03 Mar 2021 Employee with a dormant employment contract is not entitled to the transitional allowance
In many cases, after two years of illness, an employee is entitled to have his or her employment contract terminated and to receive the statutory transitional allowance. Nevertheless, there are exceptions, as the following case shows.
On 1 April 1978, the employee started working full-time, as a secretary. In 2000, she could no longer perform her work due to RSI-related complaints. In 2001, the employee was awarded a partial benefit based on the Invalidity Insurance Act (WAO), calculated on the basis of a 25-35% disability rate. Since then, in addition to her WAO benefit, she has received a supplementary benefit from an occupational disability insurance policy of Nationale Nederlanden and a wage subsidy from her employer. As of 7 January 2013, the employee called in sick completely in the position she held at that time. According to Arboned's absence data, after a short period of full absence, the employee returned to work part-time and was again on 100% sick leave as of 13 February 2015 - the day she underwent shoulder surgery.
In a decision by the UWV (the Employee Insurance Agency) on 26 January 2015, as part of the WAO reassessment, the degree of incapacity was found to be 80-100% and the employee was awarded wage loss benefits from 5 January 2015. The employee began rehabilitation on 13 February 2015 following shoulder surgery, which began on 7 September 2015. The employee underwent another operation on her shoulder on 8 June 2016. In a letter dated 19 May 2017, the employer confirmed to the employee that the UWV had decided that the percentage of incapacity for work remained unchanged at 80-100%, that the employer would not terminate the employment relationship, but that it would stop topping up the WAO benefit.
On 21 November 2017, the employee asked her employer to agree to her proposal to terminate the employment contract by mutual consent with payment of the statutory transitional allowance. However, the employer refused to do so.
The case was then referred to the competent subdistrict court on behalf of the employee. At first instance, the employee requested, inter alia, that the subdistrict court order the employer to terminate the employment contract and to pay the transitional allowance. The subdistrict court upheld the employee's claim.
However, the employer appealed against the decision of the subdistrict court and against the grounds on which it was based.
Judgment on appeal
In the appeal, the Court of Appeal ruled that the question of whether the employment contract had become dormant before or after 01.07.2015 did not have to be answered, since even in this case it had to be assumed that the employer's power to terminate - and thus the dormant status of the employment contract - had only arisen after 01.07. 2015, the employer was not obliged to terminate the employment contract with the employee and to pay a transitional allowance, because in the present case, where the end of the waiting period was before 1 July 2015, the employer could not claim compensation in the amount of (all or part of) the transitional allowance that it would have had to pay in that case.
As also stated by the Arnhem-Leeuwarden Court of Appeal in its judgment of 26 October 2020, in a situation where the end of the waiting period is before 1 July 2015 and the date of suspension of the employment contract is after 1 July 2015, the key issue is the interpretation of paragraphs 1 and 2 of Section 7:673e of the Dutch Civil Code in relation to each other.
In the situation that the employment contract was dormant after 1 July 2015, the employer would (have been) in principle obliged to agree to the termination of the employment contract and to grant the employee the transitional allowance, based on the now well-known Xella judgment, so that the requirement of section 7:673e subsection 1 of the Dutch Civil Code is fulfilled. In summary, however, section 7:673e(2) of the Dutch Civil Code provides that the transitional allowance shall not exceed the amount of the transitional allowance calculated at the time the qualifying period was reached.
In the employee's case, this date was 5 January 2015, i.e. before the WWZ (Work and Security Act) entered into force. So even if the employment contract became dormant after 1 July 2015, the transitional allowance would be zero, pursuant to section 7:673e(2) of the Dutch Civil Code. Although it is true that, in legislative history (with respect to section 7:673e under 2 of the Dutch Civil Code) there are no indications that the legislator also had an eye on this situation, it cannot be deducted from legislative history either, that an employee in this situation would be entitled to receive compensation.
The employee’s claim was upheld by the subdistrict court, but the Court of Appeal ruled against her and she was not entitled to receive the transitional allowance. Do you also employ an employee who has been sick for 104 weeks and who has indicated that he or she would like to receive transitional allowance? Or are you an employee in a similar situation? SPEE advocaten & mediation will be happy to help you to examine your legal options and to determine whether or not there is an entitlement to receive the transitional allowance.