The Supreme Court handed down an important judgment on 8 November 2019 [1] in the area of “dormant” employment relationships. Under the Wet Werk en Zekerheid, from 1 July 2015 employers were required to pay employees a transition payment upon dismissal after two years of illness. That was new. Under the old dismissal system, this obligation did not exist. The employers were not happy about that. The employers had, in their view, already paid enough with two years’ pay during illness and reintegration costs. They preferred to keep the employment relationships “dormant”. The employee remained employed, but did not work (because not fit for the position) and also received no wages (since the obligation to pay wages during sickness ends after 2 years). Sick employees who were not dismissed felt they had been treated unfairly. They too were entitled to a transition payment. There was litigation, but as a rule the court found that the employer could not be compelled to terminate the employment contract (and thereby pay the transition payment), except in a few special situations.
In February 2019 Minister Koolmees introduced a Regulation on Compensation of the Transition Payment [2], whereby the transition payment paid to an employee who was dismissed after 2 years of illness would be compensated from the General Unemployment Fund (AwF). UWV will carry this out as of 1 April 2020. All cases from 1 July 2015 are (retroactively) eligible for this compensation, which amounts to the transition payment at the point of 2 years of illness, but at most the salary paid during sickness for 2 years. The request must have been submitted to the UWV within 6 months of 1 April 2020 [3].
The Supreme Court ruled on 8 November 2019 that an employer can, on the basis of good employment practice (art.7:611 BW), be expected to accept a reasonable termination proposal from the employee. The Supreme Court ruled on 8 November 2019 that an employer can, on the basis of good employment practice (art.7:611 BW), be expected to accept a reasonable termination proposal from the employee. For the sick employee, a victory, but legally an infringement on the employer’s freedom of contract to terminate or not terminate the employment contract.
Since the statutory transition payment will be reduced as of 1 January 2020, which especially for older employees and employees with a long period of service will be approx. A 30% difference can matter; the advice to all “slapers” is to submit a proposal to the employer before the end of 2019 to terminate by mutual consent, with payment of the transition payment.
Among employment law specialists, the reaction to this ruling has not been uniformly positive. It opens the door to abuse. De Compensatieregeling can in itself be an incentive to stop effectively reintegrating employees, after which the employee can be dismissed at no cost after 2 years. The Supreme Court ruling now creates the same incentive for the employee. This one also no longer has to exert himself during the two years of illness, and he can afterwards ask for an arrangement with the statutory transition payment. We therefore anticipate more discussions about reintegration. We therefore anticipate more discussions about reintegration.
Our expectation is that the Compensation Scheme, in combination with the Supreme Court ruling, will become a particularly costly arrangement. The sum of 1 billion is already making the rounds. The premiums for the AwF are paid by employers. Ultimately, this means an increase in costs for employers in Nederland, and labor becomes even more expensive compared to zzp. Have Minister Asscher, and his successor Koolmees, realized this?
[1] Supreme Court 8 November 2019: https://www.rechtspraak.nl/Organisatie-en-contact/Organisatie/Hoge-Raad-der-Nederlanden/Nieuws/Paginas/Hoge-Raad-verplicht-einde-aan-slapende-dienstverband.aspx
[2] Regulation on Compensation for the Transition Payment: https://zoek.officielebekendmakingen.nl/stcrt-2019-10547.html
[3] Applying for Compensation at UWV: https://www.uwv.nl/werkgevers/werkgever-en-ontslag/na-ontslag/detail/compensatie-transitievergoeding-bij-ontslag-langdurige-arbeidsongeschiktheid
Author: Femke Luijkx
