The Netherlands: A dormant employment must be terminated at the employee’s request

If an employer does not want to terminate the employment with a long-term sick employee after 104 weeks, the employment is referred to as dormant. The obligation to pay wages has usually ended, but formally, the employee is still employed despite the fact that he does not receive any wages. In this way, the employer avoids having to pay a transition payment to the employee. Keeping the employment ‘dormant’ is not prohibited and in the past an employer was not obliged to agree to a termination request from the employee.

Good employership

On 8 November 2019, the Supreme Court ruled that (if the requirements of Section 7:669 subsection 1 and subsection 3 (opening lines) and b of the Dutch Civil Code have been met) an employer is obliged, according to good employership, to agree to a proposal by the employee to terminate the employment agreement in mutual agreement, granting compensation amounting to the statutory transition payment.

Exceptions

If the employer has a justified interest in keeping the employment agreement in force, an exception must be accepted, as a starting point, that the employer is obliged to agree to the employee’s termination proposal. This interest may, for instance, lie in the realistic re-integration possibilities for the employee. The employer may have no interest in the circumstance that the employee has nearly reached the pensionable age at the moment he proposes the termination.

Remuneration and compensation

The compensation payable to the employee amounts to the statutory transition payment. The remuneration does not have to exceed the amount that would be payable upon termination of the employment agreement on the date after the one on which the employer would be able to terminate the employment agreement (or have it terminated) due to the occupational disability of the employee.

The fact has been taken into account that the Dutch Transition Payment (Compensation) Act (Wet compensatie transitievergoeding) will come into force on 1 April 2020. This Act makes it possible for employers to get the paid transition allowance reimbursed. In many cases, employers consider it unfair that they have to pay a transition payment after termination of employment due to long-term occupational disability, since they have already continued to pay the wages for two years. A claim for compensation is possible with regard to employment agreements which have ended on or after 1 July 2015.