The Netherlands: Understanding the Difference Between Wage Suspension and Wage Freeze

In practice, the terms “wage suspension” and “wage freeze” are often mistakenly used interchangeably in the Netherlands, with potentially dire consequences for the employer. The key differences between the two wage penalties are discussed below, along with a notable case that provides some protection for employers.

Wage Suspension

An employer may suspend its obligation to pay wages if a sick employee fails to comply with reasonable written requirements to provide information that establishes their entitlement to those wages. This may, for instance, include seeing the company doctor.

The employee is not entitled to payment of wages during the suspension period. Once the employee starts complying, however, the employer will need to pay the wages regardless and will need to do so retroactively. This may mean that a wage suspension is less effective; if the employee starts to cooperate just before the monthly wage payment, they will not feel the impact of the wage penalty.

Wage Freeze

With a wage freeze, the employee loses their right to wages altogether. A situation where this could arise, for instance, is where the company doctor considers the employee to be 50% unfit for work and the employee refuses to carry out suitable work. If the employee does start to cooperate at some point, they will not be entitled to the wages applicable to the wage freeze period.

Obligation to Provide a Warning

In order for either wage penalty to be valid, the employer must provide the employee with a prior warning.

If the employer suspects that the employee is not fulfilling an obligation, it must call the employee to account and point out the possible consequences. This could be the warning that if the employee refuses to carry out suitable work, the wage will be frozen from a particular date.

Previous case law in the higher courts has found that the employer must choose the words carefully when issuing such a warning. These cases held that if the employer erroneously refers in its warning to a wage suspension when in fact a wage freeze was intended, then it may not later impose a wage freeze.

Rotterdam District Court Case

A Rotterdam District Court case, however, provides a potential relaxation of this strict rule. In this case, the court ruled in summary proceedings that the employer was justified in applying a wage freeze, even though the warning letter also spoke of a wage suspension.

The company doctor had found, according to advice on phased reintegration, that the employee could start to carry out some work. The employee disagreed because she considered herself medically incapable of doing it. However, she could not back this up with expert support.

As the employee did not comply with her reintegration obligations, she received two official written warnings that warned of a wage suspension. She later received a third official warning, the subject of which was "wage suspension." This letter concluded with a warning that if the employee failed to fulfill the agreements in the letter, a wage freeze would be applied.

The district judge ruled that both situations were successive and that the notice about the wage freeze was not unclear.

Conclusion

This judgment may appear to be outside the norm, as potentially unclear warnings usually come at the employer's expense. In this case, however, the decisive factor was that the consequences for the employee were clear in advance.

Although imprecise language may be allowed as long as the purport of the wage penalty is crystal clear to the employee, it would be better for the employer to err on the side of caution and exercise necessary care when drafting a warning about wage penalties.

*Justin Conijn is a paralegal with Littler Netherlands.