Tight Labor Market Impact on Fair Compensation

In determining the amount of fair compensation, the Supreme Court held in New Hairstyle that, among other things, the consequences of dismissal may be relevant. In the case below, the Subdistrict Court of Amsterdam has again made it clear that this is the case.

What’s at stake in this case?

Since 2018, an employee has been in a permanent part-time position, working 14 hours per week and performing various assignments. After the end of his last assignment in September 2021, the employee and the employer get into a dispute about the extent of the employee’s obligations to seek and accept new work. According to the employer, the employee is not doing enough and is obliged by the collective labour agreement to apply externally during the period when there is no assignment for a longer period of time. Therefore, the employer imposed a wage freeze as of April 7, 2022. In August 2023, the Subdistrict Court of Tilburg ruled that the collective agreement did not contain an obligation to seek external employment and that the wage freeze was unlawfully applied. Subsequently, the employer requested that the employment contract be terminated on the grounds of a breach of the employment relationship. The employee agreed, but asked the Subdistrict Court of Amsterdam for a fair compensation, arguing that the disruption of the employment relationship was due to the employer’s actions.

Judgment of the court

According to the Subdistrict Court of Amsterdam, there was indeed a disrupted employment relationship. This was evidenced by the parties’ behavior towards each other, the protracted conflict, and the eventual court case. The employment contract was therefore terminated. In addition, the court ruled that the employer had acted in a seriously culpable manner by misinterpreting its own collective labor agreement and, as a result, pressuring the employee to apply for an external position under the unjustified application of the salary freeze. This conduct resulted in a disruption of the employment relationship.

In estimating the amount of fair compensation, the court took into account the consequences of the dismissal and expected future earnings, in accordance with Supreme Court case law. Given the tight labor market, the employee is expected to find a new job relatively quickly. Therefore, the court awards fair compensation of only EUR 500 gross, which is slightly less than one month’s salary for the employee in question.


The state of the labor market can be a factor in determining fair compensation. Currently, in a situation of labor market scarcity, this works in favor of the employer. However, in the event of changes in the economy, this can actually work against the employer.

Amsterdam District Court September 18, 2023, ECLI:NL:RBAMS:2023:5852

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