Interim termination clause in a Dutch fixed-term employment contract
Many settlement agreements are not concluded because there is no so-called interim termination clause in the fixed-term employment contract, as this would not entitle the employee to Dutch unemployment benefits. If an employee with a fixed-term contract (temporary contract) nevertheless agrees to early dismissal by mutual consent, for example with a settlement agreement, the UWV will not (until recently) grant unemployment benefit. This was done with an appeal to Article 19 paragraph 4 of the WW. The UWV is of the opinion that the employee must first serve out his contract without an interim notice clause before he can claim unemployment benefit from the UWV.
Agree on a notice clause at a later date and include it in the settlement agreement (VSO)
But what if the absence of an early termination clause is subsequently included in a settlement agreement and the parties therefore part company with mutual consent? Is there then a right to unemployment benefit? The District Court of Amsterdam gave an interesting ruling on this issue. Our lawyer in labour law Paul Snijders, who dealt with this case at the UWV and the court in Amsterdam, explains this.
The Amsterdam District Court ruled that in such a case, the ex-employee may indeed be eligible for unemployment benefit without an early termination clause in the contract, provided that the clause is laid down in writing in one way or another, for instance in a settlement agreement.
Exclusion ground of Article 19 paragraph 4 WW: act of prejudicing the UWV
The UWV took the position that the employment contract, which did not contain an interim notice clause, first had to be fully served before an employee was entitled to unemployment benefit. In a case brought by lawyer Paul Snijders before the Amsterdam District Court, a judgment was rendered on 11 August 2021 regarding an interim notice clause and entitlement to unemployment benefit (WW). In that case, the employer and employee had not agreed on an interim notice clause, but the employer wanted to get rid of the employee.
Interim Termination Clause in a Settlement Agreement and Entitlement to an Unemployment Insurance (WW) Act
For this reason, the parties later included an interim notice clause in the settlement agreement. When the employee subsequently applied for unemployment benefit (WW), the UWV was of the opinion that the employee should not receive benefits until the term of the employment contract had expired. After all, according to the UWV, the employment contract itself did not contain a notice clause as referred to in the WW.
The contract applied as it was at the time of the WW application
Lawyer Paul Snijders argued, first at the UWV and later at the Amsterdam District Court on behalf of the employee, that for the right to unemployment benefit not only the employment contract as concluded by the parties should be considered but also the contract as it is at the time of the WW application. After all, an employment contract can be amended in the course of time for all sorts of reasons. For this reason, an interim termination clause may also be included in an employment contract.
Amsterdam District Court: an employment agreement meets the requirement of a termination clause set out in Section 7:667 of the Dutch Civil Code.
The UWV rejected this view in its objection. On appeal, however, the District Court of Amsterdam thought differently. The Amsterdam court ruled that the only requirement for an interim termination clause is that it be in writing. By including this interim termination clause in a settlement agreement, the requirement of being in writing was met. The employee is then entitled to unemployment benefit if he or she includes such an interim termination clause in a contract of employment. Section 19(4) WW does not determine when the interim termination clause must have been agreed. Now that the parties had agreed an interim notice clause in the termination agreement, the exclusion ground of Article 19(4) WW does not apply to it and the employee is entitled to WW on the basis of the settlement agreement, according to the District Court of Amsterdam.
UWV must issue new decision on WW entitlement
The UWV must now take a new decision with due regard for this ruling. This judgment of the District Court of Amsterdam means that parties who have entered into a settlement agreement in the case of a fixed-term contract have more leeway to separate by mutual consent. In particular, if parties wish to part by mutual consent, it is now possible to enter into a settlement agreement with less risk, as long as the interim notice clause is recorded in writing. This can also be included in the VSO at a later date, entitling the employee to unemployment benefit.
Advice on an agreement with a fixed term contract and the right to unemployment benefit in the event of a fixed term contract without an interim notice clause
Call our lawyer Paul Snijders in Amsterdam, specialized in Dutch labor and dismissal law, for questions about settlement agreements with mutual consent and the right to unemployment benefits in case of a fixed-term contract with or without an interim termination clause (temporary contract).