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Sub-district court formula for termination of short-term employment not always decisive after all

Sub-district court formula for termination of short-term employment not always decisive after all

Since the entry into force of the new sub-district court formula per 1 January 2009, it was explicitly stipulated in recommendation 3.6 that if an employment contract for an indefinite period is terminated after a short period of time, compensation according to the sub-district court formula (AxBxC) would in principle be awarded. The notes to this recommendation state that if an employment contract for an indefinite period is terminated rather quickly after commencement at the request of the employer, this will in principle not be a cause to derogate from the system of recommendations. Prior to 1 January 2009 this provision was not contained in the recommendations and in the event of termination of short-term employment contracts, the sub-district court formula was derogated from in many cases. The Association of Sub-district Court Judges apparently found this to be undesirable and issued recommendation 3.6 on 1 January 2009. In spite of this new recommendation, it became evident that if an employment contract is terminated after a short period of time, judges do not always take the sub-district court formula as their point of departure for the calculation of the severance pay. Two judgments of the sub-district courts inAmsterdamandBredaare illustrative in connection therewith.

The case that took place before the Amsterdamsub-district court on 28 July 2009 (Jurisprudentie Arbeidsrecht 2009, 256) concerned an employee of 49 years of age who had been in the employ of the employer for barely four months when the employer requested termination of the employment contract due to inadequate performance. This failure to perform properly was not established. The sub-district court decided that since the employer had offered an employment contract for an indefinite period, the employee was permitted to derive a certain expectation therefrom in the sense that the agreement would not result in an agreement of a very short period of time. In the opinion of the sub-district court, the sub-district court formula could therefore not, under the given circumstances, serve as a guide for the calculation of the severance pay. The sub-district court set the severance pay in an equitable fashion at € 23,760 (converted, a C factor of approximately 2.8).

In addition, in the termination proceedings that more recently took place at the Breda sub-district court (15 June 2011, Jurisprudentie Arbeidsrecht 2011, 195), the sub-district court decided that in the given situation the sub-district court formula could not serve as the point of departure for the calculation of the severance pay. In this case, it concerned a 52-year-old employee who had entered into the employ of the employer as head of property management with effect from 1 June 2010. During a direct employee consultation some eight months later, the employer made it known that he found the employee’s performance inadequate and it was expressed to him that it would be made possible for him to look for other employment within a reasonable period of time. Shortly thereafter, the employee was placed on leave of absence with full pay and a request for termination of the employment contract was submitted. The employee did not identify with the criticism. The sub-district court judged that for the short-term employment in question the sub-district court formula could not serve as the point of departure and set the severance pay in an equitable fashion at € 45,000 (converted, a C factor of 5).

The lesson that can be drawn from these two judgments is that in spite of the new, clear recommendation an employer cannot always rest assured that for the termination of an employment contract for an indefinite period the sub-district court will award compensation in accordance with the sub-district court formula (with a C factor of 1) after a short period of employment. That being said, both judgments referred to above concerned relatively poignant cases, whereby the alleged unsatisfactory performance could not be sufficiently demonstrated. This might have played a minor or decisive role in the determination of the compensation. Further, the way the notes to recommendation 3.6 itself are formulated also forms an exception to the basic rule. For instance, the notes state that reasons can exist to set the C factor in excess of 1, such as the situation in which the employee was “extracted” from his previous employer by the new employer, while the employee has abandoned much security and favourable employment conditions by leaving his previous employer.

Anique Sauvé

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