On 11 November 2022 two judgments of the Dutch Supreme Court were published in which the Supreme Court clarifies what is known as the ‘Xella Duty’. These judgments show that an employer’s duty to consent to a proposal from an employee on long-term sick leave to terminate the employment agreement and to award compensation applies also in the case of ‘deep sleepers’ and ‘semi deep sleepers’.
Background
Since the implementation of the Work and Security Act (Wet Werk en Zekerheid, “Wwz” (01 July 2015), in most cases employees are entitled to a transition fee after their employment agreement is terminated at the employer’s initiative. The same entitlement exists if the employment agreement is terminated due to long-term occupational disability. Shortly after the Wwz was implemented, this has prompted many employers to resort to so-called ‘sleeping employments’.
What is a sleeping employment? This is the maintenance of the employment agreement of an employee on long-term sick leave, (often) for reasons of avoiding having to pay the transition fee. The employment is ‘sleeping’ because the employee on long-term sick leave is not performing any work for the employer anymore, and after 104 weeks (provided that no wage sanction is imposed), the employer is also no longer obliged to continue paying wages. In other words: the employer is formally still employed by the employer, but is not performing any more work, nor receiving any more wages from the employer.
The legislator has introduced a compensation scheme in order to encourage employers to terminate these sleeping employments after all. Under this compensation scheme, employers receive compensation for the transition fee that they pay to employees on long-term sick leave. The compensation scheme entered into effect on 01 April 2020 and has retroactive effect until 01 July 2015.
Xella Duty
In 2019, the Supreme Court ruled that on grounds of the standards of good employment practices, an employer has to agree to a proposal from an employee on long-term occupational disability to terminate the employment agreement with mutual consent, while granting the employee compensation equal to the transition fee.
This duty applies from the time when the employer would have the right to terminate the employment agreement on account of long-term occupational disability. This is subject to the following requirements, among others: (i) the waiting time (the period in which the sick employee is entitled to wages) has expired; and (ii) the employee is not expected to recover within 26 weeks.
The employer owes the employee compensation equal to the transition fee, but for the purpose of calculating this compensation, the employment is fictitiously shortened till the time when the power to give notice arose. This means that there is no entitlement to compensation for the period during which the employment was kept sleeping.
Scope of the Xella Duty
On 11 November 2022, the Supreme Court clarified the Xella Duty for the situation of ‘deep sleepers’ and ‘semi deep sleepers’. A deep sleeper is an employee who he has gone through the waiting time prior to 01 July 2015 (the entry into force of the Wwz), while the employer’s power to give notice of termination had also arisen before that date. A semi deep sleeper is an employee who has gone through the waiting time prior to 01 July 2015, but the employer’s power to give notice of termination has only arisen on or after that date.
The employer is obliged to terminate the employment agreement at the request of the deep sleeper or the semi deep sleeper, while awarding a transition fee. It is important to mention here that the employer can claim compensation in these specific cases too.
As of which date does the Xella Duty apply?
Furthermore, the Supreme Court ruled, also on 11 November 2022, that the employer’s duty to consent to the employee’s proposal applies as of 20 July 2018. This is the date when the compensation scheme was published. As of that date, employers could be expected to adjust their actions according to the scheme.
The time as of which the Xella Duty applies is relevant to cases in which an employee on long-term sick leave requested a termination with mutual consent in the past, but the employer did not consent to that request at the time. If the employment has ended for other reasons (such as retirement) in the meantime, the employee cannot make a new proposal anymore and will therefore miss out on compensation. If the employee's request was made after 20 July 2018, the employer is in principle liable for damages if he has not responded positively to the request.
What does this mean for practice?
The recent judgments of the Supreme Court have made it clear that employers are obliged to consent to requests of employees, also if they are deep sleepers and semi deep sleepers, to terminate their employment agreement while awarding compensation. It is possible for employers to claim compensation for the amounts paid to this category of employees. As a result of these judgments, it is expected that the last categories of sleeping employments can also be terminated in the near future.
If you have any questions, please contact Joëlle Boulet and/or Marieke Opdam.
