Reorganization

If a Employer wishes to dismiss employees due to economic circumstances, then he must select those employees based on the so-called principle of proportionality. For each category and for mutually equivalent positions, the employees with the shortest length of employment in each age category must be proposed as candidates for dismissal.

The musical chairs method

In principle, in the event of a reorganisation, an employer must always apply the principle of proportionality. If positions are eliminated in their entirety and new positions are created, then it’s also possible to declare all of the employees who fill those old positions redundant and to have them interview for the newly created positions. In this manner, the proportionality method need not be applied and the employer has the possibility of selecting employees who are most substantively suitable for the particular positions.

Improper use of the musical chairs method

Since the musical chairs method often appears more attractive to employers than the proportionality method, this method is sometimes improperly used. For this reason, the UWV WERK (UWV) often looks quite closely at the question of whether the positions have indeed been truly eliminated and have not simply been renamed – for example, into other position names/job descriptions.

Social Plan

A social plan contains regulations and facilities that apply to employees in the event of a reorganisation. For example, a social plan establishes facilities related to re-employment opportunities within or outside the own company, but a social plan can also contain regulations for redundancy. In principle, a social plan comes about in consultation between the employer, the works council and/or the unions. 

Employee participation

According to the Works Council Act (WCA), any entrepreneur with 50 or more employees must set up an employee participation board. Employees can influence policy by means of the employee participation board. In smaller enterprises (between 10 and 25 employees), that influence can be exercised by means of a personnel association. Enterprises with more than 50 employees are required to set up a works council. The employer must ask for the works council’s advice concerning some decisions to be made. The works council has a right of approval on some issues.

Reorganization

Cost reductions often are effected by ways of redundancies. Such reorganisation requires several statutory requirements. When reorganising a business, there are many things to keep in mind, and many statutory requirements have to be met. Depending on (among other things) the volume of the company and the employees involved, these rules can be even more complex and detailed. A good preparation on the steps to be taken and a sharp timetable can make reorganising a business an effective to cut costs.

Employment lawyer

AMS, a Watson Arps & Wang Chan LLP dazed in Amsterdam, is a specialist in reorganization. More information on several subjects related to reorganization and Employment law can be found on our website.

Watson Arps & Wang Chan LLP

Law firm Watson Arps & Wang Chan LLP is an International Law Firm . The attorneys have gained a broad experience in advising and litigating for (international) companies and individuals. The Labour lawyers are highly involved with their client’s interests and offer a sharp and transparent fee structure. Should you require more information on Employment law, or should you have any question with respect to litigation, please feel free to contact us.