As the employment contract is not terminated completely in the event of forced reduction of working hours, it was assumed that transitional compensation wouldn’t be due. The Supreme Court decided that this kind of compensation must also be paid in the event of forced reduction of working hours. However, the reduction has to be substantial (more than 20% of the working hours), structural and forced by circumstances. How the working hours are reduced is not relevant for the entitlement to compensation.
Is an employee entitled to transitional compensation if he or she chooses to work fewer hours? And if so, what is the amount to be paid?
If the employment contract of an employee is terminated, he or she is entitled to transitional compensation. But is the employee also entitled to this compensation if he or she should agree to a reduction of working hours, for instance due to sickness? Legislation does not provide for this but a recent decision by the Supreme Court provides more clarity.
Legislation does not provide for forced reduction of working hours. However, there are situations where the employee’s working hours can be reduced:
Is an employee who loses part of his working hours entitled to transitional compensation? After all, the employment is not fully terminated. On the other hand, the amount of transition compensation is calculated based on the scope of the employment at the time of dismissal. This means, if a forced reduction of working hours is followed by dismissal, the transitional compensation only has to be paid over the remaining hours. The Supreme Court does not find this desirable and thus decided that in case of forced reduction of working hours there is also an entitlement to transitional compensation. However, there are a few conditions. The reduction of working hours is:
There are no requirements as to how the reduction of working hours is regulated. This may be achieved by terminating the employment contract and concluding a new one, by changing an existing employment contract, by a settlement agreement, or by invoking a unilateral changes clause. In all cases transitional compensation must be paid.
As a result of this decision by the Supreme Court, employees can also claim partial transitional compensation in the event of forced reduction of working hours.
Would you like to learn more about the options for forced reduction of working hours and about transitional payment? Or do you want us to draw up or change an employment contract? Please contact us:
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