In 2015, the Work and Security Act became effective which brought about drastic changes to the employment law in the Netherlands, especially for Embassies and Consulates. How does the new employment law work in actual practice for Embassies and Consulates?
Request to set aside the employment contract rejected more frequently
For Embassies and Consulates, the most drastic change is the requirement of a dismissal permit or legal proceedings to dismiss locally hired staff effective since 1 July 2015. Until then, this was not mandatory. Therefore, it is important for Embassies and Consulates to be aware of the fact that the decisions under the Work and Security Act reflect a clear trend towards rejecting requests to set aside employment contracts much more frequently. It concerns in particular requests based on the inadequate performance of employees, in which is decided that the employer has not made sufficiently clear that there is inadequate performance, or has not done enough to help the employee perform better.
This shows how important it is for Embassies and Consulates to keep sound personnel files before commencing legal proceedings. If the personnel file is not sound, the request to set aside the employment contract is likely to be rejected. This will also have consequences for the costs of a dismissal. Termination by a settlement agreement including compensation of the employee can be used as an alternative for setting aside the employment contract. However, the employee is likely to expect a higher compensation than the amount of transition compensation due in case of an insufficiently documented personnel file.
Notice via WhatsApp message
At least one month before the end of a fixed-term contract lasting for six months or longer, the employee must be notified on whether or not the employment contract will be continued. Such notice must be given in writing. The Amsterdam District Court decided that the obligation to notify will be fulfilled merely by sending a WhatsApp message if the employee reacts to this message, so that it is clear that the employee has received it. As it is the task of the Embassy or Consulate, as an employer, to prove that the employee has received the notice, it is advisable to have the employee sign the notice as seen or to send the notice by registered mail.
Entitlement to transition compensation in the event of dismissal due to imputable acts or omission
Up to 1 July 2015, Embassies and Consulates could often terminate the employment contract of their employees without being obliged to pay a severance payment. However, since 1 July 2015, each employee, whose employment contract lasted for two years or longer and is terminated upon initiative of the employer, is, in principle, entitled to a transition compensation, this includes employees of Embassies and Consulates. The entitlement to transition compensation will lapse due to imputable acts or omissions by the employee. However, the court will be able to grant the employee transition compensation even in the event of imputable acts or omissions, if not granting compensation would be unacceptable according to standards of reasonableness and fairness. The Zeeland-West-Brabant District Court has made use of this option in a case regarding a secondary school teacher who had given one of his students the answers of a test. According to the Court, this was a case of dismissal due to imputable acts or omissions. However, the Court did grant the teacher transition compensation. The teacher had been teaching at the school for almost ten years and would have been punished disproportionally for a transgression had he not been granted compensation.
Employer not obliged to inform employee of potential entitlement to transition compensation
The Midden-Nederland District Court decided that there is no general obligation for the employer to inform the employee of a potential entitlement to transition compensation in negotiations on termination with mutual consent. After a termination with mutual consent, each employee has a reflection period of 14 days. This is sufficient time to get information on the rights and duties with respect to a termination of the employment contract; information can be received from a lawyer, for instance.
The level of fair compensation
A fair compensation may be granted due to imputable acts by the Embassy or Consulate as an employer. What the factors are and why they will be determining for the level of fair compensation is (still) unclear. The Limburg District Court granted an employee a fair compensation of EUR 5,000 who had been dismissed instantly without due cause. According to the Court, the level of compensation followed “the exceptional circumstances of the case” and took into account the employer’s financial situation. The Oost-Brabant District Court granted an employee a fair compensation whose employment contract had been terminated upon his request due to imputable acts by the employer. The level of fair compensation equalled the transition compensation. Thus, this employee received a total amount of over EUR 30,000, consisting of twice the transition compensation. In a later decision, the Oost-Brabant District Court based the level of the fair compensation on the difference between the most recent salary of the employee and the amount of unemployment benefits for a period of six months (the employee is expected to find a new job within this period). A fair compensation was granted, consisting of EUR 10,000.
Maintaining a dormant employment contract a seriously imputable act?
An employee of an Embassy or Consulate who is unable to work and whose employment contract is terminated after two years of incapacity for work upon the initiative of the employer is, in principle, entitled to transition compensation. The Midden-Nederland District Court decided on the question whether maintaining of a dormant employment contract with an employee who had been unable to work for more than two years could be considered a seriously imputable act by the employer who tried to avoid transition compensation. In this case, the employee himself had requested the Court to set aside the employment contract and to be granted transition compensation and a fair compensation. The employee no longer received a salary.
According to the employee, the employer did not want to terminate the employment contract to avoid having to pay transition compensation. The employer denied that. The Midden-Nederland District Court decided that if the employment contract is kept dormant solely to avoid transition payment, this is indecent but cannot be considered a seriously imputable act. The District Court terminated the employment contract but granted neither transition compensation nor a fair compensation. Currently, the government considers an amendment of the law, i.e. to determine that no transition compensation is due after 2 years of sickness absence of the employee.
- Make sure to keep sound records of the (inadequate) performance of employees.
- Ensure you will have proof of the mandatory notice in the case of fixed-term contracts.
This newsletter provides a brief insight into Dutch employment law and the potential consequences for your Embassy. But the Embassy desk of our firm also focuses on:
- Labour law
- Rent law / Real estate
- Investment / Doing business in the Netherlands
- Matrimonial issues
- Immunity issues
Head of Embassy Desk