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.
Redundancy for business economic reasons applies when a business has a reduced need for employees due to financial difficulties or significant changes in the economic climate, leading to a need to cut costs or restructure. This can include situations like: * Financial Downturns: A general economic recession or a specific downturn affecting the company's industry can lead to reduced demand for products or services, necessitating staff reductions. * Business Restructuring: Changes in the business strategy, mergers, acquisitions, or a reorganisation of operations may mean that certain roles are no longer required. * Technological Advancements: The introduction of new technology or automation might make certain jobs obsolete. * Closure of a Site: If a particular branch or location of the business is no longer viable or is being closed down, the employees at that site may be made redundant. * Reduced Order Book: A significant and prolonged decrease in customer orders can mean there isn't enough work to keep all employees in their current roles. It's important to note that the reason for redundancy must be genuine and demonstrably linked to the economic state of the business or the wider economy, rather than being a cover for other reasons not permitted by law. Employers typically have specific legal obligations to follow when implementing redundancies, including consultation and notice periods.
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.
The mirror image principle is a legal concept related to the transmission and receipt of information, particularly in the context of contractual agreements and legal notices. It essentially means that if a notice or offer is sent by one party and received by another, it is considered legally effective from the moment it is received, regardless of when it was sent or if there were any delays in transmission. In simpler terms, imagine you send a letter. The sender's action is sending it. The receiver's action is getting it. The mirror image principle says that the legal effect happens when the letter arrives, not when it leaves. Does it apply to you? Yes, the mirror image principle can apply to you in many everyday situations, especially when you are involved in: * Contracts: When you sign a contract or agree to terms and conditions, the principle can determine when the agreement becomes legally binding. For example, if you accept an offer by email, the contract is typically formed when the email is received by the sender, not when you hit "send." * Legal Notices: This includes things like eviction notices, legal summons, or any formal communication requiring a specific response. The timing of when you receive such a notice is crucial for determining deadlines and your legal obligations. * Offers and Acceptances: In business and personal dealings, if you make an offer or accept one, the mirror image principle helps define when that exchange is complete and legally enforceable. * Notifications: Any situation where you are required to formally notify someone of something (e.g., terminating a service, reporting an issue), and the effectiveness of that notification depends on its receipt. Key Points for You: * Focus on Receipt: The most important aspect for you is understanding *when* a document or communication is considered received. This could be when it arrives at your postal address, when an email lands in your inbox, or when a notification is acknowledged by an online system. * Be Mindful of Deadlines: If you are expecting a notice or have a deadline to respond, be aware that the clock often starts ticking from the moment of receipt, not from the date on the document. * Proof of Receipt: In sensitive situations, it can be beneficial to have proof that a document was received (e.g., a signed delivery confirmation, a read receipt on an email, or a witness). In essence, the mirror image principle ensures that legal obligations are concretized by the actual awareness or possession of the information, putting both parties on a more equal footing regarding the timing of events.
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.
Collective redundancy applies when an employer plans to dismiss a number of employees for redundancy within a 90-day period. The exact number of employees that triggers collective redundancy depends on the size of the employer's workforce: * Small to medium-sized employers (fewer than 20 employees): Collective redundancy applies if you propose to make 2 or more employees redundant. * Larger employers (20 or more employees): Collective redundancy applies if you propose to make 10% or more of the employees redundant, or if you propose to make 20 or more employees redundant, whichever is the lower number. What it means for you as an employee: If collective redundancy applies, your employer has specific legal obligations they must follow. These are designed to protect employees and ensure a fair process. Key aspects include: * Consultation: Your employer must consult with you (or your trade union representative or elected employee representative) about the proposed redundancies. This consultation should cover: * The reasons for the redundancies. * The number and description of employees affected. * The proposed method of selecting employees for redundancy. * The proposed timetable for the dismissals. * The proposed method for calculating any redundancy payments. * Any measures to avoid or reduce the redundancies or to mitigate their consequences. * The consultation must start in good time and last for a minimum period, depending on the number of redundancies. * Information: Your employer must provide you with specific information about the proposed redundancies during the consultation period. * Notification to Government: In addition to consulting with employees, employers often have to notify the relevant government department (e.g., the Insolvency Service in the UK) about proposed collective redundancies. * Redundancy Pay: You will be entitled to statutory redundancy pay if you have been employed for at least two years and meet other criteria. The amount of statutory redundancy pay is calculated based on your age, length of service, and weekly pay. Your employer may also offer enhanced redundancy pay above the statutory minimum. * Notice Period: Your employer must give you a statutory minimum notice period. This notice period increases with your length of service. In summary, collective redundancy means that your employer is making a significant number of people redundant at once, triggering stricter legal processes and increased protections for employees, particularly regarding consultation and information.
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.
