Transition Payment in Case of Dismissal After Illness

Transition Payment in Case of Dismissal After Illness

The Dutch government offers significant legal protections for employees, including those who are unable to work due to long-term illness or disability. Under Dutch employment law, employers in the Netherlands are prohibited from dismissing an employee within the first two years (104 weeks) of an illness or disability. After this period, an employer may choose to dismiss an employee on the grounds of long-term incapacity for work and pay a transition allowance. However, it must be evident that there is no possibility of recovery or of the employee being able to perform adapted tasks within the organization. If you believe that your employment contract has been unfairly terminated due to a long-term illness, our capable employment law attorneys are ready to assess your dismissal. We can help you challenge the dismissal and pursue the transition payment you deserve. Contact our firm today to discuss your rights and legal protections under Dutch employment law.

Safe Working Conditions and Sick Leave Regulations for Employees

When it comes to taking care of its workers, the Dutch government has some of the most stringent laws aimed at ensuring favorable working conditions and better workplace protections. Under the Working Conditions Act, for instance, employers in the Netherlands are required to implement proactive health and safety measures to mitigate accidents and adverse health risks at the workplace. However, since accidents and illnesses are inevitable – they can happen at any time, within or outside the company – current labor laws in the Netherlands also require Dutch employers to have a Sickness Absence Policy. This policy should outline all of the expectations, obligations and rights of an employee during sickness absence, including the right to financial compensation upon dismissal following an extended period of inability to work. The main purpose of this policy is to ensure effective collaboration between the employee and employer and find an agreeable solution for an employee’s long-term absence due to illness.

Sick Leave Entitlements in the Netherlands

When you have a physical or mental condition that makes you unable to (partially or fully) perform the tasks agreed to during hiring, you may be entitled to sick leave. Whether it is pregnancy, illness after childbirth, or any sickness that makes you unable to perform the contracted work, Article 7:629(1) requires that you receive a payment of not less than 70% of your recently earned wages. This payment must be continued for the first and second year of sickness absence, regardless of whether you are an on-call worker or an employee on a temporary or permanent employment contract. In the event that the amount you are entitled to receive is less than the statutory minimum wage, your employer has an obligation to increase that amount to the minimum wage in the first year of your work incapacity. However, not all Dutch employees have a right to 70% of their wages when on sick leave. You may not be entitled to sick leave wages if:

• You deliberately caused your illness, or your illness is induced by an underlying disability about which you lied during the pre-employment medical examination, or
• Your contract has ended while you are on sick leave. In such an instance, your employer must report the matter to UWV (Dutch Employee Insurance Agency) on the day the contract ends.

Reintegration and Consequences of Your Insufficient Cooperation

When you call in sick to work, your employer has a legal obligation to ensure that you return to work as quickly as possible, as per the Eligibility for Permanent Incapacity Benefit (Restrictions) Act. Your employer must explore possibilities of you resuming work and take every measure to help you manage your situation. This includes reporting the matter to the company doctor or health and safety agency within four working days after you tell your employer about your illness. If your illness persists for at least 42 weeks, your employer will have to notify the UWV. Within the first 104 weeks, you must cooperate sufficiently with your employer’s attempts at reintegration. That means you must be ready to do the following unless you have a good reason why you should not:

• Talk about your health situation with the company doctor,
• Discuss your progress with your employer after every six weeks,
• Work with your employer to come up with a reintegration plan and approve this plan, and
• Accept any suitable work (new tasks, workstation, etc.) offered by your employer.

It is important to note that failure to comply with the legal obligations or cooperate actively during a sick leave may give your employer the right to discontinue the payment of wages temporarily. In some cases, insufficient cooperation may even serve as grounds for dismissal. If it is absolutely evident that you cannot return to work after two years, and your employer has tried all reintegration options, your employment contract can legally be terminated.

Dismissal After Two Years of Illness

Dutch employment laws strongly prohibit employers from terminating an employee’s employment contract during the first 104 weeks of their sick leave. After this period, your employer may choose to dismiss you due to a long-term incapacity for work. However, it must be evident that your employer has tried every possible option to allow you to reintegrate. Additionally, your employer must submit a request for dismissal to the Employee Insurance Agency. The termination of your employment contract due to long-term illness or disability can only be completed with authorization from the UWV. If the UWV finds that your employer has not fulfilled all of his or her legal obligations for reintegration, the request to terminate your contract will be denied, and your employer may be required to continue paying the required percentage of your salary for another year. In some cases, the UWV may impose an additional fine.

Transition Payments for Long-Term Incapacitated Employees

When you have been ill or disabled for at least two years, Dutch labor laws require your employer to pay transition compensation if your employment contract is terminated. Under the Labor Market in Balance Act (Wet arbeidsmarkt in balans inDutch, or WAB), the transition payment you receive upon dismissal should be equivalent to one-third of your gross monthly salary for each year you worked, and the payment must be issued within one month of your dismissal. While the transition pay provisions included in the WAB are beneficial for employees, many employers who have to deal with the consequences of an employee’s absenteeism for an extended period and at the same time pay sick-leave benefits see the requirement as burdensome. With this acknowledgement, the Dutch government has agreed to compensate employers for any transition fee paid to employees who are dismissed after being unable to work for a period of two or more years.

Reimbursement for Transition Compensation

With effect from April 1, 2020, Dutch employers may now submit a request to the UWV seeking compensation for transition payments paid to employees who are dismissed following a long-term illness or disability. According to this new Transitional Compensation Fee Scheme, which is part of the WAB, employers only qualify for this compensation if they have exhausted all options for reintegration before terminating the employment contract of any employee who has been unable to work after at least two years due to long-term illness. Most notable about this new compensation scheme is that it applies retroactively back to July 1, 2015, when transition pay was first introduced. Under this law, employers who have paid transition compensation to dismissed employees following a long-term illness after July 1, 2015 can apply for reimbursement until October 1, 2020. This is the last day employers can submit a request for the compensation of any transition allowance paid between July 1, 2015 and March 21, 2020.

Challenging Your Dismissal and Recovering Your Transition Payment

Throughout our years of practice, we have encountered cases where Dutch employees’ contracts of employment were terminated unfairly by their employers. If you believe that your employer dismissed you in violation of Dutch employment law and that you should be entitled to transition pay, you may have grounds to file a lawsuit for breach of contract in order to recover the transition payment you are owed. Hiring an experienced employment law attorney is your best bet when challenging your involuntarily dismissal from employment due to long-term illness or disability. Our lawyers are knowledgeable in all areas relating to Dutch labor and employment law and we can help you get what you deserve.

Contact Our Reputable Employment Law Attorneys Today

Being absent from work due to a prolonged illness is distressing but having your employment contract terminated for reasons that are not valid and being denied your right to transition payment is far worse. Our experienced employment law attorneys know how devastating it can be to lose your job and source of income and we are ready to help. Not only can we get in touch with your employer on your behalf, we will work tirelessly to help you recover the transition payment you are entitled to in accordance with Dutch law. Contact our lawyers today if you need any legal advice or have any questions related to employment law in the Netherlands.