Our employment lawyer in Amsterdam, mr. P.Chr. Snijders, gives legal advice on settlement agreements, the concealment of a new job and the right to a severance payment. In a settlement agreement, through which an employment contract ends by mutual consent (dismissal agreement), it is often stipulated that the employee, at the time of signing this contract, has provided all necessary information and has no concrete prospect of (finding) a new job.
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Severance payment in a Dutch settlement agreement
This has to do with the severance payment (often the transition payment) because the employer would not want to pay this severance payment if it turns out that the employee can be employed somewhere else in the short term. How likely is it that an employee who conceals his new job, when signing a settlement agreement, will face a lawsuit from his ex-employer who will reclaim the severance pay (transition pay) from the employee?
The case law on concealing a new job in the event of dismissal by mutual agreement is not entirely unambiguous.
Concealing a new job: risk of repayment of transitional allowance (Amsterdam Court of Appeal)
On 25 November 2014, the Amsterdam Court of Appeal ruled that if an employer has concealed the employee’s chances of finding a new job, it no longer has to pay the employee a severance payment, provided that the severance payment contains a clause whereby the employee declares that he has ‘no concrete prospect of other work‘ when signing the settlement agreement. In this case, it turned out that the employee was already in far-reaching negotiations with another employer about another job. Because of this ‘deception’ (withholding essential information about a new job), the employer was authorized not to pay the severance payment.
Lying about a new job in case of a concrete prospect of a new job: Dutch case law
If an employee is found to have concrete plans for a new job, while stating that this would not be the case when asked by the employer, this may be grounds for the employer to nullify the termination arrangement on the grounds of error or deceit.
Duty to report in view of ‘all the particulars of the case’
On 12 March 2013, the Dutch Court of Appeal of Arnhem-Leeuwarden ruled that, in answering the question of whether, according to generally accepted practice, a party has an obligation to disclose certain relevant data, or whether it is allowed to keep such data to itself, regard must be had to ‘all the particulars of the given case’. The fact that the employment contract was terminated on the initiative of the employer played a part in this. In a discussion, the employee had stated – in accordance with the truth – that he had ‘some job applications’.
No spontaneous obligation to provide information about the phase of job applications
Under these circumstances, in the opinion of the court of appeal, there was no spontaneous obligation on the part of the employee to provide information about the phase of his job applications. If the state of affairs in those application procedures had been decisive for the employer at that moment in deciding whether or not it wished to conclude the termination agreement, it should have asked about that state of affairs. She did not do so. The employer’s claim for nullification of the settlement agreement was therefore rejected.
Negotiations on a new job at an advanced stage: duty of disclosure
The Dutch subdistrict court in Utrecht was stricter in its approach. On 21 September 2011, it ruled that an employee who is negotiating with his employer on a termination arrangement must in any event disclose his negotiations on his new job, even if he is not asked:
‘if there is a concrete prospect of obtaining a position
and in the sense that not in general terms a chance of obtaining a job exists,
but that the negotiations for this are at such an advanced stage
that it may reasonably be assumed that a concrete and detailed offer from the employer will with a bordering degree of certainty be or has already been accepted by the employee’.
Specific question about new job: duty of disclosure
There is therefore in any event a duty of disclosure if during the negotiations on a termination agreement the employer asks a specific question about the prospect of new employment (HR 17 January 1997),
but even if this question is not asked, the lower courts assume an obligation to disclose, regardless of the questions asked by the employer about a new job.
Immediate dismissal in case of concealment of a new job during the negotiations for a settlement agreement?
However, it can end even worse if an employee conceals a new job, according to a ruling by the Arnhem-Leeuwarden Court of Appeal on 3 July 2019.
The Court of Appeal wrote that the parties were negotiating a redundancy agreement whereby the employer undertook to pay a (substantial) severance payment because the employee stated that he had no other work, nor any prospect of other work. The employer requested employee to confirm in writing that he had provided correct information about work at a particular company. In response, the employer stated that he was doing an unpaid summer internship at that company but refused to back this up with a statement from the company.
In the end, it turned out that the employee was indeed working there. Good employee must provide correct information during negotiations. The employer then summarily dismissed him.
Sufficient grounds for immediate dismissal
The court of appeal approved this dismissal. It considered that the employer had maintained an image that did not correspond to reality, namely that at the time the termination agreement was signed he had no (prospect of) other work. According to the court of appeal, this was sufficient grounds for immediate dismissal. According to the court of appeal, good employment practice requires an employee to provide correct information to his employer when negotiating a termination agreement. In fact, the employee was so seriously blamed that he was not entitled to the statutory transitional compensation.
Contact our Amsterdam employment law lawyer about severance pay
For more information about settlement agreement and severance pay please contact our lawyer employment law in Amsterdam, mr. Snijders: 020-5221999.