In principle, an employment agreement for a definite period of time can only be terminated prematurely if this is explicitly agreed between employer and employee. In practice, however, it regularly happens that both employer and employee want to terminate the employment agreement prematurely, without an interim termination clause in the employment agreement. But an employee will risk his right to unemployment benefits if he agrees to an earlier termination, without having such a clause in his employment agreement. A recent ruling focused on the question of whether this is different if an interim notice clause is still included in the settlement agreement. Until now, the lower case law on this question has been ambiguous.
Facts
This case involved an administrative assistant who joined a company on September 9, 2021, under a seven-month employment agreement. This contract did not contain an interim notice clause. Subsequently, on November 30, 2021, the employer and the employee entered into a settlement agreement in which they stated that both parties could terminate the employment agreement with one month’s notice. In accordance with the settlement agreement, the employment agreement was then terminated on an interim basis – effective January 1, 2022 – with one month’s notice. Subsequently, the employee applied for unemployment benefits.
Decision on objection and appeal
The UWV denied the employee’s application until April 9, 2022, because the employee had a fixed-term employment agreement until April 8, 2022, which the UWV said could not be terminated prematurely. The UWV stated that a notice clause not agreed upon until the settlement agreement is not a valid notice clause within the meaning of the law. The UWV declared the employee’s objection to this decision unfounded. The employee appealed. In the appeal, the court ruled in favor of the employee, saying that the UWV should not have made this decision. The court found that the notice clause in the settlement agreement met the legal requirements for an interim notice clause. The UWV then appealed to the Central Appeals Council (Centrale Raad van Beroep).
Ruling of the Central Appeals Tribunal
The Central Appeals Council confirmed the district court’s opinion that the notice clause in the settlement agreement was a valid clause within the meaning of the law. Indeed, the law merely states that an interim notice clause must be agreed in writing, with no further requirements as to the moment of agreement or its form. Therefore, the UWV should not have excluded the employee from receiving unemployment benefits in this case.
Consequences
The ruling by the Central Appeals Council provides clarity on the right to unemployment benefits in the event of premature termination of a fixed-term employment agreement, without this possibility being laid down in the employment agreement (or an addendum). According to the ruling, it is not necessary for the notice clause to have already been included in the employment agreement (or in an addendum) prior to the settlement agreement. Thus, the inclusion of a notice clause in a settlement agreement can provide a solution to secure the employee’s right to WW benefits.
