European termination laws: how they affect employees and what HR Managers should know

Layoffs are tough. Not only for the employee, but also for the company. That’s especially true if it’s for economic reasons, as it means the business is probably not doing as well as hoped. If a company operates across multiple countries, relevant staff need to be aware of how termination laws and regulations vary from country to country. For the HR department, understanding all of these differences is vital in order to ensure legal compliance, whilst guaranteeing the best support for those workers who are impacted the most.

As part of Careerminds’ European outplacement services study, we analysed the legislation that governs economic layoffs. This article gives an overview of the regulatory specifics with the main focus on the UK, along with France, the Netherlands, and Germany.

Overall, in 2024, the European economy showed resilience despite global challenges, with moderate growth backed up by falling energy prices and the easing of supply constraints. According to the European Commission, GDP growth was expected at 0.9% for the EU and 0.8% for the euro zone.

Towards the end of the year, there was surprise growth in the UK, with the economy expanding by 0.1% between October and December, due to a boost in the services sector and construction. It was also driven by different industries enjoying a spurt of growth in December, namely hospitality and machine manufacturers. 

For UK companies who are faced with making redundancies for economic reasons, it’s vital to know what processes and procedures need to be followed to comply with the law at all times. The Employment Rights Act 1996 sets out the protection afforded to employees and includes redundancies, dismissals, and parental leave.

Let’s take a closer look at certain aspects of these rights.

According to Acas (Advisory, Conciliation and Arbitration Service), a non-departmental public body of the UK government, employees have the right to:

• Redundancy pay if they’ve been working for the company for two years or over.
• The offer of a suitable alternative role if available.
• An appeals process if they think they’ve been selected unfairly for redundancy.
• A reasonable amount of time off during the notice period to look for a job and / or undertake training to increase their chance of securing a new position.

In the UK, the law states that employers must hold collective consultations with a recognised trade union or employee representative, as spelt out in the Trade Union and Labour Relations (Consolidation) Act 1992 if:

• You’re aiming to make 20 or more layoffs.
• The redundancies are all from “one establishment,” which counts as either the whole of the organisation or a “distinct entity” within the organisation that manages its own workforce and carries out all assigned tasks.
• You plan to make the redundancies within 90 days.

If it’s less than 20 layoffs, each targeted employee should receive an individual consultation. These discussions need to involve and seek agreement on:

• Strategies that can either reduce redundancies or avoid them all together.
• Ways in which you can decrease the impact of the situation on impacted employees, for example maintaining open and honest communication, including a layoff letter.

UK employers have legal responsibilities towards redundant employees, including consultations, redundancy payments, and, sometimes, support for re-employment, which can take the form of outplacement services. These enable businesses to comply with requirements while reducing the risk of reputational damage or the chance of legal challenges.

Due to Brexit, employment laws have become more complicated as the UK moves away from EU regulations. This is partly due to managing cross-border employees, without the free flow facilitated by being part of the European Union.

It is still a requirement to notify the government if, as a company, you’re planning on shedding 20 or more members of staff.

In the UK, employers are obliged to adhere to fair procedures in order to avoid unfair dismissal claims, with severance pay due to impacted workers depending on their age and seniority. In the Netherlands and Germany, employees are supported when retraining for burgeoning sectors.

Here’s an overall assessment for France, the Netherlands and Germany:

• France: Robust frameworks and advanced institutional support are provided through a professional security contract (CSP), which gives personalised financial assistance to support laid-off employees, severance, and services from France Travail, part of the French government.
• The Netherlands: All workers are covered by a legal requirement that seeks prior approval before termination of employment. Employers have to fork out transition compensation, which is calculated according to seniority. 
• Germany: There has to be an economic or social justification for dismissal, according to Germany’s Dismissal Protection Act, with employees benefiting from training and financial support in certain sectors.

All of the countries recognise the importance of professional and financial support, with the UK offering up a more flexible framework, while the Netherlands and France favour more institutionalised systems.

In the UK, there must be a consultation with representatives of employees within 90 days if there are going to be 20 or more layoffs. In Germany, there is a lot of involvement from works councils, which hold significant power during the decision-making process.

Below is a summary of each country’s rules concerning mandatory consultations: 

• France: When a company sets up a collective economic dismissal, it must consult with the Social & Economic Committee (CSE), presenting a redundancy plan and answering any questions.
• The Netherlands: Unions or works councils must be consulted, particularly in the case of collective redundancies.
• Germany: To minimise the impact of layoffs, business advice plays a key role when negotiating social plans.

All of these European countries require some sort of consultation with employee representatives to guarantee transparency. However, Germany and France stand out for having more in-depth dialogue, while the Netherlands has less extensive processes.

We’ve covered that UK employers must notify the Secretary of State if the company is seeking to carry out mass layoffs, though formal validation isn’t necessary, which favours more flexibility. The Netherlands has a similar approach to France, with less complicated administrative processes.

Check out the summary below for the other countries: 

• France: Imposes compulsory administrative validation by the Regional Directorate of the Economy, Employment, Labour & Solidarity (DREETS), strengthening the security of employees, but complicating procedures for businesses.
• The Netherlands: Prior to any dismissal, an authorisation from the Social Insurance Agency (UWV) or a court is required.
• Germany: Complying with strict legal procedures is essential, though it’s often the case that direct government approval isn’t necessary.

Only the Netherlands and France require validation from a government authority, while the UK and Germany propose more flexible approaches. France is the country out of these four with the most restrictive administrative framework.

Across the four countries we’ve concentrated on, there are a variety of regulations covering economic layoffs, but there’s one common goal – to protect employees while reacting to economic challenges.

Below is an overview of the laws protecting employees and employers in the different countries: 

Country	Employee Protection Laws	Consultation requirements	Government approval required
UK	Offers flexible labour laws; must comply with dismissal procedures	Required for 20+ redundancies	Notify authorities for over 20 layoffs
The Netherlands	Strong protections; need approval for dismissals	Mandatory consultation of unions	Yes, for collective dismissals
Germany	Stringent under the Dismissal Protection Act	Mandatory works council consultation	Social plans required for mass layoffs
France	Complex labour code; highly regulated	In-depth employee consultation	Administrative approval required

One way of reducing the impact of layoffs, and steering a seamless path through redundancies, is by offering outplacement services. The benefits of this can be felt throughout the workforce and for the company involved. 

For HR Managers, integrating outplacement services with redundancy processes provides an effective solution when supporting exiting employees during career transition, while simultaneously meeting legal and social expectations.If your organisation is considering outplacement services, contact us at the earliest opportunity to find out more.