Netherlands: Reorganization? The UWV Applies New Implementation Rules In The Event Of Dismissal Due To Economic, Technical Or Organizational Reasons

The implementation rules of the Employee Insurance Agency (UWV) required an update due to legislative changes and recent case law. As of 1 October 2019, the UWV therefore applies new implemention rules for dismissals for economic reasons (the Implementation Rules). What are the most important changes?

1. Assessment of the commercial reason for dismissal

In accordance with the recent 'ANWB judgment', the Implementation Rules stipulate that the economic circumstances that give rise to the dismissal can be assessed within a business unit of a company, provided that (i) such an assessment is for the purpose of efficient business operations and (ii) it concerns an independent business unit. If both conditions are met, , while the rest of the company is financially healthy, poor economic conditions of a business unit may be a sufficient reason to proceed with dismissal.

2. Reassignment

The reassignment obligation does not provide for an obligation to book results, but an obligation to use best endeavours. If there is a possibility for reassignment, the employer must in principle offer such position to the redundant employee. However, there may be circumstances on the basis of which it does not seem logical for the employer to make use of this possibility for reassignment. This may occur, for example, if reassignment of the employee to a position with a foreign company belonging to the group abroad is disproportionately expensive or otherwise problematic. The UWV has adopted this test on the grounds of the Shell judgment.

3. Interchangeable functions

It is clear from the Implementation Rules that, in accordance with the KLM judgment, the interchangeability of functions must be assessed on the basis of what the function generally involves in practice and not on the basis of a possible (deviating) individual performance of that function. For example if a guard also performs reception services, but in general this is not part of the normal performance of the guard's function than his reception duties are not interchangeable with the guard's function.

4. Selection of employee in case of reassignment

If a function ceases to exist altogether, but parts of that function are transferred to a new function (the so-called game of musical chairs), then the employer must offer that function to the employee who is 'suitable' on the basis of the reverse reflection principle. In other words, the person with the highest reflection rights (such as a relatively long period of employment and old age) should be the first to be considered for the vacancy. In the Implementation Rules, the UWV refers to the ANWB judgment, which shows that the reverse reflection principle does not have to be applied to employees within the company who are not suitable for the position, but who can be made suitable (through retraining or further training).

5. GDPR

The 'old' Implemention Rules contained a reference to Section 7:670 (1) to (4) and (10) of the Dutch Civil Code (old) which included a prohibition to terminate the employment contract of a data protection officer. The Implemention Rules refer to the 'more flexible' provision of Article 38 of the General Data Protection Regulation (GDPR) which states that the contract of employment of a Data Protection Officer may not be terminated because of the performance of this function. The termination prohibition has thus been changed from a 'during' to a 'on account of' termination prohibition.

6. Transitional arrangement transition payment

The criteria that small employers (< 25 employees) must meet in order to qualify for the transitional arrangement and thus pay a lower transition payment (Article 7:673d of the Dutch Civil Code) have been broadened. The test as to whether an employer is in such a poor financial situation that he can invoke the transitional arrangement is now assessed on the basis of the average result over the three financial years combined. In addition, the solvency criterion has been broadened by requiring a solvency of 15% instead of negative equity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.