Beware of expiry periods for transition pay and equitable remuneration

Too late is too late!

It is undoubtedly known that deadlines are of great importance in legal practice. Nevertheless, sometimes things go wrong and it is necessary to litigate all the way to the Supreme Court to get clarity. This was the case in a recent case about a transition payment, which remained exciting until the very end.

Facts

The case brought before the Supreme Court concerned an employee who started working for (the legal predecessor of) ABN AMRO in 1990. The employee became ill for a long time and in 2017 ABN AMRO applied to the UWV for a dismissal permit. The UWV granted the dismissal permit, after which ABN AMRO terminated the employment contract "per 1 March 2018". The latter became a major point of contention.

The employee claimed that she was entitled to receive the transitional allowance. According to her employer, however, that was not the case because of the supplementary scheme in the collective labour agreement (cao). According to ABN AMRO, this scheme should be regarded as an 'equivalent provision' within the meaning of Section 7:673b of the Dutch Civil Code.

Judgment of the Subdistrict Court

In the proceedings that followed, the employee applied for a transitional allowance of €53,111.94 gross. The application was received by the Subdistrict Court on 30 May 2018. According to the Subdistrict Court, this was too late: Section 7:686a subsection 4 opening lines and under (b) of the Dutch Civil Code provides that the authority to submit an application to the Subdistrict Court lapses within three months after the day on which the employment contract was terminated. According to the Subdistrict Court, this means that the employee should have submitted the petition before 28 May 2018 at 24:00 hours. For this reason, the Subdistrict Court declared the employee inadmissible.

Different opinion of the Court of Appeal

The employee then appealed, and with success: the Court of Appeal set aside the decision of the Subdistrict Court and ordered ABN AMRO to pay the transitional allowance of €53,111.94 gross. The considerations of the court of appeal focused mainly on the question: if the employment contract was terminated 'on 1 March 2018', did the three-month period commence on 28 February 2018 or only on 1 March?

According to the Court of Appeal, a termination as of 1 March could be understood as a termination of the employment contract on 1 March (and therefore not already on 28 or 29 February, the latter in case of a leap year). The Court of Appeal considered in this respect that the word "per" in normal speech means "as of" or "with effect from". For example, a commencement of employment as of 1 March implies a commencement of employment as of 1 March. The employment contract then commences on 1 March. In normal speech, a termination as of 1 March implies a termination as of 1 March, so that the employment ends on 1 March.

In short: the employee drew the longest straw, because according to the Court of Appeal, ABN AMRO had created an unclear situation and therefore had to pay for it itself. The expiry period of three months only started to run on 2 March 2018, according to the Court of Appeal. The petition should therefore have been submitted on 2 June 2018 at the latest. As the petition in this case was filed on 30 May 2018, the employee was indeed on time. In addition, the court also found in favour of the employee as regards the substance of the case, because the supplementation scheme in the collective labour agreement could not be regarded as a provision equivalent to a transitional allowance.

Supreme Court quashes Court of Appeal ruling

ABN AMRO appealed to the Supreme Court: as an employer, it held that the Court of Appeal's interpretation was incorrect and that the employee had indeed submitted the application too late. The Supreme Court agreed with ABN AMRO. Our highest court considered the following:

For the application of Section 7:686a, subsection 4 under b, of the Dutch Civil Code, the above means that the period within which the petition for the award of a transitional allowance must be submitted starts on the first day after the last working day and ends at the end of the day corresponding to this last working day three months later. Thus, in principle, the term always ends at the end of the day with the same number as that of the last working day, apart from the effect of the General Extension of Time Limits Act. The only exception is when the month in which the time limit expires does not have a day with the same number because it is shorter, in which case the time limit ends at the end of the last day of that month. Thus, the employee always has three full calendar months at his disposal for submitting the said application.

Now that the Court of Appeal has established that the parties have not deviated from the starting point of Section 7:672, subsection 1, of the Dutch Civil Code that notice of termination must be given by the end of the month, and that the parties agree that 28 February 2018 was the last day of the employment (...), it follows from the above (...) that the employment contract ended at the end of that day. The opinion of the Court of Appeal that the employee could reasonably have understood that the employment contract ended on 1 March 2018 due to the dismissal as of 1 March 2018, and that if ABN AMRO actually wanted to effectuate with a dismissal as of 1 March 2018 that the employment contract ended on 28 February 2018, it should have been up to the Court of Appeal to provide the employee with sufficient clarity in this respect, is therefore an error of law.

In short: the employee was found to be in the wrong after all. Her employment contract was terminated on 28 February 2018 and 28 May 2018 was the last day on which the petition for the award of a transitional allowance could be submitted. Since the employee did not submit her petition until 30 May 2018, she is inadmissible. She has therefore missed the boat!

Conclusion

The conclusion is clear: pay close attention to the expiry period, because one day (or two) too late can mean a huge loss of money! Incidentally, this applies not only to the transition allowance but to all claims under the WWZ.

Suppose the employment contract is terminated on 31 December (after obtaining a dismissal permit from the UWV, of course). The last day of the employment contract is then 31 December. The request for fair compensation or restoration of the employment contract must then be submitted by 28 February at 23:59.

But: if it concerns a leap year, the latest date is 29 February. And if the day falls in a weekend or is a recognised public holiday, the deadline is extended to the day after.

Do you also have questions about transitional compensation, equitable compensation or other employment law issues? SPEE advocaten & mediation can help you. And on time, of course.

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