How does an employer of record handle employee disputes?

An employer of record handles employee disputes by acting as the legal employer of record, meaning it holds the formal employment relationship and carries the legal responsibility for managing complaints, disciplinary procedures, and terminations in compliance with local labour law. The client company directs the employee’s day-to-day work but does not hold the employment contract, which means dispute resolution flows through the EoR. The sections below address the most common questions businesses ask before entering this arrangement.

What happens when an employee raises a complaint through an EoR?

When an employee raises a complaint, the employer of record receives the grievance as the legal employer and takes ownership of the formal response process. The employee does not file a complaint with the client company directly, the EoR is the entity with which the employment contract exists, and therefore the entity with the legal obligation to act.

In practice, the EoR’s HR team will acknowledge the complaint, assess its nature, and determine the appropriate response pathway. Depending on the severity, this could mean an informal resolution conversation, a formal written investigation, or escalation to an external mediator or legal counsel. Throughout this process, the EoR keeps the client company informed and consults with them on context, the client knows the employee’s day-to-day performance and work environment, and that input is essential to a fair outcome.

What this structure protects against is the client company being exposed to direct legal liability from an employment complaint it is not formally equipped to handle. The EoR absorbs that exposure by design.

Who is legally responsible for resolving workplace disputes, the EoR or the client?

The EoR is legally responsible for resolving workplace disputes because it holds the employment contract. Under Dutch labour law, and employment law in most jurisdictions, legal obligations tied to employment, including dispute resolution, rest with the formal employer. The client company is the operational director of the employee’s work, but it is not the employer of record.

This distinction matters considerably. If an employee claims unfair treatment, breach of contract, or a violation of statutory rights, the legal claim is directed at the EoR, not the client. The EoR must respond within the timelines and procedural requirements set by local law, document every step of the process, and ensure the resolution is compliant.

That said, the client company carries a shared responsibility for the working environment. If the dispute stems from conduct at the client’s workplace, harassment by a manager, unsafe conditions, or discriminatory practices, the EoR will investigate with the client’s full cooperation. The legal exposure, however, remains with the EoR as the employer on record.

How does an EoR handle disciplinary procedures and terminations?

An EoR manages disciplinary procedures and terminations by following the statutory requirements of the country where the employee is based. In the Netherlands, this means adhering to the Dutch Civil Code and, where applicable, the rules set by the UWV (Employee Insurance Agency) or the subdistrict court for certain termination routes. The EoR cannot simply dismiss an employee because the client requests it, there must be a legally valid ground and a documented process.

Disciplinary procedures typically follow a structured escalation:

  • A verbal or written warning, depending on the severity of the issue
  • A formal improvement plan or performance review period
  • A second written warning if the issue persists
  • Termination, subject to the applicable notice period and legal requirements

For terminations, the EoR will assess the grounds, whether they are performance-related, economic, or conduct-based, and choose the correct legal route. In the Netherlands, most terminations require either UWV approval (for redundancy or long-term illness) or a mutual termination agreement. The EoR drafts the relevant documentation, calculates the statutory transition allowance, and ensures the exit is handled in full compliance with Dutch employment law.

The client company can and should provide input throughout this process, particularly when the grounds for discipline relate to performance or conduct on the client’s site. However, the EoR retains authority over the legal execution.

What role does local employment law play in EoR dispute resolution?

Local employment law defines every aspect of how an EoR must handle disputes, from the minimum notice periods and grounds for termination to the procedural steps required before disciplinary action can be taken. The EoR’s primary value in dispute resolution is its deep, current knowledge of the employment legislation in each jurisdiction where it operates.

In the Netherlands specifically, Dutch labour law is strongly employee-protective. Employees have significant statutory rights, including protections against dismissal without cause, entitlements to transition allowances, and access to formal dispute channels. An EoR operating in the Netherlands must navigate these rules precisely, any procedural misstep in a disciplinary process can render a termination legally invalid and expose the employer to reinstatement claims or financial penalties.

For international companies using an EoR to enter the Dutch market, this is one of the most compelling reasons to use the model. Rather than building internal expertise in a legal framework that takes years to master, the client company relies on the EoR’s established compliance infrastructure. The EoR stays current with legislative changes, including updates to the Wet Werk en Zekerheid (Work and Security Act) and evolving enforcement of freelancer classification rules, and applies them automatically to every employment relationship it manages.

Can a client company override an EoR’s decision on a dispute?

No. A client company cannot override an EoR’s decision on a dispute when that decision is grounded in legal compliance. Because the EoR is the legal employer, it holds the authority, and the liability, for employment decisions. If the EoR determines that a particular disciplinary action would violate Dutch employment law, the client cannot instruct it to proceed anyway.

This is a structural feature of the EoR model, not a limitation. The EoR’s role is to protect both the employee’s statutory rights and the client’s business interests by ensuring every employment action is legally defensible. A client that overrides a compliant process and demands, for example, an immediate dismissal without proper grounds would be asking the EoR to assume legal risk on its behalf, which a reputable EoR will not do.

What the client can do is provide context, challenge a proposed course of action through dialogue, and request that the EoR explain its reasoning. In a well-functioning EoR relationship, these decisions are made collaboratively. The EoR brings legal expertise, the client brings operational knowledge. The best outcomes come from both parties working within their respective roles.

What should businesses look for in an EoR’s dispute management capabilities?

When evaluating an EoR’s ability to manage employee disputes, businesses should assess its legal expertise, HR infrastructure, communication practices, and compliance certifications. An EoR that handles disputes well is one that prevents most of them from escalating in the first place, through clear contracts, compliant onboarding, and proactive HR support.

Key indicators of strong dispute management capability include:

  • In-house HR professionals who manage employment issues directly, rather than outsourcing to third parties on an ad hoc basis
  • Documented grievance and disciplinary procedures aligned with local employment law
  • Clear communication protocols between the EoR, the client, and the employee during a dispute
  • Certifications and audits that demonstrate adherence to industry standards, in the Netherlands, NEN4400-1 certification is a meaningful quality marker
  • Experience with termination processes specific to the jurisdiction, including knowledge of UWV procedures and mutual termination agreements
  • A transparent HRM platform that maintains accurate, auditable employment records throughout the employment lifecycle

Businesses should also ask how the EoR communicates during a live dispute, whether it provides a named HR contact, how quickly it responds, and whether it documents every step. An EoR that operates reactively and without clear processes is a liability rather than a safeguard.

How Blue Lynx supports EoR dispute resolution

Blue Lynx acts as the legal employer for your workforce in the Netherlands, taking full responsibility for employment compliance, including dispute resolution, disciplinary procedures, and terminations. With over 35 years of experience in Dutch HR and employment law, the Blue Lynx team is equipped to handle the full range of employment issues that arise in a secondment structure.

  • Dedicated HR professionals managing contractor and employee relations directly
  • Fully compliant grievance and disciplinary procedures aligned with Dutch labour law
  • NEN4400-1 certified and GDPR-compliant, with regular external audits
  • Transparent HRM through NMBRS, ensuring accurate and auditable employment records
  • English-language contracts and communications for international businesses
  • Named account management and direct HR support throughout the employment relationship

If you are considering an EoR arrangement in the Netherlands and want to understand how dispute management works in practice, speak with the Blue Lynx team directly.

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