Redundancy for business economic reasons in Eindhoven: how it works

Business economic dismissal is one of the most common grounds for dismissal in the Netherlands, and it regularly affects employees at both large and small companies in the Eindhoven region too. But how does this type of dismissal work exactly, what are the rules of the game, and what can you do if your job is under threat? In this article, you can read step-by-step how the process works.

Dismissal for economic reasons occurs when a company dismisses an employee due to financial difficulties or restructuring.

Redundancy occurs when an employer has to cut jobs due to circumstances within the company itself. This could be a poor financial situation, declining sales, organisational changes, or automation making certain roles obsolete. A partial closure or relocation of a business unit can also be a valid reason.

Crucially, it must be about structural redundancy of jobs. A temporary downturn or reorganisation that is reversed after a few months does not, in principle, justify this type of dismissal. Furthermore, the employer must be able to demonstrate that redeployment to another suitable position is not possible, even after training.

The two routes to making employees redundant for business reasons

If your employer wants to dismiss you for business-economic reasons, they essentially have two options. The first is to apply for a dismissal permit from the UWV (Employee Insurance Agency). The second is to enter into a settlement agreement (VSO), meaning dismissal by mutual consent. In practice, an employer has a choice in cases of business-economic reasons, and many employers opt for the VSO route as it is quicker and offers more certainty about the outcome.

However, both routes are sometimes used simultaneously: while a settlement agreement is being negotiated, a UWV (Employee Insurance Agency) procedure is already running in the background as a pressure tactic. It is therefore wise to be fully aware of your legal position before agreeing to anything.

The UWV procedure step by step

If your employer opts for the official route via the UWV, they must apply for a dismissal permit and submit an extensive file. The UWV will assess, based on the implementation rules for dismissals for business-economic reasons, whether all conditions have been met. These implementation rules have been significantly updated as of 1 July 2025, so it is important that you and your employer are working with the most recent version.

The employer must demonstrate, among other things:

• Why jobs are structurally disappearing and how this is substantiated.;
• that the order of dismissal has been correctly determined (see the redundancy principle below);
• that redeployment to another suitable position is not possible, not even after retraining;
• that there are no vacancies for comparable work within 26 weeks of the UWV's decision.

An employer may only terminate employment after receiving the dismissal permit. The time taken for the UWV procedure may be deducted from the notice period, provided at least one month's notice period remains.

The reflection principle determines who is made redundant

If multiple people within the same or comparable roles need to be made redundant, the reflection principle determines the order. This principle is intended to prevent arbitrariness and ensures that the age structure of the staff after the redundancy round remains as close as possible to the situation beforehand.

Concretely, it works as follows: employees in equivalent job categories are divided into five age groups (15–25, 25–35, 35–45, 45–55 and 55+). Within each age group, the employee with the shortest period of service is the first to be considered for redundancy. Before permanent employees are considered, flexible contracts and temporary employments that are due to end within 26 weeks must already have been terminated.

Errors in the application of the proportionality principle occur regularly and can lead to the dismissal application being rejected or the dismissal being quashed retrospectively. If you suspect that your employer has applied the proportionality principle incorrectly, it is worth having this checked.

Collective redundancy and the WMCO

If your employer intends to make 20 or more people redundant within the same area of work and within a period of three months, this constitutes a collective redundancy. In that case, the Collective Redundancy Notification Act (WMCO) applies. The employer is then obliged to give advance notice of their intention to both the UWV and the relevant trade unions. Thereafter, a one-month waiting period applies before the actual redundancy procedure can begin.

This applies regardless of the dismissal route chosen: whether it’s via the UWV, the cantonal court, or a settlement agreement, the notification obligation remains in force. If the employer fails to comply with this, the dismissal can be annulled or you as an employee can claim a fair compensation.

Your financial rights when made redundant

In the event of redundancy for business reasons, you are entitled to a transition payment in almost all cases. The amount depends on your gross monthly salary and the length of your service: for each full year of service, you will receive one-third of your monthly salary. In 2026, the maximum transition payment will be €102,000 gross, or one gross annual salary if that is higher than €102,000.

In addition to the statutory transition payment, your collective bargaining agreement may contain a different arrangement. Since 1 January 2025, it has been possible to agree on a replacement provision in a collective bargaining agreement for dismissals for company-economic reasons, instead of the transition payment. For example, this could be in the form of outplacement support or a financial compensation. This provision no longer needs to be exactly the same amount as the statutory payment, but must be aimed at preventing or reducing unemployment.

Please note a few practical points:

• Always check that the transition payment has been calculated correctly, including allowances and holiday pay.
• When requesting a settlement agreement, always check whether the termination date allows sufficient time for an unemployment benefit.
• Check if your collective labour agreement includes a social plan that offers additional rights.
• Keep an eye on the limitation period: you have three months from the end of your employment to claim a transition payment through the courts.
• Always have a settlement agreement checked before you sign it.

What can you do if redundancy is looming

If you are told that your role is being made redundant, do not react hastily. You do not have to accept your employer’s initial offer straight away. In many cases, there is room to negotiate the amount of the severance pay, the end date or any outplacement support. You can also find more information about your rights in the event of a reorganisation on our page about Reorganisation and redundancies in Eindhoven.

Steps you can take at the very least:

• Please request, in writing, an explanation of the grounds for dismissal and the order of priority applied.
• Check whether the mirroring principle has been correctly applied to your situation.
• Consider whether redeployment to another role is realistic and raise this.
• Have the transition payment recalculated and compare it with any collective labour agreement provisions.
• Consult an employment lawyer before signing a settlement agreement or consent order.

Hulp bij bedrijfseconomisch ontslag in Eindhoven

At Arbeidsjurist Eindhoven, we have an in-depth understanding of the local labour market and know how redundancies for business reasons work in practice in Eindhoven and Brabant. Whether you’ve received a letter stating that your role is being made redundant, or you want to know if your employer’s procedure is correct: we’re happy to help you work through it. Feel free to contact us for an initial consultation. Together, we’ll look at your situation and what the best next step is for you.

Frequently asked questions

Does my employer always need a dismissal permit from the UWV for dismissal for economic reasons?

Not necessarily. In the case of redundancy due to business economic reasons, the employer can opt for a dismissal permit via the UWV or for a settlement agreement (termination by mutual consent). Both routes are legally permissible. No dismissal permit is required for a settlement agreement, but as an employee, you do have the right not to agree to it.

What is the principle of reflection, and does it apply to me?

The reflection principle determines the order in which employees are considered for redundancy if multiple people in comparable roles need to leave. Employees are classified into five age groups; within each group, the employee with the shortest length of service is considered first. The principle applies to business-economic redundancies via the UWV (Employee Insurance Agency), not to dismissals for personal reasons.

Do I have a right to a redundancy payment in the case of dismissal for operational reasons?

Yes, in almost all cases, you are entitled to a transition payment if you are made redundant for business reasons. In 2026, this will amount to one-third of your gross monthly salary per full year of service, up to a maximum of €102,000 gross. Always check that the calculation is correct and whether your collective agreement contains any different provisions.

When does a collective redundancy occur, and what does that mean for me?

A collective redundancy is when your employer wishes to dismiss twenty or more employees in the same work area within a three-month period. In that case, the Collective Redundancy (Notification) Act (WMCO) applies: the employer must report the intention to UWV and the trade unions, and a one-month waiting period applies. As an employee, you then have extra protection, and an incorrect procedure can lead to the dismissal being annulled.

May I negotiate the compensation in case of dismissal on economic grounds?

Certainly. You are not obliged to accept your employer's first offer. With a settlement agreement, there is almost always room to negotiate the amount of compensation, the end date, and any additional agreements such as outplacement. Always have the agreement checked by an employment lawyer before you sign.

We are happy to think along with you. For advice tailored to your situation, we would be glad to talk. No rights can be derived from the content of this page and it may contain inaccuracies.