5 February 2019

Dutch Supreme Court explains scope of employer’s obligation to reassign employees

The circumstances in which an employer has to reassign employees to another suitable position was recently explained by the Supreme Court. The deciding factor is whether reassignment can reasonably be required from the employer in the given circumstances. In other words, an individual test of reasonableness applies, instead of an obligation to achieve the employee’s reassignment. By issuing this ruling, the Supreme Court confirmed that the scope of the employer’s reassignment obligation has remained the same since the introduction of the Dutch Work and Security Act (WWZ) in 2015. The Supreme Court also ruled that if an employee does not find an alternative suitable position within the group, this may be a valid ground for dismissal (“h ground”). For group companies, including globally operating companies, the ruling means that they have a certain margin of discretion to determine whether they can reassign an employee to an alternative suitable position within the group. Another implication is that employees ”on the bench” – whose temporary assignment has ended, without there being another position available – can be dismissed based on the h ground.

Background

The employee had worked as an expat for several legal entities of the Shell group. According to the rules that apply to Shell expats, an expat is assigned abroad from the country where he has been recruited (Base Country), and is employed by the Shell entity in the new host country (Host Country). Before termination of a temporary assignment abroad, the expat can participate in the Managed Open Resourcing (MOR) system. MOR takes place in an internal internet-based application four times a year. On that platform, all internal vacancies within Shell, including expat positions, are made public. After the employee’s temporary assignment had ended, he started looking for a new position using the MOR system. He entered into the service of Shell International Exploration and Production BV (SIEP) in the Netherlands, his Base Country. Having refused a position in Rotterdam twice, he applied for fifteen internal positions using the MOR system. None of these applications were successful.

Employer SIEP subsequently submitted a request for termination of the employment agreement to the sub-district court. The request was based on the h ground for dismissal as set out in the Dutch Civil Code: other circumstances due to which the employer can no longer reasonably be expected to continue the employment agreement. The h ground can only be used in limited situations. The sub-district court ruled that, among other things, the criteria for termination based on the h ground had been met and that SIEP had fulfilled its reassignment obligation. The sub-district court therefore ruled that the employment agreement would be terminated. This judgment was upheld on appeal. The employee then appealed to the Supreme Court.

The scope of the employer’s reassignment obligation and the ground for dismissal

Under the Dutch Civil Code, in order for a termination request to the sub-district court to succeed, an employer must demonstrate that there is a reasonable ground for termination. In addition the employer must also demonstrate that it is “not possible or logical”, even with additional training, to reassign the employee to an alternative suitable position within the company within a reasonable period. In this case, the two main legal questions concerned (i) the scope of the h ground and (ii) the interpretation of the employer’s reassignment obligation under the WWZ. The first addressed the question whether the impossibility to reassign an employee can constitute a valid h ground. On the first question, the Supreme Court ruled that under certain conditions, in case an employee does not find an alternative suitable position within the group, the h ground can constitute a valid ground for dismissal. Regarding the second question, the Dutch Dismissal Regulation (“Ontslagregeling”), which is based on the Dutch Civil Code, states that, in case the employer’s company forms part of a group, the assessment of the availability of an alternative suitable position must include the other legal entities of the group, including international entities. The official explanatory memorandum to the Dutch Dismissal Regulation explains that if the reassignment obligation is not met, it is not possible to dissolve the employment agreement. Before the WWZ came into force, the definition of the employer’s reassignment obligation was worded differently from the current definition. The previous law implied an “individual test of reasonableness”. The question therefore arose whether the employer’s reassignment obligation is only met under the WWZ when it is not at all possible or logical to reassign the employee, as seems to follow from the terms of the current definition. Or, does the employer also meet this obligation if it is not reasonable to require the employer to reassign the employee to an alternative position, as was the case under previous law?

The Supreme Court ruled that the latter is the case. It argued that according to the legislative history, the legislature did not envisage a break with the past. The employer’s reassignment obligation is not an obligation to achieve a specific result. The deciding factor is whether, in the given circumstances, the employer can reasonably be required to reassign the employee to another suitable position at the company. The Supreme Court further ruled that the employer has a certain margin of discretion in determining whether this is possible. The court of appeal had been correct in its assessment that, in this case, SIEP could not reasonably be required to reassign the employee to another suitable position within the Shell group and that the employment agreement could be dissolved based on the h ground.

Stefan Sagel successfully litigated this case before the Supreme Court on behalf of Shell.

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