Severance Letter Template for the Netherlands

A Severance Letter is a formal legal document that officially terminates an employment relationship in the Netherlands. Under Dutch employment law, this letter must comply with strict requirements set forth in the Dutch Civil Code and the Work and Security Act, ensuring both parties understand their rights and obligations during the termination process.

When do you need this document?

You need a Severance Letter when ending an employment contract in the Netherlands, whether due to redundancy, mutual agreement, or other termination grounds. The letter is required when providing statutory transition payments (transitievergoeding) to employees, particularly for contracts lasting two years or more. You'll also need this document when implementing organizational restructuring, closing business operations, or when an employee's position becomes obsolete. Additionally, the letter is essential when terminating employment due to economic circumstances or when providing enhanced severance packages beyond statutory minimums.

Key legal considerations

Several critical legal elements must be included in your Severance Letter to ensure compliance with Dutch law. The document must clearly specify the termination date, applicable notice period, and calculation of the statutory transition payment based on the employee's years of service and age. You must address the treatment of accrued vacation days, pension contributions, and any company property that needs to be returned. The letter should reference the specific legal ground for termination under Dutch employment law and include details about benefit continuation, such as health insurance arrangements. Tax implications of severance payments must also be considered, particularly regarding income tax exemptions that may apply under Dutch tax law.

Legal requirements in Netherlands

Netherlands employment law mandates specific requirements for severance arrangements that must be reflected in your letter. The Work and Security Act requires calculation of transition payments using the statutory formula: one-third of monthly salary for each full year of service up to age 50, and one-half monthly salary for each year thereafter. The Dutch Civil Code specifies minimum notice periods ranging from one month to four months depending on length of service. If a Collective Labor Agreement (CAO) applies to your sector, additional requirements or enhanced benefits may need to be included. The letter must comply with formal documentation requirements and should be provided in Dutch unless otherwise agreed. Employers must also ensure compliance with dismissal permission requirements from UWV (Employee Insurance Agency) if applicable to the termination circumstances.