Employees are not quick to resign with immediate effect because if they do they risk losing benefit rights as a result of terminating their employment contract and–not unimportant–their right to the transition payment.
In the Dräger ruling rendered by the Dutch Supreme Court in March 2018, the Court confirmed that a transition payment could also be due if the employer justifiably dismissed the employee with immediate effect. What is not as well-known is that an employee can also resign with immediate effect and still retain their right to a transition payment. The employee will then have to bring an action before the Subdistrict Court claiming the transition payment. The employee in this case was successful.
Resignation with immediate effect
Some valid reasons for the employee to resign with immediate effect include:
- an employer who fails to pay the employee’s salary or fails to pay it on time for a long period of time;
- an employer who seriously threatens or sexually harasses the employee;
- an employer who grossly disregards the obligations under the employment contract in some other way.
Employee’s immediate resignation on account of employer’s failure to comply with rehabilitation obligation and impending damage to health
In the case on which the Den Bosch Court of Appeal ruled, the employer had well and truly crossed the line. The employee became unfit for work after suffering a heart attack and the employer then seriously violated its rehabilitation obligations for a prolonged period of time. For example:
- the employer disregarded the expert opinion given by Employee Insurance Agency (UWV) and compelled the employee to immediately perform unsuitable work under the threat of a 100% pay freeze and instant dismissal if the employee refused;
- prior to this, during the rehabilitation process, the employer failed to draw up a plan of action despite a request from the employee to do so;
- despite the company doctor’s advice, the employer failed to take timely action to start a mediation process—action was only taken after 1.5 years of sickness;
- the UWV also ruled that the employer failed to meet its rehabilitation obligations and stated that a wage penalty might be imposed.
The employee could no longer cope with the pressure and saw no other option than to resign immediately. Once the employee had resigned, he claimed the transition payment and the fixed compensation in court proceedings.
The Court of Appeal and the Subdistrict Court concurred that there was a compelling reason for the employee’s resignation and the reason was the employer’s conduct, which in this case could also be construed as a ‘seriously culpable act on the part of the employer’. As a result, the employer had to pay the sick employee the transition payment and the fixed compensation.
It is somewhat unsatisfactory that no fair compensation was claimed and that the judgment did not address this. Given the employer’s serious culpability I believe that it would have been logical to award fair compensation.
Sick employee and dismissal
In the case of dormant employment contracts, maintaining an employment contract with an employee absent from work due to long-term sickness (even after the employer had violated the rehabilitation obligations) is not a ground for judges to assume serious culpability on the part of the employer. The employer has no obligation to dismiss, even if the sick employee loses a transition payment as a result.
In a – very remarkable – decision, the Arbitration Tribunal for Healthcare Scheidsgerecht voor de Gezondheidszorg, (arbitration institution hearing healthcare disputes) recently came to a different conclusion. The Tribunal forced the employer to initiate dismissal proceedings for the sick employee with an undertaking to pay a transition payment subject to a penalty. Whether the regular courts will follow this line in the future, is doubtful.
However, in the case ruled on by the Court of Appeal in Den Bosch, the employee’s resignation with immediate effect did produce the ‘desired’ result: i.e., termination of employment with the award of a transition payment.
Note: immediate dismissal or resignation–and immediate resignation in the case of the employee–cannot simply be withdrawn unilaterally. The employee should therefore not take this step too lightly.
Another relevant question is whether an employee who has rightly resigned with immediate effect is entitled to unemployment or sickness benefits.
The UWV does not easily consider resignation on account of impending health damage sufficient to be able to claim an unemployment or sickness benefit, especially if ‘second-track rehabilitation’ (i.e. employment at another employer) is still feasible. Termination of the employment contract by the employee will result in act prejudicial to a national insurance fund in terms of receiving a benefit or be deemed voluntary unemployment and consequently the employee will not be entitled to an unemployment benefit.
However, in the event of a legally valid immediate dismissal as described in the case set out above, it is likely that the employee will retain his benefit entitlements.