Severance Plan Issues - Foreign Nationals

[Guest Gibson]

We are implementing a severance pay plan and would like to provide severance for 3 Dutch citizens working for our company abroad. There are specific Dutch laws which may control the severance given to those employees. How do we handle them under the Severance Plan? in light of the fact that we are granting fullest possible discretion to our plan adminstrative committee, do we include those employees as eligible for severance, but exercise discretion so they get only Dutch statutory benefits? Or can we exclude them completely? Title VII and other federal employment laws do not apply to foreign nationals working abroad for a US company, although they do apply to US citizens working for US company abroad. Thanks in advance.

[Guest Lesley Sifers]

I haven't worked directly with international employment laws for about a year. However, in The Netherlands, as in most European countries, it is very difficult to sever employment - even if you are closing your business - without substantial payments to the employee(s) who are released. You need to first look into the legal requirements including the need to get permission from the cantonal court. Statutory severance payments are usually based upon age and length of service and can be quite substantial. I strongly suggest you get legal representation in the Netherlands if you don't already have someone. Good luck.

[Guest Lesley Sifers]

Whoops - I think I misunderstood your question. When I looked again, are you wanting to know if you should include these foreign nationals under your severance plan on a prospective basis? If so, I wouldn't do it because the statutory requirements are already quite generous. Plus, if you ever do terminate any of those Dutch employees, you will incur legal expenses even if the parting is generally amicable. It is a totally different situation than in the U.S.