Changes needed to dismissal law in the US and Netherlands

This topic is central to Grace van Arkel’s dissertation 'A Just Cause for Dismissal in the United States and the Netherlands, A study on the extent of protection against arbitrary dismissal for private-sector employees in the United States and the Netherlands'. While dismissal law in the Netherlands is shifting its orientation from a social legislative point of view to an economic one, precisely the opposite shift is taking place in the US. Van Arkel will defend her dissertation on Friday 9 March 2007 at the Erasmus University Rotterdam.

In a nutshell, US dismissal law allows an employer to dismiss an employee without reason on grounds of the “at will rule,” while in Dutch dismissal law the principle of iusta causa dimissionis stipulates that the employer must have reasonable grounds for dismissal. In her research Van Arkel ascertained that both countries have encountered obstacles in seeking a new balance in the context of economic globalisation. In order to be able to reach a new balance, both debates, in the US and the Netherlands, need to undergo a shift in focus, Van Arkel contends.

The current debate in the US centres on the question of whether a standard based on just cause will necessarily lead to cases involving punitive damages. If so, this could result in extremely high damages being awarded. Employers are therefore opposed to “just cause legislation.” In the Netherlands the question is whether the dual dismissal system should be abolished in order to make dismissal legislation more flexible. Getting rid of dismissal protection comes upon resistance from employees. A compromise is necessary if a new balance is to be reached between flexible dismissal law on the one hand, and protection from dismissal on the other.

In order to reach this new balance, Van Arkel argues that the initiators in the US of so-called “Restatement of Employment Law” should commence by recognising all the exceptions to the at-will rule in jurisprudence. In the Netherlands, she argues, the dual dismissal system should be maintained, but with a division of tasks between the government and court. The Centre for Work and Income (CWI) would then decide on dismissals concerning business or economic circumstances, while the Court (cantonal judge) would decide on all other dismissals. The reasoning behind this division is that in the current system, both agencies decide on dismissals on both grounds, but make their decisions on the basis of different criteria. This leads to legal insecurity and inequality for both employers and employees. In ten recommendations she further elaborates on how a new balance can be reached between (more) flexible dismissal law for employers, and dismissal protection for employees.