Dormant employment contracts, how does that work again?

In the so-called Xella judgment of 8 November 2019, the Supreme Court ruled that, on the grounds of good employment practice, employers must in principle agree to a proposal to terminate the employment contract with mutual consent of employees whose qualifying period during illness (104 weeks) has expired, subject to payment of compensation equal to the statutory transitional allowance.

In the lower courts, the question frequently arose as to from what point this so-called Xella standard applies and whether employers must also pay the Xella compensation if this compensation is not compensated by the UWV.

The question also arose whether the Xella standard applies to dormant employment contracts of which the waiting period during sickness had lapsed before 1 July 2015, but of which the employment contract had not yet been terminated (these are referred to as deep sleepers, semi-deep sleepers and late sleepers).

On 14 February 2022, two conclusions were published by the Advocate General about the above legal issues.

In brief, the Advocate General concluded that the Xella standard applies back to 1 July 2015 (the entry into force of the WWZ) and that the Xella standard applies to all dormant employment contracts, regardless of whether there is a right to compensation from the UWV.

The Advocate General considers that the existence of the compensation scheme was essential for the formulation of the Xella standard, but that this does not mean that the Xella standard only applies if the employer is actually entitled to compensation.

The Xella compensation is in essence a transitional compensation, which makes it, according to the Advocate-General, contrary to the legal system to attach an extra condition to the obligation to pay, namely the employer's right to compensation.

Against this background, the Advocate General concludes that the Xella standard is applicable to all dormant employment contracts, including those of which the regular waiting period had already expired before 1 July 2015. The Advocate General notes that employers do not actually owe the Xella compensation in the case of deep sleepers (the waiting period expired before 1 July 2015 and the authority to give notice arose before that), because the (statutory) transitional compensation did not yet exist at that time and the Xella compensation was therefore nil.

For semi-deep sleepers and late sleepers, the Xella standard does apply. It is now up to the Supreme Court to decide.

The two conclusions of the Advocate-General can be read here and here.

Do you have any questions about dormant employment contracts, the Xella/transition allowance and/or the right to compensation/remuneration from the UWV? The employment lawyers at SPEE advocaten & mediation will be happy to help you.

SPEE advocaten & mediation Maastricht