On 18 January 2019, the Dutch Supreme Court confirmed that in the case of international groups, there are reasonable limits to the obligation to redeploy employees before they can be dismissed. This makes it clear that redeployment should not automatically be considered an option in the case of a large employer that has branches worldwide. Employers like Shell can breathe a sigh of relief at this point.
What about the redeployment obligation in the Netherlands? Before an employer can dismiss an employee, the options for reassigning the employee to another position, with or without training, must be investigated. This obligation follows from Book 7, Article 669(1) of the Dutch Civil Code and is broader than the obligation previously applicable before introduction of the Wet werk en zekerheid [Work and Security Act]. Previously, the obligation only applied if an employee who was dismissed due to long-term sickness or if an employee was dismissed for operational reasons. However, the current redeployment obligation applies to all grounds for dismissal, except for ‘culpable acts or omissions by the employee’. In all other cases (e.g. ‘inadequate performance’), this therefore means that in principle the obligation to redeploy applies, unless the employer can demonstrate that redeployment ‘is not reasonable’. This may be the case, for example, if the ground for dismissal is ‘damaged employment relationship’.
The redeployment obligation is often a problem for large international employers. Employees who are threatened with dismissal and who are prepared to work abroad, regularly take the view that they should be given priority for a placement in one of the foreign companies belonging to the group. Employees usually invoke Article 9(2) of the Ontslagregeling [Dismissal Regulation], in which the redeployment obligation is set out in further detail. It states that if the employer is part of a group, the investigation into redeployment options should also look at jobs in other companies that form part of the same group. The Dismissal Regulation is silent on whether jobs in foreign companies belonging to the same group as the employer should also be considered. In the explanation to the Dismissal Regulation, it is explicitly stated that an employee who is threatened with dismissal has priority over an external applicant.
A Shell expat threatened with dismissal also made reference to this. He argued that Shell’s global opportunities should be investigated in his case and that he should be given priority over external applicants. On 19 September 2017, the Court of Appeal of The Hague (see ECLI:NL:GHDHA:2017:2654) ruled that it is indeed necessary to look for suitable positions within the Shell group worldwide. However, the Court of Appeal disagreed with the issue of priority that was claimed. According to the Court, this would not be reasonable because these vacancies and appointments are for separate, local companies of the Shell group and that if priority were given, this would interfere with the freedom of these companies to implement their local personnel policies according to their own needs and wishes. Moreover, according to the Court of Appeal, it is not clear how a company in the Netherlands could legally enforce outside the Netherlands any priority given to an employee, partly in the light of corporate governance within a large international group.
The Supreme Court (see ECLI:NL:HR:2019:64) ruled in cassation that the redeployment obligation should not be regarded as an obligation to achieve an objective, but as a best-endeavours obligation. It should be examined whether it is possible or reasonable to redeploy the employee. In determining whether it is reasonable, one should also look at circumstances that do not make redeployment self-evident or reasonable. The employer therefore has a certain margin of discretion. The redeployment obligation is thus considerably nuanced in an international context.
Caroline Mehlem, legal team Labour, Employee Participation & Pensions
Employers are making a big mistake if they assume that outstanding holidays will lapse after the statutory expiry date. The Court of Justice of the European Union (EU Court of Justice) recently ruled that there can be no question of automatic expiration: holidays can only expire if the employee has actually been enabled to take them. The employer has the clear task of proving this – if necessary.
The right to paid annual leave is one of the fundamental rights as laid down in the EU Charter and this right is further elaborated in the Working Time Directive (Directive 2003/88/EC). The case law of the EU Court of Justice also shows that this right to holidays is considered an extremely important principle of EU law. In two rulings of 6 November 2018 (ECLI:EU:C:2018/872 and 874), the EU Court of Justice again emphasised the importance of actual holiday rest. In order to promote this so-called recuperation function of holidays, it is not acceptable to provide incentives to give up holiday rest (as already follows from earlier rulings of the EU Court of Justice). The aforementioned rulings now also mean that employers have an obligation to ensure in a specific and demonstrable manner that employees are actually given the opportunity to take outstanding holidays. If necessary, the employer must even encourage the relevant employee to take the outstanding days of leave in good time.
In the Netherlands, an expiry deadline is applicable to the minimum holiday entitlement (the so-called statutory holidays that amount to four times the number of working hours per week): the minimum holiday entitlement expires six months after the calendar year in which it was accrued (Book 7, Article 640a of the Netherlands Civil Code). However, as a result of the rulings discussed here, employers may no longer simply assume that holidays automatically lapse after this period.
In other words, a holiday entitlement can only lapse if it is established that the employee, after having actually had the opportunity to take the holiday, has consciously and in full knowledge of the consequences waived it.
In practical terms, this means that employers must repeatedly inform their employees in writing, well in advance of the expiry date, about the imminent expiry of their holidays and the need to take them in good time. It is important to keep these warnings, reminders and requests to employees in writing and to have the employee formulate a specific holiday schedule. If the employer fails to do this, the employee may argue that his holiday entitlement has not lapsed and, for example, must be paid to him upon termination of his employment. If an employer does not have the above mentioned supporting documents in its record-keeping system, this can then come with a hefty price tag!
I am not ruling out the possibility that this could play a major role in negotiations on the termination of employment relationships by mutual consent (by means of a settlement agreement). That is to say, case law now makes provision for employees to ask their employer to produce the evidence. If there is no evidence, this could result in unpleasant extra costs for the employer. Therefore, this is something to be aware of.
For questions, please contact Caroline Mehlem, lawyer specialising in Labour, employee participation & pensions.
The District Court of Amsterdam has ruled in two individual cases (one and two), brought by the FNV, that riders working for the meal delivery service Deliveroo are entitled to an employment contract. It is remarkable that the District Court gave this decision because in July 2018, the same court came to the conclusion that the self-employed status of a Deliveroo rider was not sham and therefore, the rider was not entitled to an employment contract. I have previously written a blog about this case.
Why did the subdistrict court arrive at this different decision?
In February 2018, Deliveroo made the decision not to extend the employment contracts of its riders. Riders were only able to work by means of a contract for services, a so-called ‘partner agreement’. The question was whether or not this partner agreement actually constituted an employment contract. The only way to verify this has been to compare the legal conditions of an employment contract with the partner contract and how the partner contract is actually put into practice. The subdistrict court reached the following decision:
Work: the way riders are able to use the Deliveroo app gives them little room to refuse. According to the subdistrict court, this room is more limited than the partner agreement suggests. Here, the subdistrict court paid particular attention to the performance criteria. Riders who perform well are given a certain priority position when logging in for certain (desirable) sessions. This results in an obligation to perform work.
Pay: Despite the fact that the pay received by riders in the partner agreement is higher than the minimum wage and that their pay varies for each specific session, it still constitutes pay in the opinion of the subdistrict court. One of the factors in this is particularly the fact that the remuneration was not so much higher than the minimum wage for a contract for services could be assumed. The pay is moreover a fixed rate that cannot be negotiated.
Relationship of authority: Throughout the partner agreement, there is an emphasis in various places on the independence of the rider. However, according to the subdistrict court judge, these rights and obligations do not indicate self-employment. For example, the riders must meet various health and safety requirements. The use of the Deliveroo meal box and clothing has since been made optional, but can be ordered from Deliveroo at a reduced price. This encourages the use of Deliveroo material. Moreover, the rider is still externally recognisable by the customer, because the order is placed via Deliveroo. There is therefore still a relationship of authority.
During a specified time period: The subdistrict court found it unlikely that only a small number of deliveries would be made, so that the criterion of carrying out work during a specified time period would not be met. Moreover, it is conceivable that riders would turn their Deliveroo activities into a business, thus relegating the features of an employment contract further into the background. Since these are exceptional cases, the subdistrict court rejected these arguments for those issues on which a decision had to be given. Deliveroo therefore lost this case.
We can discuss this judgment of the subdistrict court at length. This also applies to the earlier ‘Deliveroo case’ on which a subdistrict court judge of the same court ruled differently. In each instance, it depends on the circumstances of the case and the arguments put forward as to who is the winning party. I repeat: would a legal form lying between a contract for services and an employment contract not be a solution?
Joost Kokje, legal team Labour, Employee Participation & Pension