As an employer, you are obliged to inform employees with a fixed-term employment contract (of 6 months or longer) in writing whether you wish to extend it after it ends. If you fail to do this, you are in principle liable to pay the employee notification compensation equal to 1 gross month’s salary. If you do this, but too late, you owe a pro rata payment. The rationale behind this notification obligation is that employees receive timely certainty about whether or not the employment contract will be continued.
Nevertheless, many employers do not know that this notification compensation does not always have to be paid, for example if invoking this compensation would be unacceptable according to standards of reasonableness and fairness. A subdistrict court in Almelo recently ruled on such a case.
Facts
An employee entered into employment on 27 September 2016 and had a fixed-term employment contract that ended by operation of law on 30 September 2017. It was not until 30 September 2017 that the employee received a letter from the employer stating that the employment contract would be terminated as of 1 October 2017. The employee therefore requested the subdistrict court, on the basis of article 7:668 of the Dutch Civil Code, to order the employer to pay €1,634.83 gross for failing to comply with the notification obligation. The employer argued in response that invoking this compensation would be unacceptable according to standards of reasonableness and fairness. The employer argued, among other things, that it had been in discussion with the employee about terminating the employment relationship by mutual consent and had already released him from his work duties. It had also already been indicated that the employer was aiming for a termination, in an email of 21 March 2017. Since they were, however, unable to reach agreement, the fixed-term employment contract expired and the employment was terminated for that reason.
Ruling
The subdistrict court ruled in the employer’s favour here and rejected the employee’s claims. The employer had already provided the employee with clarity (in writing) and in good time that it was aiming for a termination of the employment. As a result, the employee could not reasonably have had any uncertainty about whether or not the employment contract would be continued. The fact that the employer was later unable to reach agreement with the employee on the conditions of a termination by mutual consent does not change this.
Conclusion
Does the employee request payment of the notification compensation from you, but do you believe you gave the employee sufficient clarity in good time? Then contact us. We can assess whether this is the case, whether a claim by the employee has any chance of succeeding, and whether or not you are required to pay it.