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How should multinationals deal with the strict re-employment obligations in the Netherlands?

A recent ruling by the Court of Appeal of The Hague in a case concerning Shell

Introduction

Under Dutch law, an employer can only terminate an employment agreement if (1) there is a so-called “reasonable ground” to do so and (2) re-employment of the employee into a different suitable position within a reasonable term, whether or not with the help of training, is not possible or not logical.

The Dismissal Decree states that if the employer’s company is part of a group of companies, jobs in the other companies belonging to this group must also be involved in the assessment of whether a suitable position is available. However, to date it is not yet clear what the exact scope of this re-employment obligation is within the group of companies.

This plays a role especially when it concerns re-employment options within an international group of companies. How far does the re-employment obligation stretch within an international group? And how far does the re-employment obligation stretch when dealing with expats? The Court of Appeal of The Hague recently rendered an interesting judgment about this topic (Court of Appeal of The Hague, ECLI:NL:GHDHA:2017:2654).

Facts

The employee has been working with the Shell Group since 1993, mostly in positions abroad outside the Netherlands. His last posting in Gabon ended in 2015. Subsequently, the employee returned to his Base Country the Netherlands and took up employment at Shell, in the SIEP division, to start looking for another job from that position. Later on in 2015 the employee was offered the position of Maritime Assurance Assessor (MAA) in Rotterdam. The employee first declined this offer. Later, he wanted to accept it under protest, but then the job had already been given to someone else. Internal applications by the employee were not successful. Eventually, the Subdistrict Court terminated the employment agreement at Shell’s request.

Court of Appeal of The Hague

The employee brought an appeal and claimed that the Subdistrict Court could not have terminated the employment agreement. The Court of Appeal considered that there is a reasonable ground for termination if re-employment of the employee within the Shell Group is either not possible or not logical. The test of the reasonable ground and the test of re-employment coincide if it concerns an expat like the employee, who is always deployed on a mobile and temporary basis.

Scope of re-employment obligation: worldwide

A particularly important aspect for the question whether Shell has fulfilled its obligation to re-employ the employee is whether Shell’s investigation should focus on the options of re-employment for all existing and soon to be expected vacancies within the Shell Group around the world. In line with the Dismissals Decree, the Court of Appeal ruled that this is indeed the case, and the Court of Appeal seems to attach value to the fact that the employee has been working in the Shell Group as an expat all over the world since 1993.

No priority over external candidates

However, the Court of Appeal ruled that in this case the employee has no priority over other candidates to be re-employed elsewhere within the group (outside the Netherlands). Such priority would interfere with the freedom of the individual local companies of the Shell Group to have their own local personnel policy. Shell cannot enforce at law that one particular employee is given priority, also considering the demands of corporate governance in place for listed companies like Shell.

Efforts of the employee

Shell uses a system for re-employment in which employees look for internal positions themselves. It has not become evident that the employee did not know his way around this system. The Court of Appeal held that Shell did not have to give instructions for this or provide him with a list of vacancies. It follows from the above that re-employment within a reasonable term was not possible or logical. Therefore, the Subdistrict Court has terminated the employment agreement rightly.

At Shell, redundant employees receive generous compensation if their employment agreement is terminated. However, such compensation is not due if an employee does not accept a suitable position. In this case, the employee is not eligible for compensation, since he has not accepted the position of MAA although it was suitable. The long employment of the employee (more than 40 years) and his age (61 years) do not make this unacceptable.

Conclusion

Dutch law prescribes that the employer is obliged to offer a suitable position to the employee, if such position is available within the group of companies. The group of companies is defined broadly and includes group companies worldwide. For multinationals, like Shell, this has led to practical problems. For example, in case the Dutch company of the multinational does not have control over the local company outside the Netherlands it is not able to offer such suitable position (even if it wanted to). However, at the same time the Court denies the employer’s termination request because the employer has not fulfilled its re-employment obligation. The Court of Appeal of The Hague applies a reasonableness tests to the re-employment obligation laid down by the law. In my view, a practical solution for this legal dilemma.

Author(s)

  • Soo-ja SchijfSoo-ja Schijf