The Dutch Supreme Court recently clarified the criteria for the e-ground (culpable behaviour) (Supreme Court, 28 May 2021, ECLI:NL:HR:2021:781). In its judgment, the Supreme Court decided on the question whether a dismissal on the e-ground must be a last resort in order to be legally valid.
Background
In the case at issue, there was a conflict of interests between the employee/director in concluding a lease for the company, since the general director of the company was also the (in)direct lessor of the office building. The key question in this case is whether the employer could terminate the employment agreement on the “e-ground” (a culpable act or omission by the employee pursuant to Section 7:669 (3) under e DCC).
This case came before the Supreme Court for the second time. Earlier, the Subdistrict Court had conditionally rescinded the employment agreement at the employer’s request due to culpable behaviour of the employee within the meaning of Section 7:669 (3) under e Dutch Civil Code (DCC). The employee had successfully appealed against this conditional rescission, whereupon the Supreme Court had quashed that ruling of the Court of Appeal. Then, after a referral, the Court of Appeal held that the Subdistrict Court had rightly rescinded the employment agreement due to culpable behaviour of the employee, among other reasons because the employee should have been transparent about the existing conflict of interests. The employee (again) appeals against this decision to the Supreme Court.
Opinion of the Supreme Court
In the cassation proceedings, the employee argued that the Court of Appeal had ignored that it is implied in the criterion of Section 7:669 (3) under e DCC that the employer must have demonstrated that dismissal is the last resort, and that lighter disciplinary measures do not suffice. The employee also argued that the Court of Appeal had ignored that for a dismissal on the e-ground to be legally valid, rules of conduct must have been broken that are knowable to the employee.
The Supreme Court held that legal history shows that a dismissal on the e-ground is based on a culpable act or omission of the employee of such a nature that the employer cannot reasonably be expected to allow the employment agreement to continue. If the acts or omissions of an employee are a reason for dismissal, it must have been clear to the employee in advance what the employer did or did not consider permissible (except for obvious things like theft, etc.), and the demands the employer can set on the employee must be common and not excessive, according to the Supreme Court. The Supreme Court held that a dismissal on the e-ground does not require that it is a last resort, in the sense that a dismissal would only be possible if the employer could not suffice with less drastic means. Neither the text of the law, nor legislative history offers a clue for this position.
Against the background of the foregoing, the Supreme Court dismissed the complaints of the employee advocated in the cassation proceedings. According to the Supreme Court, the employee also ignored that it is implied in the judgment of the Court of Appeal that the employee could not reasonably doubt that his behaviour – consisting of not being sufficiently open to the employer about the conflict of interests that had arisen about the extension of the lease of the office building, and that he subsequently did not sufficiently protect the interests of the employer in it – was not permissible.
Conclusion
According to the Supreme Court, a legally valid dismissal on the e-ground does not require that it is a last resort, in the sense that a dismissal would only be possible if the employer could not suffice with less drastic means. With this judgment, the Supreme Court confirms that the law and legislative history have no clues for such a position.
Do you have questions about a dismissal on the e-ground or dismissals in general? Please contact Dewi Krop and Soo-Ja Schijf.
