The Balanced Labour Market Act (Wet Arbeidsmarkt in Balans, “WAB”) will enter into force on 1 January 2020. This new Act provides a package of measures in the fields of flexible labour, dismissal law and the Unemployment Insurance Act (Werkloosheidswet, “WW”), with the goal of improving the balance between flexible and permanent employment agreements. In the coming period, we will be discussing the main changes in several news reports. This week we will look at the cumulation ground.
The current system
An employer can only terminate an employment agreement if there is a reasonable ground to do so and re-employment of the employee into a different suitable position within a reasonable term, possibly with the help of training, is not possible or not logical. In subsection 3 of Section 7:669 of the Dutch Civil Code (“DCC”), an exhaustive list of grounds for dismissal is given:
- Commercial reasons;
- Long-term occupational disability;
- Frequent sickness absence;
- Inadequate performance;
- Culpable act or omission on the part of the employee;
- Serious conscientious objections;
- Disturbed working relationship;
- Catchall ground.
Fully-fledged ground for dismissal
If an employer wishes to end an employment agreement, he must have a fully-fledged ground for dismissal. This means that all conditions for one single ground must be fulfilled. In the current system, grounds for dismissal cannot be combined. For instance, termination of an employment agreement is not possible when circumstances occur out of different grounds for dismissal, such as inadequate performance and a disturbed working relationship, but these circumstances are in themselves insufficient to assume one single reasonable ground. To give an example: an employee may not performing well, but has not yet started an improvement plan, while there is also a somewhat disturbed working relationship.
Too strict
The legislator considered the above exhaustive list of grounds to be too strict. Practice shows that there are situations in which a court does see the need to rescind an employment agreement, but the reason to assume fully-fledged ground for dismissal is (only just) insufficient. The legislator will therefore extend the options for dismissal. In addition, the legislator expects that employers will offer a permanent contract sooner when the options for dismissal are extended. After all, this will make it ‘easier’ for employers to terminate an employment agreement.
Cumulation ground
With the introduction of the WAB, a new ground will be added to the exhaustive list in Section 7:669 subsection 3 DCC: the i-ground, also known as the cumulation ground. The cumulation ground gives courts the option to combine several reasons for dismissal. The a- and b-grounds are reserved for the UWV, so they cannot be ‘cumulated’ by the court. The f-ground does not allow for cumulation either: after all, one cannot have a partially serious conscientious objection.
Additional compensation
The downside of a rescission based on the cumulation ground is that the court may award the employee extra compensation on top of the transition fee (and possibly the fair compensation), up to a maximum of 50% of the transition fee. This extra compensation is intended to compensate for the fact that there was no fully-fledged ground for dismissal. The court is free to determine the amount of this additional compensation, in which the consequences of the dismissal and any serious culpability on the part of the employer do not play a role.
Entry into force
The WAB will enter into force on 1 January 2020. If a petition for rescission is submitted to the court before this date, current law will apply and therefore the cumulation ground cannot yet be used. Naturally, the same goes for appeals in 2020: the commencement date of the dismissal proceedings is decisive.
