Breaking news from Dutch Supreme Court

Important news if you are an Employer in the Netherlands: you are probably aware that, if an employee is sick, the employer pays the wages for a maximum period of 24 months (or at least the legal minimum of 70%). It is only after these 24 months of illness that the employer can terminate the employee’s employment contract (with a UWV permit). The employee is entitled to payment of the legal Severance ('Transitievergoeding'). Since this Severance can be quite high, many employers chose not to terminate, in order to avoid having to pay this 'Transitievergoeding'.

The Dutch Supreme Court has put an end to this pragmatic solution of  ‘dormant employmentcontracts’ (without any costs). From now on, if the sick employee (with no prospect of reinstatement) asks to be dismissed in order to obtain his 'Transitievergoeding' you will be obliged to collaborate with this termination and the payment of the legally applicable Severance.

Note: under certain strict conditions it may be possible to obtain financial compensation from the government for this legal Severance ((‘Wet compensatieregeling Transitievergoeding’).

The firm Van Rossum Guyon

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The Netherlands

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