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News, Legislation

Compensation transition payment in case of dismissal after long-term occupational disability?

vrijdag 5 augustus 2016

Minister Asscher of Social Affairs and Employment announces an adjustment to the Wet werk en zekerheid (Wwz - employment and security act).

On 21 April 2016, Minister Asscher sent a letter to the Lower House of the Dutch Parliament, in which he stated that the cabinet, in consultation with the social partners, intends to make a number of adjustments to the Wwz; these adjustments include, among others, the transition payment in relation to dismissal due to long-term occupational disability.

In case an employee has been occupationally disabled for a long period of time, the employer is, in principle, obliged to continue paying the employee's wages for the first two years. During this period, there is also a prohibition of termination. After two years of occupational disability, the prohibition of termination no longer applies and the employer may terminate the employee's employment contract. Since the introduction of the Wwz, termination of the employment contract with an ill employee after two years has had negative consequences for employers. The reason for that the employer is obliged to pay the transition payment. This circumstance makes employers decide to continue an employment contract after two years of occupational disability, which causes the employment contract to be dormant. A number of subdistrict court judges has already ruled that an employer is not obliged to terminate the employment contract after the obligation to continue to pay wages has ended. Moreover, this fact is not to be considered seriously culpable, which means that the employee cannot ensure that a transition payment and/or fair compensation will be payable.

The cabinet intends to come to a regulation on the grounds of which employers are compensated for the costs for a transition payment because of dismissal due to long-term occupational disability. The compensation could be financed from the Algemeen Werkloosheidsfonds (Awf - General Unemployment Fund), which will cause the (uniform) contribution to increase. Furthermore, a possible retrospective effect when introducing the proposed adjustment will be looked into.

The legislative proposal is expected to be submitted to the Lower House at the beginning of 2017 and could be put into effect on 1 January 2018.

If you have any questions on this subject, please contact Madeleine Boone.

Lisa Kloot

employment Law and employer representation

+31(0)10 209 27 61 kloot@lvh-advocaten.nl
Peter Verheijden

commercial cooperations, mergers and acquisitions, employment law and employer representation 

+31 (0)10 209 27 75 verheijden@lvh-advocaten.nl

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