When a company in the Netherlands undergoes reorganization, expats may worry about their rights and future prospects. Expats often work under specific conditions and with work permits, meaning that job loss can impact both their career and residency status. This article explains expats’ rights during reorganization, the effects on their work and residence permits, and the impact on tax benefits like the 30% ruling.
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What is a reorganization?
A reorganization is when a company restructures to improve efficiency or profitability. This can mean changing or even eliminating roles. In such cases, employees are generally entitled to severance pay if their employment is terminated without fault. Expats, who often work under temporary contracts or specific terms, may face additional challenges. More information about severance pay can be found on the Dutch Government website.
Residence and work permits: what happens after job loss?
For expats, their residence permit is directly linked to their work in the Netherlands. A reorganization and subsequent job loss can have serious consequences:
- Link between job and residency status: For many expats, their residency depends on their job, often with a specific employer. If the job is terminated, the basis for their residence permit also ends. Expats usually have a short period to find new employment; without it, their stay in the Netherlands may end. Read more about residence permits at the IND.
The importance of the 30% ruling in case of job loss
The 30% ruling is a tax benefit that expats may qualify for under certain conditions. It’s an attractive option, allowing employers to pay 30% of the gross salary tax-free. However, this benefit is revoked if the expat becomes unemployed or leaves the Netherlands. For more information, visit the Dutch Government’s page on the 30% ruling.
- Conditions to keep the benefit: The 30% ruling is linked to a specific employer. If an expat finds a new job with an employer willing to apply the ruling within three months, the benefit may continue. More information about the 30% ruling is available on the Dutch Tax Office website.
- Loss of tax benefit when leaving: If the expat does not find a new job, the 30% ruling expires. This can have financial consequences, as expats without this benefit may have to pay higher taxes or may decide to move to a country with a lower tax burden.
Important note: The nominal value of the 30% reimbursement is not considered insured salary under employee insurance schemes, such as the Dutch sickness benefits act (ZW), work and income act (WIA), and unemployment insurance act (WW). This means that the 30% ruling is not included when calculating benefits under these schemes.
Severance pay for expats
In the Netherlands, employees are generally entitled to severance pay if their employer terminates their contract, and this includes expats. Severance pay provides financial support during the post-employment period and can be used for retraining or finding a new job. For expats, it can also help cover relocation and resettlement expenses if they decide to leave the Netherlands. Read more about severance pay and dismissal rights on the Dutch Government’s website.
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Preparing emotionally and financially for job loss
Aside from losing income, job loss also brings emotional and financial uncertainties, especially for expats. It’s important to be prepared for the next steps:
- Staying in the Netherlands while job searching: Expats may qualify for unemployment benefits depending on how long they worked in the Netherlands and the type of contract they had. It’s recommended to apply for unemployment benefits one week before the contract end date. For more information, see the UWV’s page on unemployment benefits.
- International considerations: Expats who decide to leave the Netherlands may face tax implications in their home country, especially if they benefited from schemes like the 30% ruling.
Tips for preparing for a reorganization
- Negotiate clear agreements with your employer: During a reorganization, discuss the specific consequences for you as an expat. Ask about the possibility of being paid temporarily while you look for another job.
- Contact the IND and Dutch Tax Office: Get information on the rules regarding work and residence permits, as well as the 30% ruling in case of unemployment. This helps you clarify your situation.
- Seek advice from legal experts: If you have doubts about your rights and options, consult a legal specialist. De Unie can help you with contract termination negotiations and financial compensation.
- Build a financial buffer: For expats, the potential loss of the 30% ruling and the need to find a new job can create financial pressure. Ensure you have savings or adjust your income as needed while you recover.
How can De Unie help you?
De Unie offers expats in the Netherlands valuable support with employment rights issues and legal guidance. Whether you need help with a reorganization, have questions about your residence permit, or want to understand your rights related to the 30% ruling, De Unie is here to assist. Contact our Service Center for personal advice and discover what we can do for you.
Join de Unie today and gain access to expert legal support, or call us directly for advice.
