The Health Care Arbitration Tribunal has ruled in preliminary relief arbitration proceedings on the question of whether the employer of an employee on long-term sick leave can be forced to terminate the employment agreement while promising to pay a transition fee.
Termination of Employment Agreement Due to Sickness
If an employee is unfit for work due to sickness for more than two years, the employer may terminate the employment agreement (under certain conditions) with the permission of the UWV. In that case, the employer shall owe the employee a transition fee. This may be a reason for the employer not to terminate the employment agreement, but to keep it ‘dormant’.
Dormant employment
In the event of a ‘dormant employment’, the employee remains formally employed but (because of his incapacity for work) he no longer performs any activities. Because the employee has been incapacitated for work for more than two years, the employer is no longer required to pay wages. In case law it is assumed that this action does not constitute a serious culpable act or omission by the employer. If the employee himself takes the initiative to terminate the employment agreement, he is therefore not entitled to a transition fee.
Compensation Transition Fee
In 2018, the legislator made an arrangement to compensate employers for the transition fee in the event of dismissal of employees with long-term occupational disability. This compensation scheme will enter into effect on 1 April 2020 but also applies to ‘old cases’. Because the employer will shortly be entitled to compensation, an important reason for keeping the employment agreement with an employee with long-term occupational disability ‘dormant’ will disappear.
Facts of the Judgment
The employee is employed as a medical specialist by a hospital and has been incapacitated for work for more than two years. He receives an IVA benefit (full invalidity benefit) because, according to the UWV, he is fully and permanently incapacitated for work. Moreover, the employee is expected to only have a short time to live left. The parties, however, have not been able to reach agreement on the termination of the employment and the employer does not take any initiative to terminate the employment agreement. The employee himself therefore requests the Healthcare Arbitration Tribunal to order the employer to terminate the employment agreement. In the event of termination, the employee would be entitled to a transition fee of EUR 144,659.
The Judgment of the Arbitration Tribunal
The Arbitration Tribunal has considered that the employment agreement between the parties has become devoid of meaning, in view of the permanent and full incapacity for work of the employee. Also in light of the compensation scheme for the transition fee it must be assumed that the employer may, under certain circumstances, be obliged to terminate the dormant employment agreement on the grounds of being a good employer. If the employer does not comply with this obligation, he may be ordered to do so. The latter option is justified in the special circumstances of this case.
The employer has not been able to provide good grounds for not terminating the contract. There is, however, reason to assume that this is also the result of an underlying labour conflict. The failure of the employer to act will result in the employment agreement ending in the (short) term as a result of the death of the employee, while no transition fee is due.
In view of the circumstances of this case, the Arbitration Tribunal considers that the employer is obliged to terminate the employment agreement at short notice, without observing the notice period and while promising to pay the transition fee. The employer is ordered to terminate the employment agreement, on pain of a penalty of EUR 5,000 per day with a maximum of EUR 150,000.
For Practice
This is the first time that an employee who is incapacitated for work has been able to successfully enforce termination of his employment agreement while being granted the transition fee. Are things getting out of hand now? In our view, this conclusion is too far-reaching. In this award there were very special circumstances, namely an extremely distressing situation for the employee. Moreover, the general line in case law (both in judgments of subdistrict courts and courts of appeal) is that the refusal to terminate the employment agreement of an employee with long-term occupational disability is not seriously culpable. In short, this award does not necessarily mean the end of the possibility of keeping the employment contract dormant.
Contact
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