The Netherlands: No Longer Offering Work Is Not Dismissal

The hospitality industry often employs flexible hours staff such as dishwashers, cleaners and kitchen helpers. Called in during busy periods, such employees work less during quiet periods. This is allowed in the Netherlands, provided it is done within the statutory framework, the Collective Labor Agreement for the hotel, restaurant and café industry (Horeca-cao) and any arrangements made in the employment contract. 

But what happens if an employee on a fixed-term employment contract is no longer called in, for example, because an assignment is cancelled or there is an employment dispute, even though the contract is still ongoing and there has been no formal termination? 

Such a situation was the subject of a recent court case.¹ The employer unexpectedly stopped offering work to a cleaner, even though his employment contract was still in force. The court held that what the employer may have seen as a practical solution was a case of wrongful termination of employment, which had financial consequences for the employer.

The situation

The employee was employed as a cleaner under a fixed-term employment contract. About two months before his contract was due to expire by operation of law, he was no longer called in to work. He understood this to be a summary dismissal and took his case to the Subdistrict Court, asking for his dismissal to be set aside and for the continued payment of his wages.

The employer argued that the company's sole client had terminated their cooperation, leaving no work or income to keep him or its other employees employed.

The judge's findings

The judge held that no formal notice of summary dismissal had been given, but that the employee was simply no longer being called in to work, which had to be equated to "termination" (for a reason other than urgent cause) of a fixed-term contract that did not include an early termination clause. The judge held this to be wrongful termination of employment.

Because the employer had not requested permission from the Employee Insurance Agency (UWV) to dismiss the employee for commercial reasons and had not submitted an application for termination to the Subdistrict Court, the termination was wrongful. Therefore, the employment contract had not been validly terminated and the employer's "notice of termination" was set aside. 

Financial consequences

The judge ruled that the employee was entitled to wages from the time he was no longer offered work up to the date that the employment contract ended by operation of law, amounting to about two months' wages. 

Moreover, the employer was ordered to pay a 15% statutory increase due to late payment of wages, plus statutory interest. The court also awarded a transition payment, which in principle is legally required when an employment contract is terminated on the employer's initiative. In addition, the employer was ordered to reimburse all legal costs.

Practical tips

• Adhere to the correct dismissal procedures: dismissal for commercial reasons requires permission from the Employee Insurance Agency or an application for dismissal to the Subdistrict Court. Any dismissal issued without these steps having been taken is invalid.
• Work interruption is not dismissal: not calling in an employee on a current contract without issuing a formal termination could be considered as wrongful termination.
• Document arrangements made: if there is less work, document this properly and discuss it with the employee. Avoid tacitly putting employees "on ice" without providing substantiation or documentation.
• Temporary contracts also create financial and other obligations: in the event that the work ends early, employees on temporary contracts may be entitled to wages and, after their contracts expire, to a transition payment.