Netherlands: no more court formula for “manifestly unreasonable” layoffs

In the Netherlands, employers who want to part with an employee have two options: use the dissolution proceedings or ask employment services (CWI) for a layoff authorization. In that case, the competent organization doesn’t define compensation, the employer does. Employees who feel prejudiced against because they didn’t receive enough or any compensation can go to court to request layoff pay within six months; this is called “manifestly unreasonable” layoff. Courts used to have different ways of dealing with these cases, even if they all tended to apply the “court formula” (usually one month’s pay per seniority year) to determine compensation. The ruling of November 27 questions this trend. Indeed, in its decree, the Supreme Court sets the principle that such compensation is different from compensation given for dissolution proceedings because the damage undergone by the employee should be repaired, which implies an individual evaluation, not the application of a general formula.