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Employment, employee participation & pensions

Relocation obligation within international groups

Caroline Mehlem

28 January 2019 - 3 minutes reading time

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

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