Employment Law Newsflash September 2011

We are pleased to offer you our September 2011 Employment Law Newsflash. It is a reflection of what we stand for: giving practical advice and maintaining personal contact with our clients and business relations. In this Newsflash we would like to inform you concisely about some topics of current interest. If you would like to know more, please don’t hesitate to call one of our lawyers for a brief explanation (tel.: +31 (0)20 344 61 00).

As from 1 January 2012 Dutch general old age pensions will not commence until the retiree’s birthday
On the basis of a current legislative proposal, it is likely that as from 1 January 2012 a Dutch old age pension will not commence until the retiree’s 65th birthday. Employment contracts or collective labour agreements often provide that the employment contract will end on the first day of the month in which the employee reaches the age of 65. Since as from 1 January 2012 the old age pension will not start until the retiree’s 65th birthday but it will be possible that the employment contract will end earlier as from the first day of that month the retiree will have a period without salary that must be bridged. In order to avoid that, it appears that an amendment to the employment contract or the collective labour agreement will also be necessary. The Dutch Minister is of the opinion that the employer and the employees should arrange this in consultation. We advise you to have that looked into

Director of a listed company is no longer an employee
The legal relationship between a director and a listed company no longer can be deemed to be governed by an employment contract. This follows from the Dutch Management and Supervision Act (Wet Bestuur en Toezicht), which the Upper House of the Dutch Parliament passed at the end of May 2011. As a result of that Act, directors of listed companies will lose the protection against dismissal that is afforded under Dutch employment law. It is expected that the Act will enter into effect as from 1 January 2012. Currently, a director often has an employment contract with the listed company (in addition to the parties’ relationship pursuant to company law). In practice that has led to undesirable developments, in particular in connection with severance payments (and the amount of such payments). In the future it is expected that a commission contract will be entered into instead of an employment contract. In addition, the new Act also lays a foundation for a ‘one tier board’ at a public limited liability company (N.V.) or private limited liability company (B.V.), and the number of positions that a managing director or supervisory director may hold will be subject to a maximum. Employment contracts that are already in effect will continue to be honoured after 1 January 2012

Contract drawn up by the employer may not be interpreted to the employee’s disadvantage
This follows from legal proceedings that were conducted before the Court of Appeal of Leeuwarden, the Netherlands. That case involved the interpretation of a study costs agreement. The employer demanded repayment of all the study costs because the employee handed in his resignation before he had completed the study course (which had already been paid for). Pursuant to the agreement the employee had to pay back the costs after completing the study course. The agreement did not have any provision governing the situation in which the employee resigned himself during the study course. The Court of Appeal ruled that an agreement that has been drawn up by the employer cannot be interpreted to the employee’s disadvantage. Therefore, the employee’s resignation during the study course did not lead to the employee being obliged to pay back the study costs to the employer. This ruling shows once again how important it is to ensure that contracts are drawn up properly and completely (Court of Appeal of Leeuwarden, 5 July 2011).

Summary dismissal after mistakenly taking a colleague’s bicycle (theft)
After work an employee mistakenly took a colleague’s bicycle. He thought that it was his wife’s bike, which had been stolen several days earlier. It was only after his employer asked for an explanation a day later that he brought the bicycle back and attempted to apologise for his behaviour. The Cantonal Division of the District Court ruled that the employer had properly summarily dismissed the employee. The Court found that the employee should have given the bicycle back to his colleague as soon as he had realised his mistake. The Court did not accept the employee’s explanation that he was in the middle of moving house. (Cantonal Division of the District Court of Bergen op Zoom, the Netherlands, 2 August 2011).

Unclear records of unsatisfactory performance kept by an employer and lack of an improvement plan led to rejection of a request to have an employment contract dissolved
Chanel requested the Cantonal Division of the District Court to dissolve an employee’s employment contract without awarding any compensation because the employee’s performance had been unsatisfactory for years. The court rejected that request to have the contract dissolved because Chanel had not made a sufficient effort to allow the employee’s performance to improve by implementing an improvement plan. The performance assessment forms also did not show that the employee’s performance had been unsatisfactory. Chanel uses a scale of 1 to 5 for its performance assessments, and the employee’s average scores were above 3. This case shows once again that it is important to be consistent in applying performance appraisal reports. In practice such reports often are not completed accurately, which can have consequences in proceedings such as these. It is also important to implement an effective improvement plan (individual training and/or counselling) in order to decrease the chance that the Court will reject a request to have the employment contract dissolved (Cantonal Division of the District Court of Delft, the Netherlands, 27 January 2011).”

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