Supreme Court, 8 November 2019
According to the Supreme Court (ECLI:NL:HR:2019:1734), a dormant employment contract is in breach of good employment practice, as laid down in Section 7:611 of the Dutch Civil Code. If there are reasonable grounds for an employee's request to terminate the employment contract, if it is plausible that the employee will not recover within 26 weeks or if suitable replacement work can be performed by the employee within that time, and if redeployment to another position is not possible within a reasonable period of time, an employer is obliged to cooperate with the termination of the employment contract. If the employer has a legitimate interest in maintaining a dormant employment contract, an employer may decide not to agree to the request for termination of the employee's employment.
Transition compensation
An employer may consciously want to maintain a dormant employment contract in order to avoid paying a transition allowance. However, an employee will be more than happy to receive the transition allowance. The Supreme Court's ruling therefore turns out to be to the employee's advantage. The Supreme Court has ruled that the amount of the transitional allowance need not exceed the transitional allowance that the employer would have had to pay to the employee if the employer had terminated the employment contract. If payment of the transitional allowance would mean that the employer runs into financial difficulties, the court can decide that the employer can, for example, pay the amount in instalments, or that the payment is suspended until a specific moment.
AOW and dormant employment
If you have recently retired, but have had several years of dormant employment before, you may still be entitled to your employer's transitional allowance.
Transition compensation in the event of long-term incapacity for work
When an employee is sick for a period longer than 2 years, the employer may terminate the employment contract. The employer will then owe the employee a transition allowance. It is irrelevant whether the employee is still ill at the time of dismissal. The Transition Compensation Scheme ensures that the employer can get the transition compensation paid back. Employers can claim this compensation for transition allowances paid on or after the 1st of July 2015. Transition compensation paid for this period will not be compensated.
Requirements for the compensation of transition indemnity in case of long-term disability are:
- Dismissal of the employee as a result of long-term illness;
- The employee is legally entitled to transition compensation; and
- The transition allowance has already been paid by the employer.
Contact
Are you (as an employee) wondering whether your employment can be qualified as a dormant employment? Or do you (as an employer) want to know what is expected of you? Contact Legal Q! We are happy to help you with all your questions regarding a dormant employment contract.