Employers are no longer allowed to keep the employment contract with employees dormant after two years of illness to avoid the payment of transition compensation. After all, they are entitled to compensation for the transition allowance they have to pay. However this compensation does not cover the period in which the employment contract was kept dormant.
Earlier this year, we blogged that employers were likely to be required to terminate the dormant employment with employees with long-term employment disabilities. Payment of the transition compensation could then no longer be avoided by keeping the employee in service. The lower courts did not yet agree on this. On 10 April 2019, the District Court of Limburg therefore submitted preliminary questions to the Supreme Court. The Supreme Court has now issued a ruling.
The Supreme Court follows the advice given by advocate general de Bock on 18 September 2019: employers are in principle obliged to terminate a dormant employment relationship upon the request of an employee with long-term employment disability. The statutory transition compensation must also be paid.
The reason for following this advice is the standard of “good employment practices”. This is because the employer is compensated for the transition allowance on the basis of the Compensation Scheme for Transition Allowance Act. As of 1 April 2020, a request for this can be submitted to the UWV. Thus, the employer no longer has an interest in allowing the employment contract to continue. This means the employer is required to terminate the dormant employment contract, upon request of the employee who is unfit for work, against payment of the transition compensation.
The employer is only allowed to keep the employee in service if he has a legitimate interest in doing so. That could be the case if the employee still has real reintegration opportunities.
As of 1 January 2020, the scheme will lapse where employees aged 50 and over can get a higher transition compensation. If an employer and an employee conclude a settlement agreement or a request for termination is submitted before 1 January 2020, the current law still applies. As an employer, you must also take into account that the transition compensation over the period that the employment contract was dormant does not fall under the compensation scheme.
Do you have any employees with dormant employment contracts and would you like to learn more about the amount of transition compensation? Or would you like to get more information about the decision of the Supreme Court? Please contact us:
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