Closing your business and dismissing staff: how to go about it
- Frances Gallimore
- 18 May 2026
- Edited 9 June 2026
- 5 min
- Ending and deregistration
Letting your staff go when you close your business costs more than just time and money, as former entrepreneur Maarten Denis knows. “I did not find the process itself particularly complicated, but it was emotionally draining.” Read how he managed the redundancy process and find out what you can and should do yourself.
Get advice early and draw up a plan
What you need to arrange for your staff depends, among other things, on how you are closing down. Are you stopping voluntarily, selling your business, or being forced to close due to bankruptcy? “Discuss the various scenarios with your accountant early on and look for good advice from other entrepreneurs or friends who have experience to share,” advises former entrepreneur Maarten Denis. In 2021, he sold his construction company and had to make 9 employees redundant.
Which redundancy procedure?
| Situation | What happens to contracts? | Redundancy procedure | Things to consider |
| Entrepreneur stops voluntarily | Employer terminates employment agreements with consent of staff or via the Employee Insurance Agency (UWV) |
By mutual agreement with staff, settlement agreement (vaststellingsovereenkomst, VSO) Are you unable to reach an agreement? Then apply for a redundancy permit from the UWV | The UWV assesses necessity, reassignment of staff, and the order of redundancy |
| Business takeover | New owner takes over employment agreements | No dismissals in the event of a business takeover | Dismissals following a business takeover are not allowed, unless by mutual agreement with staff or for business reasons unrelated to the business takeover |
| Bankruptcy | The trustee (curator) terminates employment agreements | The trustee and the UWV manage the dismissal procedure | The UWV often pays outstanding wages via the wage guarantee scheme |
| Retirement (Employer reaches state pension age) | The employer terminates employment agreements with the consent of the staff or the Employee Insurance Agency (UWV) |
By mutual agreement with staff settlement agreement (vaststellingsovereenkomst, VSO) Are you unable to reach an agreement? Then apply for a redundancy permit from the UWV | You may apply to the UWV for transition payments (in Dutch) |
| Death of the entrepreneur | In principle, employment agreements remain in force | Heirs/successors are the employer. The standard UWV procedure applies only if the business ceases trading | You may apply to the UWV for transition payments (in Dutch) |
| Collective redundancy (more than 20 employees)) | Multiple employment agreements are terminated | Extra UWV rules and reporting obligations apply to collective redundancies | In addition to individual UWV applications, the rules in the Collective Redundancy (Notification) Act (Wet melding collectief ontslag, WMCO) apply. These include a waiting period and consultation with the trade unions |
Making a well-considered decision
By talking to several people and combining their advice, Denis was able to make a well-considered decision and draw up a plan. “Things had not been going well for a while; a major client who had accounted for 50% of our turnover for years suddenly dropped out, my business partner left, and then came the coronavirus. My accountant warned me early on, ‘If this continues, you are heading for bankruptcy.’ I sought advice from my cousin, who is very knowledgeable and has a lot of experience with bankruptcies, and got in touch with a local construction firm that had recently gone bankrupt.”
Selling the business
Denis decided he would rather not go bankrupt himself. “Because that haunts you for the rest of your life,” he says, “And your business is like your child. I had worked hard at it for over 40 years and did not want to leave the business I had taken over from my father in that state. My accountant advised me to sell my business, and my father was fully behind me too. Fortunately, I managed to find a buyer surprisingly quickly. It was all sorted within 3 weeks.”
“I am glad that this way I didn’t pass on the problem to the major institutions, such as the bank and the Netherlands Tax Administration,” adds Denis. “It just feels better when you can pay off the mortgage properly and meet all your tax obligations.”
Maarten Denis
Former owner of a construction company
Maarten Denis grew up in an entrepreneurial family and took over his father’s construction company in 1990. Together with a business partner, he expanded the business. After more than 23 years of entrepreneurship, the business came under pressure for various reasons. In 2021, he decided to sell the business. Saying goodbye to his staff, whom he regarded as family, was the hardest part of the process for him.
Ran a business for 23 years
Employed 9 staff members
Sold the business in 2021
I knew all my staff members personally. They almost felt like family.
Making transition payments
The buyer of his business wanted to take over everything: the stock, machinery, vehicles, and the premises, but not his staff. “So, I had to make proper arrangements for the dismissals and saying goodbye to my staff. If you close your business and make your staff redundant, you must make transition . And that is a lot of money, especially if your staff have been with you for a long time. I had 9 employees who had been working for me for 1, 5, 10, or even 25 years. Together with the accountant, I calculated the total amount I had to pay for all 9 employees, and it was a large number. Fortunately, I was able to include part of these payments in the sale price.”
Informing your staff
“Work was steadily drying up, and of course the staff noticed that too,” recalls Denis. “There simply wasn’t any more work coming in. During the pandemic, I still had 3 major quotations in the pipeline, but they were all cancelled or subject to an extension. Without work, there was no money coming in, so I had to dip into my reserves. At first, I tried to keep my staff busy with small jobs, but at a certain point there was simply nothing left to do. Everyone could sense that things were not going well. In the end, I said: people, I have had to make a decision, I am closing the business.”
Explaining it properly
“I told everyone at once in the canteen, well-prepared with figures and an explanation of how things had gone over the past few years. I made it clear that the business was going downhill and that I did not want to go bankrupt, because I did not want to leave my staff empty-handed. After that, I spoke to everyone personally and explained what they were entitled to. I wanted to do it fairly and properly, because they had always been good to me. Thanks to them, I was able to grow the business. We really did it together. I knew them all personally; they almost felt like family.”
I did not want to leave my business bankrupt. It is like your child, after all.
Dealing with mistrust
What affected Denis most were the reactions of some employees. “It was precisely the people who had been there the longest who reacted with mistrust and did not believe me. Some even sought legal advice and wanted access to all the figures. That was painful. At the same time, there were also employees who did understand and accepted the decision. You have to find a balance between acting professionally and showing consideration for people. I am glad I was able to sort everything out properly with settlement agreements and transition payments.”
Think of yourself too
“Looking back, I did not find the process of laying off staff particularly complicated, but it was emotionally draining,” says Denis. “That is why it is important to keep thinking of yourself during the process. I was given that advice by another entrepreneur. The employees will eventually find work again, and as an employer you need to support them in that wherever possible. I helped a number of employees look for another job. But it is also important for yourself that you leave things in good order and then let go. Start early with making a plan for what’s next.”
FAQ Ending yur businss with personnel
No, there is no general legal obligation to give employees a set period of notice in advance that you are closing your business. But you must comply with the statutory notice periods that apply to the employment agreement.
Note that it may be mandatory if specific agreements have been made in a collective labour agreement (CAO), a social plan, or if it forms part of a settlement agreement.
In the case of collective redundancies (involving 20 or more employees), additional notification requirements (to the UWV and trade unions) and a one-month waiting period do apply.
Although there is no legal obligation, in practice it is often advisable to inform staff as early as possible.
Additional protection against applies to employees on sick leave. In case the business closes down, dismissal is usually permitted, but you must provide the UWV with a sound justification.
A fixed-term contract can only be terminated earlier when the employer and the employee are in agreement and use a settlement agreement. Or with the consent of the UWV. If the fixed-term contract expires and is not renewed, the employee is also entitled to a transition payment.
When dismissing an employment contract, you must ensure that the termination and the required administrative procedures are handled correctly.
- Arrange the dismissal formally, via the UWV or with a settlement agreement. Record the end date and draw up a final settlement including the final salary, outstanding holiday entitlement, and the transition payment.
- Process this in the payroll records, including a final payslip and deregistration as an employer with Netherlands Tax Administration.
- Deregister employees from the pension fund and cancel any insurance policies.
If you deregister with KVK, you do not, in principle, need to deregister as an employer with the Tax Administration. They will be notified automatically. However, there is often a longer period of time between the moment your staff leave and when your business is liquidated and deregistered. In that case, it may be useful to deregister as an (in Dutch) with the Tax Administration as soon as you have no more employees. Read more about this in the Tax Administration’s Handboek Loonheffingen (Chapter 17: Einde van inhoudingsplicht of dienstbetrekking, in Dutch).
Also do not end your eHerkenning too soon. Especially if your business had staff. Ending it too early may mean you can no longer log in to arrange necessary matters. Even after the actual end date of your business, you will often still need to access things such as final tax returns or corrections with the Tax Administration or UWV. It is safer to only cancel eHerkenning once all administrative obligations have been fully completed. This is usually 3 to 6 months after stopping, but sometimes longer.