Dormant Employment Agreement

In principle, employers are not required to take the initiative to terminate the dormant employment contract. The Supreme Court only accepted the obligation for employers to accept a proposal from an employee with a dormant employment contract, to terminate his employment contract and to pay him the statutory severance pay. The question is whether, when circumstances change, an employer is required to accept a reasonable proposal from a worker on the basis of good employer behaviour. If so, is the situation of termination of the employment contract the same? If the Supreme Court considers that this to be the case, it will be a new way of terminating employment and thus imposing the transitional payment. In response to these differences, the Supreme Court issued a preliminary ruling on the legal issues relating to the termination of dormant jobs on 8 November 2019. An employer voluntarily wishes to maintain a dormant employment contract in order to avoid the payment of a transitional allowance. However, a worker will be more than happy to get the transition allowance. The Supreme Court`s decision is therefore an advantage of the worker. The Supreme Court held that the amount of the transitional allowance should not exceed the transitional allowance that the employer would have had to pay to the worker if the employer had terminated the employment contract. If the payment of the transitional allowance were to cause financial hardship to the employer, the court may decide, for example, that the employer can pay the amount in increments or that the payment is suspended until a specific date. The starting point is that in the event of compulsory redundancy after two years of employment, the transitional payment must be paid, regardless of the reason for dismissal, and must therefore also be paid to persons with long-term disabilities. However, the law does not provide for a redundancy requirement.

In principle, Dutch labour law is designed to prevent unfair dismissals. One of the possible consequences of these restrictions is that an employer may force a worker to agree on compensation that does not exceed the UWV`s compensation received by the employer If the transition costs are higher than the remuneration, the employer may threaten not to terminate the contract and to leave the work on hold. It is striking, however, that in other cases there have been no poor employment practices, when dormant employment contracts have been maintained despite the new compensation regime. In these cases, it was pointed out that there is currently no legal obligation to terminate dormant employment contracts and that this is not the result of the compensation system either. It was also taken into account that a claim for compensation for a transitional payment cannot be made until 1 April 2020. The transition tax is one-third of the monthly salary for each calendar year that has been renewed by the employment contract and a proportional portion of the contract for a period during which the employment contract lasted less than one calendar year. Other rules for calculating the transitional tax can be established in a separate order. By maintaining the employment contract, the employee is „trapped” in his employment contract. The worker may terminate the employment contract on his initiative. However, in this case, he is not entitled to a transitional allowance. In this case, the compensation cannot be greater than the transitional allowance applicable in the event of termination of the employment contract the day after the employer could have terminated the employment contract on the basis of long-term disability.

The Supreme Court disagrees with some lower courts that it is permissible to keep workers in sleepy employment. With the introduction of the compensation regulation, employers are compensated for the costs they have to bear as a result of the payment of the transitional tax.