Recently, at the employer's request, the subdistrict court dissolved the employment contract with an employee due to a disrupted working relationship. In doing so, the subdistrict court ruled that the employer had acted seriously culpable and therefore awarded the employee fair compensation of €100,000. The employer appealed, contesting both the seriousness of the imputable conduct and the amount of the compensation. You can read the outcome of the appeal below.

Facts

The employee in this case had been employed by employer since 2007: a steel company based in the Netherlands. In early 2023, an unannounced conversation took place between the HR director and the employee. During this conversation, the HR director informed the employee that, in his opinion, the cooperation with the employee had not been going well for some time and that, in that context, he wanted to start looking at a departure. Without any prior consultation, the employer proposed to terminate the employment contract by mutual consent: he confronted the employee on the spot with a settlement agreement.

The employee felt overwhelmed and pressurised to agree to the proposed settlement. After consulting with his legal advisor, the employee decided not to sign the agreement. According to the employee, cooperation with his supervisor had always been good and this unexpected conversation came as a big shock.

As the employee did not agree to the settlement agreement, the employer decided to file a request for dissolution of the employment contract with the subdistrict court. According to the employer, the working relationship had been disrupted by this incident to the extent that further cooperation was no longer possible.

Proceedings at the Subdistrict Court

The subdistrict court dissolved the employment contract between the parties, but did rule that the employer had acted with seriously misconduct. The subdistrict court ruled that it was the employer who had escalated the situation by unexpectedly presenting the termination agreement. This had seriously complicated a restoring the working relationship. Instead of seeking a solution or improvement, the employer had moved too quickly to terminate the employment contract, so the disruption of the working relationship was largely his fault.

The subdistrict court held the employer responsible for the situation that had arisen, and for that reason the court awarded fair compensation of €100,000 to the employee. In addition, the non-competition and non-solicitation clauses from the employment contract were terminated, allowing the employee to start working elsewhere without restrictions.

Court proceedings

On appeal, the employer requested that the requests for payment of equitable remuneration and dismissal from the non-competition and non-solicitation clause be rejected. In turn, the employee requested an increase of the fair compensation to over €290,000.

Like the subdistrict court, the court of appeal concluded that the dismissal was the result of seriously misconduct by the employer. In doing so, the court took as its point of departure, among other things, that the last appraisal interview related to the year 2018 and the incidents on which the employer relied were far in the past. Moreover, the employee had not been given the opportunity beforehand to prepare for the (unannounced) interview and was offered a settlement agreement on the spot.

According to the court, the employer's serious misconduct justified the award of fair compensation. In determining the amount, the court took into account the "value of the employment contract". The court ruled that the fair compensation of €100,000 gross was appropriate, given the circumstances and the estimated duration of the employment. The actual extrajudicial costs - based on established Supreme Court case law - were awarded, however.

You can read the full judgment here.

Conclusion

In this case, the court emphasised that seriously misconduct by an employer, such as abrupt and unannounced termination of long-term employment, can have significant financial consequences for the employer. This decision is an important reminder for employers to act transparently and carefully in labour disputes.

Abruptly terminating an employment contract can have major consequences. Would you like to seek advice on how to carefully terminate an employment contract or do you have other employment law questions? The lawyers and jurists at SPEE advocaten & mediation are ready to provide expert guidance and answer your questions.