Redundancy for business economic reasons is one of the most common grounds for dismissal in the Netherlands, and in the Eindhoven region it regularly affects employees at both large and small companies. But how exactly does this type of dismissal work, what rules apply, and what can you do if your job is at risk? This article takes you through the process step by step.
When does redundancy for business economic reasons apply?
Redundancy for business economic reasons occurs when an employer has to eliminate jobs due to circumstances within the company itself. This might include a poor financial situation, declining turnover, organisational changes, or automation that makes certain roles redundant. A partial closure or relocation of a part of the business can also be a valid reason.
Crucially, the redundancy must involve the permanent elimination of positions. A temporary downturn or a reorganisation that is reversed after a few months does not, in principle, justify this type of dismissal. The employer must also be able to demonstrate that redeployment to another suitable role is not possible, even after retraining.
The two paths to redundancy for business economic reasons
If your employer wishes to make you redundant for business economic reasons, there are, in principle, two routes available. The first is to apply for a dismissal permit from the UWV. The second is to conclude a settlement agreement (vaststellingsovereenkomst, VSO), in other words, dismissal by mutual consent. In practice, where business economic reasons are involved, the employer has a choice, and many opt for the VSO route as it is faster and offers greater certainty about the outcome.
Nevertheless, both routes are sometimes pursued simultaneously: while negotiations over a settlement agreement are ongoing, a UWV procedure may already be running in the background as a form of leverage. It is therefore wise to have a clear understanding of your legal position before agreeing to anything.
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 a comprehensive file. The UWV assesses whether all conditions have been met based on the implementation rules for dismissal on business economic grounds. Those implementation rules were substantially updated on 1 July 2025, so it is essential that both you and your employer work with the most recent version.
The employer must demonstrate, amongst other things:
- why the positions are being permanently eliminated and how this is substantiated;
- that the order of dismissal has been determined correctly (see the mirror image principle below);
- that redeployment to another suitable role is not possible, even after retraining;
- that no vacancies exist for comparable work within 26 weeks of the UWV’s decision.
The employer may only give notice after receiving the dismissal permit. The time taken by the UWV procedure may be deducted from the notice period, provided that at least one month’s notice remains.
The mirror principle determines who is made redundant.
Where several people need to be dismissed within the same or comparable roles, the mirror image principle (afspiegelingsbeginsel) determines the order. This principle is designed to prevent arbitrary decisions and ensures that the age distribution of the workforce after the redundancy round remains as close as possible to what it was before.
In practice, it works as follows: employees are grouped by category of interchangeable roles into five age bands (15–25, 25–35, 35–45, 45–55, and 55+). Within each age band, the employee with the shortest length of service is first in line for redundancy. Before permanent employees are affected, flexible contracts and fixed-term contracts expiring within 26 weeks must already have been terminated.
Errors in applying the mirror principle are common and can lead to an application for dismissal being rejected or the dismissal being retrospectively overturned. If you suspect your employer has applied the principle incorrectly, it is worth having this checked.
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Plan a conversationCollective redundancy and the WMCO
If your employer intends to dismiss twenty or more people within the same workplace within a period of three months, this constitutes collective redundancy. In that case, the Collective Redundancy (Notification) Act (Wet melding collectief ontslag, WMCO) applies. The employer is then required to notify both the UWV and the relevant trade unions of their intention in advance. A waiting period of one month then applies before the actual dismissal procedure can commence.
This applies regardless of the chosen dismissal route: whether it proceeds via the UWV, through the cantonal court, or via a settlement agreement, the notification obligation remains in force. If the employer fails to comply, the dismissal may be set aside or you as an employee may be entitled to fair compensation.
Your financial rights if you are made redundant due to business economic reasons
In almost all cases of redundancy for economic reasons, you are entitled to a statutory redundancy payment (transition payment). The amount depends on your gross monthly salary and your length of service: for each full year of employment, you receive one third of a monthly salary. In 2026, the maximum statutory redundancy payment is €102,000 gross, or one gross annual salary if that exceeds €102,000.
In addition to the statutory redundancy payment, your collective agreement (CAO) may contain a different arrangement. Since 1 January 2025, it has been possible for a collective agreement to provide for an alternative arrangement in place of the statutory redundancy payment in cases of business economic redundancy — for example, in the form of outplacement support or a financial payment. That alternative does not need to match the statutory payment exactly, but must be aimed at preventing or limiting unemployment.
Please bear in mind the following practical points:
- Always check that the redundancy payment has been calculated correctly, including allowances and holiday pay.
- When negotiating a VSO, always check that the end date allows enough time to qualify for unemployment benefit (WW).
- Check whether a social plan under your collective agreement applies that provides additional entitlements.
- Keep an eye on the limitation period: you have three months from the end of your employment to claim a redundancy payment through the courts.
- Always have a settlement agreement reviewed before you sign it.
What you can do if you are facing redundancy for economic reasons
If you are informed that your role is to be made redundant, do not react hastily. You do not have to accept your employer’s initial proposal immediately. In many instances, there is scope to negotiate the level of severance pay, the termination date, or any outplacement support. You can find further background information on your rights during a reorganisation on our page about Reorganisation and redundancy for business economic reasons in Eindhoven.
Steps you can take in any event:
- I am writing to request a detailed explanation of the grounds for my dismissal and the order in which redundancies are to be made.
- Check whether the mirror image principle has been applied correctly in your situation.
- Consider whether redeployment to a different role is realistic and raise this with your employer.
- Have your redundancy payment recalculated and compare it with any applicable collective agreement provisions.
- Consult an employment law specialist before signing a VSO or any other agreement.
Why Arbeidsjurist Eindhoven?
At Arbeidsjurist Eindhoven, we know the local labour market and understand how redundancy for business economic reasons works in practice in Eindhoven and the wider Brabant region. Whether you have received a letter informing you that your role is being eliminated, or you want to know whether the procedure at your employer is being followed correctly, we are happy to think things through with you. Contact us without obligation for an initial conversation. Together we will look at your situation and work out the best next step for you.
Frequently asked questions
Does my employer always need a dismissal permit from the UWV for redundancy on business economic grounds?
Not necessarily. For reasons of economic redundancy, the employer can choose between a dismissal permit via the UWV or a settlement agreement (dismissal by mutual consent). Both routes are permitted by law. A settlement agreement does not require a dismissal permit, but as an employee you have the right to refuse to agree to one.
What is the mirror image principle and does it apply to me?
The mirror image principle dictates the order in which employees are selected for redundancy when several individuals in comparable roles need to depart. Employees are categorised into five age bands, and within each band, the employee with the shortest length of service is selected first. This principle is applicable to redundancies on business economic grounds via the UWV, but not to dismissals for personal reasons.
Yes, if you are dismissed for business economic reasons, you are likely entitled to a redundancy payment.
Yes, in almost all cases you are entitled to a statutory redundancy payment (transitievergoeding) when dismissed for business economic reasons. In 2026, this amounts to one third of a gross monthly salary for each 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 collective redundancy apply and what does it mean for me?
Collective redundancy applies when your employer intends to dismiss twenty or more employees within the same working area within a three-month period. In that case, the Collective Redundancy (Notification) Act (WMCO) applies: the employer must notify the UWV and the trade unions of their intention, and a one-month waiting period applies. As an employee you have additional protection in such circumstances, and an incorrect procedure can result in the dismissal being set aside.
Can I negotiate the redundancy pay?
Absolutely. You are not obliged to accept your employer's first offer. When a settlement agreement is involved, there is almost always room to negotiate on the level of the payment, the end date, and any additional arrangements such as outplacement support. Always have the agreement reviewed by an employment law specialist before you sign.
We're happy to help you brainstorm ideas. For advice tailored to your specific situation, we'd be happy to sit down with you. No rights can be derived from the content of this page and it may contain inaccuracies.
