As an employer, can you enter into an employment contract with an employee who has not yet obtained the required diploma, who does not yet have the VOG certificate required for the position, or who has not yet fulfilled another important condition? Although this will also depend on the position and the conditions that have not yet been met, in some cases, including a condition precedent or dissolving condition in the employment contract may help. Entering into the employment contract or maintaining the employment contract is then conditional on meeting certain conditions. Both the conditions precedent and the dissolving conditions in the employment contract are discussed in this article.
What is the difference?
Condition precedent: in the case of a condition precedent, the employment contract only commences as soon as the condition is fulfilled. For example, an employment contract can be entered into under the suspensive condition that the employee in question has obtained the required diploma for the position within two months.
Dissolving condition: on the other hand, a dissolving condition ensures that an employment contract, which has already entered into force, ends prematurely due to the occurrence of a certain condition. Think of an employment contract that ends (i) as soon as a residence permit required to work in the Netherlands is withdrawn, or (ii) when the employee does not have a VOG within a period of two months after commencement of the employment contract.
Tip: As an employer, it is important that you clearly choose either the condition precedent or the dissolving condition. When you enter into an employment contract with a condition precedent, it is advisable not to execute the employment contract yet. After all, the idea behind a condition precedent is that the employment contract has not yet started. If you already want to give effect to the employment contract, it is advisable to opt for a dissolving condition, provided of course the requirements are met.
What are the requirements?
The general requirement for both a condition precedent and a dissolving condition is that it must concern a future and uncertain event.
The inclusion of a dissolving condition in the employment contract is subject to additional requirements, which mean that the validity of a dissolving condition is only accepted in exceptional cases. For instance, it follows from case law that:
the condition must not be contrary to the closed system of dismissal;
the occurrence of the condition must not depend on the subjective judgement of the employer or employee; and
when the condition takes effect, the employment contract must have become effectively void.
In addition, some dissolving conditions have been declared null and void by law. For instance, it is not possible to include a provision that the employment contract ends by operation of law when (i) an employee marries or enters into a registered partnership, or (ii) in connection with an employee’s pregnancy or childbirth.
Incidentally, the question has been raised in the literature whether the dissolving condition is still possible in a general sense under the WWZ. For the time being, it is assumed in case law that this is the case, although it will of course be examined on a case-by-case basis whether the closed system of dismissal is not in fact unfairly circumvented.
The situation is different in the case of a condition precedent, as its entry into force does not end an already existing employment contract.
It is therefore assumed that a condition precedent is, in principle, valid, provided the aforementioned general requirement of a future and uncertain event is met, as well as the condition being objectively determinable and not entirely dependent on the will of one party. In addition, of course, the limitations from general contract law apply, including that the condition may not be contrary to morality, public order or mandatory law.
What are the consequences?
Condition precedent: when a valid condition precedent occurs, the employment contract is never concluded.
Dissolving condition: when a valid terminating condition occurs, the employment contract ends by operation of law, without the need to take into account a notice period. In certain cases, the employee may be entitled to a transitional compensation. For example, there is a right to a transition allowance if the employment contract was not continued consecutively after an end by operation of law on the initiative of the employer, unless this is the result of seriously culpable acts or omissions by the employee.
Tip: just as you do not have to execute the employment contract before a condition precedent takes effect, it is not advisable to allow an employee to continue working after a dissolving condition has taken effect. After all, the employee may then take the position that the employment contract should be deemed to have been continued, as a result of which, in principle, you cannot still invoke the dissolving condition later. Therefore, if you want to agree with an employee that he/she will be given more time to fulfil a certain condition, and you continue the employment contract for that reason, it is advisable to explicitly agree that the dissolving condition will be maintained during that extension.
It is possible to include a condition precedent or dissolving condition in the employment contract in certain cases. Formulating a condition precedent or dissolving condition requires close attention. It can be difficult to assess whether a particular condition precedent or dissolving condition is valid. We have extensive experience in drafting and assessing conditions precedent and dissolving conditions. Do not hesitate to contact us if you have any questions about a specific clause. We will be happy to look into them with you!