My employer is reorganising: what does a social plan mean for me?

Your employer announces a reorganisation, and many people have to leave. Perhaps you are one of them. What does that actually mean? In short: a reorganisation can constitute a ground for dismissal, in which case your room to negotiate is limited. But that is by no means always the case. It depends heavily on the size of the reorganisation and how carefully your employer proceeds.

What is a reorganisation in legal terms?

A reorganisation falls under the economic ground for dismissal. Your employer has considerable freedom to organise their business as they see fit. But as soon as that new organisation means that people have to leave, they must comply with the rules of the UWV.

If your employer wishes to terminate your employment contract by giving notice, they must apply to the UWV for permission. That permission is only granted if the UWV establishes that:

• there is a genuine economic reason, for example poor financial results, a more efficient way of working or the closure of a department;
• you are eligible for dismissal in accordance with the rules, for example because your position is made redundant or on the basis of the reflection principle (afspiegelingsbeginsel) for interchangeable positions;
• redeployment is not possible, not even in another suitable position within the company.

Large reorganisations: everything is often already arranged

In a large reorganisation, the works council and the trade unions are usually involved, and a social plan has been drawn up. The process is then often handled professionally. The social plan is the guiding framework for the entire reorganisation, and it also sets out the terms of your departure.

This means there is little room to negotiate. If all is well, the trade unions or the works council have already taken care of that. The terms of a social plan are also often better than the statutory baseline, for example with a longer notice period and a higher severance payment.

In such a situation, the main thing is to check that your settlement agreement is correct. Have the terms of the social plan been properly incorporated? Has your severance payment been calculated correctly? If so, negotiation is often not possible.

You can of course choose not to sign the settlement agreement. Your employer must then still apply to the UWV, and the UWV may also reject the application. That usually does not make the situation more pleasant, but it may result in a longer period of employment.

What does a social plan contain?

A social plan often regulates:

• the amount of the severance payment;
• the notice period;
• what happens to your holiday entitlement;
• outplacement and a training budget;
• the option of applying internally for another position.

The hardship clause

Many social plans contain a hardship clause (hardheidsclausule). You can invoke it if the social plan has a disproportionately adverse effect on you in particular. Think of a single parent with young children, or an expat whose residence permit depends on this job.

An appeal to the hardship clause is not granted lightly. It is an exception, not the rule. But in special circumstances, it may be worth investigating.

Small reorganisations: more room

There are also smaller reorganisations, in which an employer wants to let one or two employees go. The question then is whether everything has been handled with the same care. There is usually no social plan, and the substantiation is often thinner.

In that case, it pays to investigate carefully whether your employer complies with the UWV's rules. Ask for the documents:

• What shows that there is an economic reason?
• Why are you eligible for dismissal, and not a colleague?
• Why is redeployment to another position not possible?

Does it turn out that you could in fact simply have been redeployed, or that under the rules you are not eligible for dismissal? Then there is no ground for dismissal, and you can negotiate considerably. Read more about the ground for dismissal in Received a settlement agreement? What you need to know.

In the higher income bracket

Even with a social plan, it is wise to pay extra attention to a few points:

• Does the social plan actually apply to you? Some plans contain a cap or exception for senior or management positions.
• Have your bonus, RSUs or stock options been properly addressed? A social plan often says little about these. More in Bonus, RSUs and stock options in a settlement agreement.