Severance pay and obligation to give notice in case of dismissal of fixed-term employment contracts of six months or more
Our Dutch lawyer Employment Law in Amsterdam gives legal advice on the compensation in lieu of notice and the obligation to give notice in case of dismissal of fixed-term employment contracts of six months or more.
When a fixed-term employment contract ends, an employer must inform the employee in writing no later than one month in advance whether the contract will continue or not. This is called the obligation to give notice. As of 1 January 2015, pursuant to Section 7:668(1) of the Dutch Civil Code, the notice obligation applies when a fixed-term employment contract is terminated.
Call our employment lawyers: 0031 20 – 522 1999
No obligation to give notice in case of an employment contract shorter than six months
If the employment contract is entered into for a period of less than six months, the employer’s obligation to give notice does not apply.
Neither does the obligation to give notice apply in case of an employment contract for the duration of a project or for another reason whereby no end date has been set (for example, in case of replacement due to illness).
In all other cases, an employer is obliged to:
- Not later than one month before a fixed-term employment contract ends,
- inform the employee in writing not later than one month before the end of a fixed-term contract whether it will be continued.
Compensation for neglecting the duty to give notice in the case of a temporary employment contract
The employer must then indicate whether he wants to extend the employment contract and, if so, under what conditions (Section 7:668 of the Dutch Civil Code). If the employee has completely failed to comply with this obligation to give notice, he will, ‘in principle’, owe the employee compensation equal to the amount of the salary for one month. This compensation in lieu of notice is therefore equal to one month’s salary, or to a pro-rata payment. Only in the event of:
- bankruptcy,
- suspension of payment
- or debt rescheduling
this indemnity in lieu of notice is not owed.
Claiming partial compensation in advance
If the employer does comply with his obligation to give notice, but not in time, then the employer owes compensation for the period that the employer is late with his notice. This is called pro rata compensation.
How do you calculate the pro rata notice fee?
It’s all about the day the notice letter was received. Suppose that this only happened on June 7 instead of at the end of May, and that you earn € 2,400 gross per month. Because the letter of notice was only received on June 7, it is 7 days too late. The compensation in lieu of notice under article 7:668 is then
Informing in writing
The law requires the employer to inform the employee in writing. This is evident from the legislative history (MoU Parliamentary Papers I 2013/14, 33818, C, p. 79):
‘In order to strengthen the position of the employee, this bill regulates that the oral promise of the employer on this point is formalized through a written obligation to give notice. This will prevent an employer from promising an employee to continue the employment contract but subsequently failing to keep that promise’.
When does the obligation to give notice apply? When the employee has received the letter
The law states that the letter must have reached the employee. Only on that date can it be determined whether the employer was on time. The employer must be able to prove the latter. See ECLI:NL:RBROT:2015:3883:
… For the written notice obligation of Section 7:668 (1) of the DCC, the receipt theory of Section 3:37 (3) of the DCC applies. This theory implies that a statement addressed to a certain person only has effect if it is certain that this statement has actually reached the person concerned.
Prior notice in employment contract
An employer may also include a provision at the start of an employment contract stating that the employment contract will end by operation of law on a certain date and that it will therefore not be extended. In that case, the employer must clearly state that this provision constitutes notice. But in that case, the employee must still inform the employer of the continuation one month in advance if he wants to extend the employment contract, and thus go back on the notice.
End of the temporary employment contract
Recent case law shows that compensation is not due in all cases if the employer fails to do so. Our lawyer in Amsterdam explains this as follows. Although it is clear from the legislative history that the notice must be given in writing, this to protect the employee, there are judges who deviate from this requirement, such as Subdistrict Court of The Hague on 29 February 2016. The subdistrict court held that the employee (could) not reasonably understand an oral notice other than aimed at the end of the employment contract’. Because the employee had to understand that the employment contract would end anyway, no notice allowance was granted.
Reasonableness and fairness in notice obligation
In a similar vein, ECLI:NL:RBROT:2016:4415, Rotterdam District Court ruled on June 13, 2016. There, too, it was established that the employer had not complied with the notice obligation. However, in view of the circumstances of the case, the subdistrict court found it unacceptable by standards of reasonableness and fairness to order the employer to pay the compensation claimed.
As a result, according to the court, the employee had sufficient certainty that the temporary employment contract would not be continued and would end:
‘The Subdistrict Court is of the opinion that it cannot have been the legislator’s intention in a case like the present one, where for the employee there cannot reasonably have been any uncertainty or lack of clarity about the non-continuation of the temporary employment contract for a long time, to nevertheless give this employee a claim to payment of the compensation in advance if the employer has not complied with its obligation to give written notice’.
Collecting the payment in advance
The above judgments show that judges sometimes take a flexible approach to the requirement for written notice, as long as it is sufficiently clear to the employee that his fixed-term employment contract will not be extended.
When should you file a petition with the court?
The employee’s lawyer must have filed a petition with the court within two months of the day on which the employment contract ended. This is a so-called expiration period, which cannot be interrupted or extended. Too late is too late. Therefore, contact a specialized lawyer in labor and dismissal law in time if you want to claim and collect the compensation in court.
Advice on severance pay and obligation to give notice by a lawyer in Amsterdam
Please contact our specialized Dutch lawyer for employment law in Amsterdam for legal advice on the obligation to give notice and the compensation in case of a fixed term contract: 020-5221999
