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Netherlands: Severance Pay Ceiling Proposed

(Dec. 9, 2008) The Ministry of Justice of the Netherlands announced in a press release on November 26, 2008, that the Dutch Cabinet had endorsed a legislative proposal to place a ceiling of one year's salary as the severance pay for employees whose annual salary is €75,000 (about US$95,000) or more. The ceiling, which would be effected through amendment of the Civil Code, would apply only if a district court decides on the employee's dismissal. It would not apply where there are employer-employee agreements made in an employment contract or agreements in social plans regarding cases of company reorganizations or collective redundancies. The court can also disregard the ceiling in cases of employer misbehavior or fault for the dismissal. (Press Release, Ministry of Justice of the Netherlands, Ceiling for Higher Income Severance Pay (Nov. 26, 2008), available at

The bill will be submitted to the Council of State for its opinion. Subsequently, after the bill and the opinion have been submitted to the Lower House of Parliament, they will be made public. (Id.)