On 6 February, the Dutch Supreme Court issued an important ruling on employment law. It ruled that when determining the amount of fair compensation, it is possible to deduct the unemployment benefits that a former employee could receive. You can read more about this here:

What is the case about?

In a petition, the Antonius Zorggroep Foundation requested the District Court of Northern Netherlands to terminate the employment contract due to a disrupted working relationship and to declare that the employee in question was not entitled to fair compensation, as there was no serious culpable conduct on the part of Antonius. The employee, on the other hand, argued that the request for termination should be rejected and requested a substantial fair compensation.

In its ruling of 8 May 2024, the court terminated the employment contract and ordered Antonius to pay the employee, in addition to the transition payment, fair compensation amounting to three years' salary (a total of €443,916 gross), in view of the employer's seriously culpable conduct, namely failure to comply with its reintegration obligations. Among other things, the situation on the labour market and the chances of finding a comparable job were taken into account.

Antonius lodged an appeal with the Arnhem-Leeuwarden Court of Appeal. In doing so, Antonius argued, among other things, that in determining the fair compensation, the employee's right to unemployment benefits for 24 months had been wrongly disregarded. In its ruling of 18 November 2024, the court of appeal overturned the decision of the court of first instance with regard to the fair compensation to be paid by the employer.

The court of appeal considered it reasonable to deduct the unemployment benefits that the employee was able to receive during this period from the fair compensation. The amount of this deduction must be determined in a manner and at a level that is in line with the exceptional circumstances of the case.

What was the Supreme Court's ruling?

The Supreme Court ruled that the fact that the court of appeal deducted the possible unemployment benefit from the lost wages when determining the fair compensation did not constitute an incorrect interpretation of the law. The court of appeal took into account not only the disadvantages of the termination of employment (loss of wages) but also the possible advantages (such as the right to benefits or the possibility of earning other income) that are sufficiently related to this. The extent to which the consequences thus determined determine the amount of the fair compensation will also depend on the presence of other circumstances that are relevant in determining the compensation. Another factor that may be taken into account is whether the employee is disadvantaged in terms of possible future rights to unemployment benefits.

The full judgment can be read here. .

Conclusion

This case shows that an employee's right to obtain unemployment benefits may indeed be taken into account when calculating the fair compensation.

Based on established case law of the Supreme Court, we already knew that the court must determine the fair compensation in a manner and at a level that is in line with the exceptional circumstances of the case. In its reasoning, the court must provide insight into the circumstances that led to the decision on the amount of the compensation. In the case of fair compensation based on seriously culpable conduct on the part of the employer, the ultimate aim is to compensate the employee for this seriously culpable act or omission. In this regard, account may be taken of the income that the employee would have received if the employment contract had been terminated at a later date, any other work that the employee has since found and the income that he receives from this, and the (other) income that the employee can reasonably expect to earn in the future.

It is now also clear that the possible unemployment benefit may indeed be deducted from the lost wages. This provides clarity for both employers and employees in future proceedings and, of course, in the negotiations that are likely to precede them.

At SPEE advocaten & mediation, we are ready to advise you on the implications of (proposed) dismissal. Our employment law specialists can help you navigate this complex matter and assess your legal position. The amount of any fair compensation is, of course, part of this.