17 April 2019

Supreme Court to provide clarity on dormant employment agreements

The Supreme Court will look at the termination of “dormant” employment agreements in a case initiated by De Brauw and Stichting Achmea rechtsbijstand. Many employers continue to employ long-term disabled employees who no longer receive a salary, to avoid having to pay these employees a transition payment.  While new legislation will compensate employers for the transition payment as of 2020, they remain reluctant to terminate these dormant employment agreements. In a preliminary ruling, the Supreme Court will answer the question whether employers have to accept a proposal to terminate a dormant agreement if the employee agrees to cap the transition payment to the amount the employer will later receive as compensation from the UWV agency. Besides paying the transition payment in advance, there will be no financial disadvantage for employers.

Stefan Sagel, who litigated this case on behalf of De Brauw, comments: “Considering the ongoing ambiguity in Dutch courts on this much-disputed topic, I am pleased that a first step has been taken towards formulating clear and fair guidelines.

For our recent article about this development, click here.

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