In a recent case, an employer petitioned the Sub-District Court to dissolve an employment contract with immediate effect after the UWV (Employee Insurance Agency) had dismissed its application for dismissal for economic reasons. The employee reported sick two weeks after the UWV's rejection of the application but before the employer had filed its petition with the Sub-District Court. The Sub-District Court rejected the petition for dismissal because it held that dissolution during illness was prohibited.
Case law and the literature indicate differing views on this matter, which is why the Dutch Supreme Court has now been asked to provide a definitive ruling on the question.
Scope of the prohibition on termination during illness
At issue here is the scope of the statutory prohibition on termination: the employer may not terminate the employment contract "while the employee is unfit to do his work due to illness."1 However, if the UWV had granted the employer's dismissal permit, the employee's unfitness for work would not have precluded termination of the employment contract, since the prohibition on termination during illness does not apply if the employee reports sick after the UWV has received the application for dismissal. However, the UWV rejected the application for dismissal in this case and the employer filed its petition for dissolution after that. The court could only grant that petition if the conditions for cancellation of the employment contract had been fulfilled and if there were no prohibition on termination.
The question now is whether the prohibition on termination during illness precludes dissolution of the employment contract or whether the exception to the prohibition on termination that applies during the UWV procedure also applies to the court proceedings. If so, the court would be able to dissolve the employment contract despite the employee's illness.
Advocate-General to the Supreme Court
The Advocate-General to the Supreme Court (the 'AG'), who provides independent advice (an 'opinion') to the Supreme Court, is clear in her opinion. She considers that the prohibition on termination during illness does indeed preclude the dissolution of an employment contract for economic reasons if the employee reports sick before the employer has filed a petition with the Sub-District Court. This is also the position if the employee becomes sick during the UWV proceedings prior to that or after the UWV has refused the application for a dismissal permit.
According the AG, the legislature deliberately opted for detailed rules prohibiting termination and the exceptions to those rules. The legislature also intended to limit those exceptions, particularly regarding dismissal due to economic reasons. There are also two distinct reference dates for an exception to the prohibition on termination during illness in the UWV procedure and the court dissolution procedure, namely where the employee reports sick after:
- the UWV has received the application for dismissal; or
- the Sub-District Court has received the petition for dissolution.
Finally, Supreme Court case law indicates that the prohibition on termination during illness must generally be applied strictly.
Strategic sick report?
The fact that employees could use reporting sick as a strategy to frustrate the dismissal procedure does not, in the AG's view, constitute a reason for depriving all employees who are unfit for work of this protection against dismissal. If an employer suspects that the sick report has been made for strategic purposes, it will have to arrange an assessment of whether the employee is indeed unfit for work. The employer can ask its company doctor to issue an opinion on this or apply for a UWV expert opinion.
The AG considers that the prohibition on terminating the employment contract during illness applies in dissolution proceedings for economic reasons if the employee became unfit for work before the Sub-District Court received the petition, whether or not the employee had already been sick during the UWV procedure. We will now wait to find out whether the Supreme Court agrees with the AG's opinion.
Given the AG's opinion, it would make sense in our view, when dealing with dismissal for economic reasons, to file the petition for termination immediately if the UWV rejects the application.
1 Employees enjoy significant protections during illness under Dutch law. An employer cannot dismiss the employee during the first 104 weeks of the employee's illness, and employees receive a continued salary payment during those 104 weeks.
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