Netherlands Update: Notice or termination, what does it matter?

In order for an employee with a fixed-term contract to know where he stands, an employer must let us know no later than one month before the expiry of the employment contract whether it will be renewed and, if so, under what conditions. This is called the notification obligation. But what if the employer complies with the notification obligation (we are not going to renew) while it turns out afterwards that there is no question of a fixed-term employment contract but for an indefinite period. Does the notice that has been given count as termination or not?

The notice

When a fixed-term employment contract that has been entered into for six months or more is about to expire, an employer must give notice to the employee. This is a legal obligation that follows from Article 7:668 of the Dutch Civil Code (‘BW’). An employer is obliged to inform the employee in writing one month before the end date of the employment contract whether the employment contract will be continued and, if so, under what conditions. If this is not done (on time), the employer will owe the employee a compensation in lieu of notice.

The cancellation

A notice is different from a termination. As a rule, the termination of an employment contract requires permission from the UWV. However, if the termination is given without the permission of the UWV, the employee must apply to the subdistrict court for annulment of the termination within two months. If the employee does not do so (in time), the termination will still be final.

The Problem

It may be unclear whether an employment contract is for a definite period or for an indefinite period. For example, if there have been more short-term contracts or if an employee has come over from another employer.

Suppose the employer is of the opinion that there is a fixed-term employment contract and he says not to renew. The employee lets this sink in for a while and comes back to the employer after two months with the announcement that the notice was meaningless because there was (and is) an employment contract for an indefinite period that, in his view, is still running. Can that notice then be regarded as a termination retrospectively? If that is the case, the consequences for the employee are considerable, because then the two-month period in which he could challenge the termination has now expired and with it the termination is final.

What follows from the case-law

The Supreme Court ruled on this in the Constar judgment as follows:

• • If the notice should actually have been a termination, it cannot simply be assumed that this qualifies as a termination since it can work to the disadvantage of the employee (because, for example, he can no longer claim annulment of the termination after two months), but
  • If it is sufficiently clear to the employee that the purpose was to terminate the employment contract, a notice can be regarded as termination. Whether this is sufficiently clear must be assessed on the basis of all the circumstances that may be relevant in this regard. These can be statements or intentions of the employer, awareness of this on the part of the employee, etc.

In other words: no, unless. A notice is not automatically a termination, but it can be if it appears from all the circumstances of the case that the employer wanted to terminate the employment contract anyway.

An employer who therefore wishes to rely on the fact that the notice qualifies as termination will have to invoke those circumstances and, if necessary, be able to prove them. The lower case law shows that this is not a done deal, but that if the circumstances are sufficiently clear, a notice can indeed be regarded as a termination.

By Hocker, Netherlands, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact netherlands@transatlanticlaw.com

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