Court of Utrecht, Subdistrict section, Utrecht location, LJN:BV0899
Dutch employment law has a dual dismissal system. When an employer wishes to terminate the employment contract with an employee - and cannot come to an agreement with this employee - the employer, in short, may apply to the Subdistrict Court for rescission of the employment contract or he may ask the UWV WERKbedrijf for permission to terminate the employment contract. An important difference between these proceedings is the possible compensation. Where the Subdistrict Court may award compensation equitably, the UWV WERKbedrijf may not, but the employee must claim compensation for manifestly unreasonable dismissal. The employee must institute such proceedings himself. The amount of possible compensation should not be based on the subdistrict courts formula and is uncertain. Consequently, proceedings before the Subdistrict Court offer more hold for an employee with regard to a compensation. It therefore happens that employees try to enforce the subdistrict courts formula. An employee can do this by applying for rescission himself to the Subdistrict Court, after the employer has submitted an application for dismissal to the UWV WERKbedrijf.
On 11 December 2009 the Dutch Supreme Court (Van Hooff/ Elektra) confirmed that such an application may be submitted as long as the employment contract exists, so also after an application for dismissal has been submitted (and the dismissal permission has been granted) and the notice period has not expired yet. The Supreme Court, however, has set the condition that the employee will have to make clear in the rescission proceedings that there is such a change of circumstances that in fairness the employment contract should be terminated at an earlier time than the date as of which notice was given. Therefore, a stricter test applies and thus the possibilities for an employee are considerably smaller.
Subdistrict Court: No Stricter Test
Recently, the Subdistrict Court of Utrecht has rendered a decision in which it did not deem the stricter test applicable. In this case an employee was employed as Senior Investment Manager with a provider of financial services. At some point, in his office the employer opened a branch office of Friesland Bank. In 2009 the employer ceased his activities in the field of investment management and transferred them to Friesland Bank. Next, the employee was seconded to Friesland Bank. In 2010 Friesland Bank decided to have the work performed by a third party from then on. As a result, the employee could not perform any activities for Friesland Bank anymore in the future. Subsequently, the parties entered into consultations about the future. In a letter dated 18 August 2011 the counsel of the employee announced that if no solution would be reached, he would initiate legal proceedings in the short term. In response to this, Friesland Bank withdrew its confidence in the employee and on 14 September 2011 the bank filed an application for dismissal with the UWV WERKbedrijf. The application for dismissal was honored on 11 November 2011, after which notice of termination of the employment contract was given as of 1 February 2012. Next, on 21 September 2011, the employee submitted an application for a rescission of his employment contract.
The employer argued that the employee had only applied for a rescission in order to get a substantial severance pay. The employer relied on the Van Hooff/ Elektra judgment. The Subdistrict Court did not follow the employer, but deemed it decisive that the employee, through his counsel, had already announced to the employer in a letter of 18 August 2011, before the application for dismissal was submitted, that he would start legal proceedings if the parties would not reach an agreement. It should have been clear to the employer that this could mean rescission proceedings. Nevertheless, the employer filed an application for dismissal. In this case, because the employee had announced legal proceedings, the circumstance that the contract had already been terminated as of 1 February 2012 does not mean that a stricter test should be applied to the application for rescission. Because it was an established fact that the position of the employee would become redundant and that the employer had not made sufficient efforts to find another position for the employee, the Subdistrict Court terminated the employment contract as of 1 January 2012. The employee was awarded compensation in the amount of C=1.25, which comes down to more than EUR 190,000 gross.
Conclusion
While the Van Hooff/ Elektra judgment requires special circumstances for an application for rescission to the Subdistrict Court after an application for dismissal has been submitted with the UWV WERKbedrijf, the Subdistrict Court in Utrecht is of the opinion that this stricter test should not be applied under all circumstances. In the case at issue it was decisive that it was announced already before the application for dismissal had been submitted with the UWV WERKbedrijf that the employee was considering legal proceedings. That is remarkable, since it happens regularly that during settlement negotiations the 'threat' of legal proceedings is used. The question therefore is to what extent this decision is an isolated case. In my opinion, this decision does not affect the stricter test required by Van Hooff/ Elektra. Nevertheless, under circumstances it may be rewarding for the employee already to bring up rescission proceedings in time.
First published in the Kennedy Van der Laan newsletter - February 2012
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
