave, training budgets, a later end date or transition support. However, wording must be handled carefully to avoid problems with unemployment benefit eligibility. In reorganisations, a VSO is frequently combined with an outplacement programme so the employee receives immediate support in labour-market orientation and job search.

• UWV: formal review, strong focus on file quality, selection and redeployment.
• VSO: faster and flexible, but requires careful and balanced drafting.
• Both: the rationale for eliminating the role must be substantiated.
• Practical: outplacement can be agreed in either route as transition support.

Who can be selected: interchangeable roles, reflection principle, redeployment

Selection is rarely discretionary. Employers usually must apply the reflection principle (afspiegelingsbeginsel) within a group of interchangeable roles. “Interchangeable” means roles are sufficiently comparable in content, level, pay, required skills/knowledge and onboarding time. Within that group, redundancies are allocated across age brackets, and within each bracket “last in, first out” is applied based on length of service. This prevents cherry-picking specific employees.

Redeployment is equally important. Redeployment means assessing whether the employee can be placed into a suitable role within the organisation (or group) within a reasonable period, potentially with training. “Suitable” does not necessarily mean identical; it can be a different position aligned with experience and capabilities. Employers must be able to show they examined vacancies, temporary work options and reskilling possibilities.

Example: an admin team of eight is reduced to five due to automation. First, define the interchangeable group (administration), apply the reflection principle, and identify three positions to be eliminated. At the same time, check whether suitable roles exist elsewhere, such as customer support or planning. Only when redeployment is not feasible does dismissal become the next step.

• Define the interchangeable group of roles.
• Apply the reflection principle per age bracket and length of service.
• Document redeployment: vacancies, interviews, training options.
• Apply the same rules consistently within the same group.

Impact for employees: transition payment and outplacement

When employment ends at the employer’s initiative, the employee will often be entitled to a transition payment (transitievergoeding), including in redundancy situations and for permanent contracts, unless a statutory exception applies. In a VSO, parties agree on payment and final settlement; in the UWV route, payment follows termination after notice. Clear communication is essential, because uncertainty quickly creates friction and delays.

Outplacement is not a legal obligation, but in reorganisations it is frequently a practical, people-focused choice. It helps employees find new work faster and supports a careful exit process. Outplacement typically includes labour-market orientation, positioning (CV and profile), interview training, networking strategy and guidance during negotiations for a new role.

A workable approach is to agree a concrete budget or programme in the VSO and specify duration, scope and start date. For realistic expectations, it helps to understand how outplacement in a reorganisation is organised in practice.

• Transition payment: often due when the employer initiates termination.
• Outplacement: accelerates job search and supports sustainable placement.
• VSO terms: specify budget, duration, scope and start date.
• Communication: provide timely clarity on process, timelines and support.