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23 Sep 2021 The re-employment requirement in the event of dismissal for business economic reasons

A recent ruling by the Den Bosch Court of Appeal shows that employers should not take the redeployment requirement in case of business economic dismissals too lightly.

The facts

The employer in this case is a manufacturer of 3D imaging and portable measurement solutions, with several branches worldwide, including in the Netherlands. Since 1 April 2014, the employee has worked for the company as a business assistant. She is part of the global HR team, which is managed by the Chief People Officer from the head office in Florida.

The Board of Directors of the group to which employer belongs decided on 14 February 2020 to carry out a worldwide restructuring and thus a strategic reorientation of the market. This should lead to a reduction in costs and an increase in efficiency and competitiveness. At the beginning of April 2020, the employee in question was informed that her duties in the Netherlands would cease. For that reason, in May 2020 the employer requested permission from the UWV to terminate the employment contract with the employee for business economic reasons.

However, on 18 August 2020, the UWV refused to give its consent: according to the UWV, the employer has failed to make it clear that there is a need to save costs worldwide. There was no reorganisation plan for the shedding of five hundred jobs (including three jobs in the position of business assistant) and, according to the UWV, it had not become clear that it was necessary for the employer to shed the position of business assistant in the company in order to run its business more efficiently. The subdistrict court also rejected the request to dissolve the employment contract. The employer therefore lodged an appeal with the court of appeal in Den Bosch.

Judgment on appeal

The Court of Appeal examined the requirement of reinstatement and ruled that the employer had not met it. The employer had insufficiently substantiated that it had actively sought a suitable position for the employee. Although the employer stated that an overview of vacancies had been provided to the employee, at the hearing on appeal the employer could not explain when this had occurred. According to the employee, she only received such a list in the course of the legal proceedings. In any event, according to the Court of Appeal, the mere provision of an overview of vacancies is insufficient to comply with the obligation to make an effort to redeploy.

Failure to comply with duty to reinstate

At the hearing the Employer also stated that sometime last year in America he had inquired about the position of Sales Contract Manager. At the hearing the employee disputed this and explained that she had never heard anything about this (before). This assertion of the employer is therefore too vague, according to the Court of Appeal. It has not been explained when and with whom such a conversation would have taken place. Therefore the Court of Appeal ignored this argument. After it became clear that the employee would become redundant, the employer failed to enter into a conversation with the employee to take stock of her wishes and possibilities for a possible reassignment. Also in view of the broad employability and language knowledge of the employee, it could not be ruled out in advance that there would be another suitable position for her within a reasonable period of time within the worldwide organisation of employer. In this respect the Court of Appeal took into account that despite the reorganisation, there were more than one hundred vacancies. The employer could not assume that there was no point in discussing other possible positions with the employee. In short: the requirement of re-employment has not been met. Therefore, the Court of Appeal did not dissolve the employment contract, not even if the grievances of the employer with respect to the a-ground would succeed.

A-ground insufficiently substantiated

With respect to the a-ground (dismissal on economic grounds), the Court of Appeal still observed the following. If the employer's argument that saving USD 17.7 million on personnel costs by dismissing five hundred persons was necessary for an efficient operational management would be followed, the employer still failed to explain why it was necessary that the jobs of the business assistants it had appointed, including those of the employee, were cancelled. According to the employer, there was a team of eight business assistants in Europe. In the application at first instance, the employer explained that three of these were made redundant.

But the presentation referred to by the employer on appeal shows that there were nine business assistants, four of whom were declared redundant. Of the nine business assistants, according to this production, two were in Germany. However, according to another production, an HR organisation chart, there were three business assistants in Germany.

In other words, the information provided by the employer about the number of business assistants in Europe is not consistent. At the appeal hearing, the employer explained that the term "business assistant" is a generic term within the organisation that is used in all kinds of documents for positions with different contents. According to the employer, the three positions mentioned in the organisation chart are not really business assistant positions. If business assistants have different (and therefore not comparable) jobs within the employer, and/or the number of business assistants is not fixed, then, in the opinion of the court of appeal, the choice of the employer as to which business assistants should be removed for the sake of good business practice cannot be tested. In this respect the employer has not sufficiently explained why it was necessary for the employee's position to be abolished.

You can read the entire judgement here.

Conclusion

This judgment underlines the importance of a good substantiation of business economic dismissals. A reorganisation requires careful preparation, in which the requirement of re-employment must be taken very seriously. You should therefore engage the services of an employment lawyer, well in advance. SPEE advocaten & mediation knows what to do.

SPEE advocaten & mediation Maastricht

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