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Employer beware: new Section 7:653a of the Civil Code has immediate effect

02 November 2022

As previously reported, the Transparent and Predictable Conditions of Employment Act entered into force on August 1, 2022. The first substantive ruling on this law was recently published. In this ruling, the District Court of Noord-Holland makes it clear that (the new) Section 7:653a of the Dutch Civil Code - which includes a limitation on the prohibition of ancillary activities - entered into force immediately on August 1, 2022 and also applies to employment contracts concluded before this date. As a result, as of August 1, employers will now need an objective justification even for ''old'' ancillary work clauses. Read more about how the District Court of Noord-Holland applied this requirement in this article.

Employee, working as Service Support IATA, expresses in a conversation with her employer on May 23, 2022 that she wishes to terminate the employment contract. In doing so, she also asks for the possibility of entering into a settlement agreement. The employer refuses this request. The employee confirms the refusal and emphasizes that in that case, no termination has taken place on her part. However, the employer indicates that it still assumes the employment contract to be terminated on May 23, 2022. As a result, the employee claims reinstatement and continued payment of wages in summary proceedings. In turn, the employer argues that by running an Airbnb, the employee violated the ancillary employment clause and thus forfeited a fine of EUR 10,000.

In this case, it is up to the District Court of North Holland to judge:

  • Whether the employee terminated the employment contract on May 23, 2022, and
  • Whether the employee breached the ancillary employment clause in her employment contract and thereby forfeited a fine of EUR 10,000.

1) Did the employee terminate the employment contract?

According to the District Judge, the employee did not clearly and unambiguously terminate the employment contract. There had been no written notice of termination by the employee, even though Article 3.2 of her employment contract required this. Furthermore, it could not be inferred from the correspondence between the employer and the employee that the employee's will was aimed at a unilateral termination. On the contrary, it was aimed at a termination by mutual consent. The claimed reinstatement and continued payment of wages is therefore granted.

2) Did the employee violate the ancillary employment clause and thereby forfeit a fine of EUR 10,000?

The District Judge emphasizes that (the new) Section 7:653a of the Civil Code entered into force immediately on August 1, 2022, and also applies to employment contracts concluded before this date. This Section provides, amongst other things, that a clause in which the employer prohibits or restricts the employee from performing ancillary work outside of working hours is null and void, unless this clause can be justified on the basis of objective reasons. The employer may explain this objective justification afterwards. Examples of justifications include: health and safety, the protection of confidentiality of business information, the integrity of public services, the violation of a legal requirement or the avoidance of conflicts of interest. In this case, the employer has not substantiated any objective justification at all. The claimed fine is therefore rejected.

 

Source: North Holland District Court  6 September 2022, AR 2022-1051

 



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