Opinion of the Advocate General: Employers Must Terminate Dormant Employment Agreements

On 10 April 2019 the Subdistrict Court of Limburg asked the Dutch Supreme Court, by means of preliminary questions, whether an employer can be obliged to terminate 'dormant employment agreements'. On 18 September 2019 the Advocate General (A-G) De Bock advised the Supreme Court to answer this question affirmatively. It is now up to the Supreme Court to give a final opinion.

Dormant employment

If an employee has been incapacitated for work 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’. 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 addition, the employee is not entitled to a transition fee because the employer does not terminate the employment agreement.

The legislator has meanwhile made an arrangement to compensate the transition fee to employers who terminate the employment agreement of an employee with long-term occupational disability. This compensation scheme will enter into effect on 1 April 2020, but also applies to all transition fees that were paid on or after 1 July 2015. Because the employer will shortly be entitled to compensation, an important – and perhaps for many employers even the most important – reason for keeping the employment agreement with an employee with long-term occupational disability ‘dormant’ will disappear.

The Subdistrict Court of Limburg asked the Dutch Supreme Court the preliminary question whether, on grounds of good employment practices, the employer should agree to a proposal from an employee with long-term occupational disability to terminate the employment agreement, while granting the employee an amount equal to the transition fee.

According to De Bock, the starting point should be that on grounds of the standards of good employment practices, an employer should agree to a proposal from an employee with long-term occupational disability to terminate the employment agreement with mutual consent, while granting the employee an amount equal to the transition fee. However, the requirements that apply to the dismissal have to be met.