The resolutive condition in an employment contract

An employer can include a resolutive condition in the employment contract. However, this can only be done in exceptional cases. What requirements must a resolutive condition meet? Is the employee entitled to transitional compensation when the resolutive condition takes effect?

The resolutive condition

In employment law, the protection of the employee comes first, which is why the resolutive condition is only allowed in exceptional cases.

A resolutive condition must meet three requirements:

1. The inclusion of a resolutive condition must not conflict with the closed system of dismissal law.
2. The fulfilment of the resolutive condition must be objectively determinable and not depend on the judgment of the employer or the employee.
3. After the fulfilment of the resolutive condition, it should no longer be possible to fulfil the employment contract, which would thus become an “empty shell”.

Whether a resolutive condition meets these requirements is regularly a point of discussion between employers and employees. Consequently, there are many judgments in which the resolutive condition is central.

Certificate of conduct

One of the most common resolutive conditions is the inability to provide a Certificate of  Conduct (VOG). In a recently published ruling, the District Court of Zeeland-West Brabant ruled that the inclusion of this resolutive condition in the employment contract with a warehouse employee did not violate the dismissal system, any statutory provision or a prohibition on dismissal. The employer reports that it is committed to its insurers, clients and Customs to screen its staff and have a valid VOG.

The issuing of a VOG is done by the Ministry of Justice and Security. Thus, the fulfilment of the resolutive condition is objectively determinable and does not depend on a subjective appreciation of one of the parties. The third requirement is also met because the employer has stated that it is obliged to screen its staff and have them possess a valid VOG, so that without a VOG the employment contract cannot be fulfilled. The warehouse employee’s request to annul the dismissal was therefore rejected.

Residence permit

A recent decision by the Oost Brabant District Court dealt with the residence permit as a resolutive condition. The court ruled that the resolutive condition did not contravene any statutory provision or prohibition on dismissal. The employer argued and substantiated without contradiction that, by law, a foreign employee must have a valid residence permit to perform work for a Dutch employer. The fulfilment of the resolutive condition is objectively determinable and not dependent on the subjective appreciation of one party, as the issuing of the residence permit is done by the IND. The third requirement is also met, without a residence permit it is not possible to perform work with the employer.

Although the conditions for the legal validity of the resolutive condition are met, the court ruled in this case that the employer could not invoke it anyway. Because the employer knew that the application for the extension of the residence permit was still pending and it was extended 8 days after the deadline, the application of the resolutive condition is unacceptable by the standards of reasonableness and fairness and thus violates the standard of good employment practice.

Schiphol Pass

In a ruling, the Noord-Holland District Court ruled that the withdrawal of the Schiphol Pass as a resolutive condition did not meet the three requirements. This was because the pass had been withdrawn by Schiphol solely on the basis of a criminal investigation into the employee. According to the court, mere suspicion is insufficient justification for termination of the employment contract. After all, it is quite possible that, if the suspicion turns out to be unfounded, the employee will regain the Schiphol pass and be able to resume work. The subdistrict court therefore held that the resolutive condition was contrary to the statutory system of dismissal. Thus, the first requirement the resolutive condition has to meet was not met in this case.

However, although the employee kept his job, it was of little use to him in the short term. Because of the withdrawal of the Schiphol Pass, his claim to be admitted to work was rejected. Since the reason for not being able to work was at the employee’s risk, the employer also did not have to pay wages.

Points of attention when invoking the resolutive condition

So a resolutive condition is only valid if all three conditions are met. That is only in a limited number of situations. And even then, the employer may not be able to invoke it. For instance, the employer will have to see if reassignment is possible in a position where the resolutive condition does not apply. And also, the general standard of good employment practice applies, as shown in the residence permit ruling.

Something similar played out in a case before the District Court of The Hague. Here, the employer had dismissed the employee because, even after he had been granted several extensions, he had submitted only one of the two requested VOGs. In fact, the resolutive condition in the contract referred to only one VOG. The fact that a VOG95 was required in addition to the regular VOG was only evident from additional arrangements and was also not made clear in the reminders to the employee. The employer should therefore have given the employee another opportunity to submit the appropriate VOG.

Transitional compensation when the resolutive condition occurs

Whether the transitional compensation should be awarded when the resolutive condition occurs is still under debate. The law only states that, after a termination by operation of law, there is a right to a statutory transition compensation if the employment contract was not continued on the initiative of the employer. The question is whether, when the resolutive condition takes effect, the employment contract was not continued on the initiative of the employer.

So far, there have been a number of rulings in which no transitional compensation was awarded. A 2018 ruling by the Midden Nederland District Court explicitly said that the employer had no choice to continue the employment contract. The withdrawal of the government authorisation for the security guard position meant that the employment contract ended by operation of law. The employee claimed the statutory transitional compensation. The subdistrict court ruled that the employer had no choice in continuing the employment contract due to the entry into force of the resolutive condition and therefore no transition compensation was due.

In a recently published ruling, the Noord-Nederland District Court did award the transitional allowance. In this case too, the government permission for the job as a security guard was withdrawn, resulting in the employment contract ending by operation of law. The subdistrict court stated here that the subdistrict court in the above-mentioned ruling did not rely on the text of the law, which states that the employee is entitled to the transition allowance if the employment contract has not been continued after an end by operation of law on the initiative of the employer. Thus, the employee can then claim the transition fee. This is because the employment contract was then not continued by the employer. Only in case of seriously culpable acts or omissions, the employee is not entitled to transition compensation. However, the employer had not invoked this rule.

Although an employer cannot influence the fulfilment of the resolutive condition, he can influence the non-continuation of the employment contract. For example, in the Midden-Nederland District Court decision already discussed, the employer could have continued the employment contract under temporary exemption from work of the employee (with or without salary). Moreover, it is the employer’s choice to include a resolutive condition in the employment contract and therefore the fulfilment of that condition could be seen as termination on the employer’s initiative.

Thus, the question of whether the employee is entitled to the transitional compensation upon entry of the resolutive condition has still not been unequivocally answered. The question has also not yet been submitted to the Supreme Court.

Conclusion

Therefore, if an employer wants to include a resolutive condition in the employment contract, the three aforementioned elements must always be met. It is still unclear whether transitional compensation should be awarded upon the fulfilment of the resolutive condition. It is waiting for the Supreme Court to rule on this.

Employment law and dismissal lawyer

Do you have a dispute with an employee who has a resolutive condition in his/her employment contract and/or requests transfer compensation upon the fulfilment of the resolutive condition and are you looking for legal advice on your options as an employer? Or do you have other questions about employment law and dismissal? Please contact us: