In a recent ruling, the Arnhem-Leeuwarden Court of Appeal addressed whether a hiring freeze releases an employer from the legal obligation to reassign an employee whose position is being eliminated within the employer’s company.

Case Background

The employee in question worked for an international petrochemical company. After the Employee Insurance Agency (UWV) denied permission for dismissal, the employment contract was still terminated by the subdistrict court due to economic reasons. The employee disagreed and appealed the decision, arguing that his position had not been eliminated and that the employer had not made sufficient efforts to reassign him within the company. He requested either the reinstatement of his employment or financial compensation.

Court’s Decision

The Court of Appeal concluded that the employment contract was wrongly terminated because the employer had not fulfilled its reassignment obligations. As a result, the Court did not need to assess whether the employee’s position had actually been eliminated. The employee was awarded fair compensation of €109,723.27 gross.

Hiring Freeze Not a Valid Argument

The employer argued that there was a hiring freeze in place, making reassignment impossible. The Court rejected this argument, stating that the employee already had an indefinite employment contract. Reassignment is mandatory if a suitable position is available, even during a hiring freeze, according to the Court. A hiring freeze applies only to new hires, not to existing employees who need to be reassigned.

Lack of Active Reassignment Efforts

The Court identified several shortcomings in the employer’s efforts to reassign the employee:.

• No Reassignment Discussion: The employer did not discuss reassignment options with the employee.
• No Active Search for Suitable Positions: There was no active search for suitable positions within the global company.
• No Available Vacancies Presented: The employer did not bring any available vacancies to the employee’s attention.

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Additionally, the employer cited German regulations that allegedly made it difficult to comply with Dutch reassignment requirements. This argument was dismissed; the Court held that such complications are the employer’s responsibility and risk.

Read the full ruling here

Conclusion

This ruling makes it clear that, even during a hiring freeze, an employer is legally obligated to actively reassign employees with permanent contracts to suitable positions. Failure to conduct a reassignment discussion or to present available vacancies can lead to the conclusion that the employer has not met its obligations. This may result in significant financial consequences, such as the award of fair compensation to the employee.

Do you have questions about reorganizations, reassignment obligations, or other employment law issues? Feel free to contact the employment law specialists at SPEE advocaten & mediation. We are here to assist you.