The subject of 'equitable compensation' in employment law regularly leads to interesting case law. This certainly applies to the case recently heard by the Court of Appeal in Den Bosch, in which a very high equitable compensation was awarded to the employee.
The employee has been employed by the supermarket chain Aldi since 17 February 1992. She started as a cashier and worked her way up to shipping manager, with a monthly salary of €5,593.33 gross. In mid-February 2016, the employee reported sick and in May 2016 she made a suicide attempt. In August 2017, Aldi started her reintegration, with the employee’s manager acting as case manager. However, the employee experienced harassment and intimidation from this very manager.
The UWV determines that Aldi has not done enough to reintegrate the employee. For this reason, the UWV imposed a wage penalty on Aldi on 4 January 2018. At the beginning of February 2018, the employee made a second suicide attempt and reported sick again.
Unfortunately, the employee does not recover and Aldi wants to terminate the employment contract. On 24 May 2019, Aldi received permission from the UWV to terminate the employment contract due to long-term incapacity for work. The termination takes place by letter dated 27 May 2019.
The employee went to court and argued that Aldi not only owed the statutory transitional compensation, but also an equitable compensation of €755,488 net. In addition, on 19 November 2019 the employee held Aldi liable on the basis of Section 7:658 of the Dutch Civil Code (employers' liability). Aldi's insurance company engages an expert to investigate the circumstances.
The Subdistrict Court found against the employee and dismissed her claim on 11 February 2020. This was reason for the employee to appeal, which was very succesful!
Serious culpability of the employer
According to the Court of Appeal, in the period up to the notification of illness on 16 February 2016, there was no question of seriously culpable acts or omissions on the part of Aldi which contributed to the termination of the employment contract. It is an established fact, however, that in that period the manager made hurtful remarks to the employee. Nevertheless, the Court of Appeal ruled that Aldi had taken the employee's report seriously and had responded adequately.
The same cannot be said about the period after the notification of sickness on 16 February 2016: the Court of Appeal rules that there were seriously culpable acts or omissions on the part of Aldi. After all, the advice given by the company doctor in July 2016, to have a different person than the manager maintain in contact with the employee, was not followed, even though this manager had previously been unwilling to cooperate in mediation and the employee had indicated to Aldi that she could not manage on her own with this manager.
At the start of the reintegration process, the manager acted as the reintegration manager, which made the reintegration process more difficult. This was despite the fact that contact with this person was difficult. A new reintegration manager was appointed only after the employee had again sought the advice of a confidential advisor.
Also, Aldi did not follow the advice from the occupational consultant: the reintegration did not, or at least not sufficiently, take place at another location. The advice to follow the two-track policy was not sufficiently followed by Aldi.
In addition, Aldi did not or hardly did anything about reintegration during the third year of illness.
The conclusion of the Court of Appeal is: also in view of the long duration of Aldi's failure to act, Aldi has grossly neglected its reintegration obligations. According to the employee, the seriously culpable acts and omissions eventually led to termination of employment (because of long-term incapacity for work); if Aldi had acted adequately then the employee could have reintegrated and the employment contract would not have had to be terminated.
According to the Court of Appeal, the report of the UWV's insurance doctor supports this argument. The termination of the employment contract is therefore attributed to the seriously culpable acts and omissions of Aldi.
Fair compensation
The employee is therefore entitled to equitable compensation. The exact amount is not regulated by law. What ultimately matters is that the employee is compensated for the employer's seriously culpable actions or omissions.
In this case, the court of appeal assumed the employee's loss of income to be €214,675.92. The court of appeal takes into account a career break of 10 years, the employee’s gross salary and the growth from cashier to shipping manager in the last 24 years.
The court also included an amount of €50,000 for the missed career. Furthermore, a component of €10,000 is included as compensation for the employee for the psychological distress caused by the dismissal. In this respect the Court of Appeal assumes that, if Aldi had acted differently after the employee had reported sick, the course of the illness would have been less long and less intense and there would not have been a need for dismissal after two years of illness.
The court takes into account that the (statutory) transitional allowance is €74,493. This amount is therefore deducted from the amounts that we have discussed above.
Interestingly, the Court of Appeal considered that the UWV had already imposed a wage penalty on Aldi, but that this did not lead to a different opinion regarding the amount of the equitable compensation in this case.
The Court of Appeal ultimately deemed an equitable compensation of €200,000 gross appropriate. This is because according to the Court of Appeal, Aldi has contributed in a considerable way to the circumstances which led to the termination of the employment contract due to long-term occupational disability. The seriousness of the culpable acts and omissions is considerable according to the Court of Appeal: during a long period of time there were many moments on which Aldi could and should have acted differently.
You can read the full judgment here.
Are you an employer or employee and do you have questions about dismissal due to long-term incapacity for work, employer liability, reintegration obligations, the transitional compensation or equitable compensation? SPEE advocaten & mediation will be happy to assist you.