On 1 January 2020, the Labour Market in Balance Act (”WAB”) came into force. This brought a number of important changes. See also the previous WAB updates we have written on this subject. One of the most striking changes is the entry into force of the cumulation ground, or ”i-ground”.
It was hoped that this new ground for dismissal would provide a better solution for cases in which there is no sufficient ground for dismissal, but it is clear that continuation of the employment is not meaningful. In addition, it was supposed to encourage employers to offer permanent employment contracts sooner.
Judges are very reluctant to grant dissolutions on the i-ground; case law mainly shows rejections. In the meantime, however, a number of dissolutions have been granted. Below is an overview.
WHAT IS THE SITUATION AGAIN?
An employer who wants to dissolve an employee’s employment contract will have to substantiate that there are sufficient grounds for dismissal. In other words; the requirements set by law for the chosen ground for dismissal must be fully met. The grounds for dismissal are listed exhaustively in Section 7:669(3) of the Civil Code.
a. Economic reasons
b. Long-term occupational disability
c. Frequent absenteeism
d. Dysfunction
e. Culpable acts or omissions
f. Work refusal due to conscientious objection
g. Disrupted employment relationship
h. Other circumstances that are such that the employer cannot reasonably be required to continue the employment contract
i. Cumulative ground
WHY AN I-GROUND?
In practice, the situation regularly arose where there was no sufficient ground for dismissal, but termination of the employment contract was desirable or even necessary. A good and frequently chosen example is the confluence of dysfunction and a disrupted employment relationship, where the employment relationship becomes disrupted in (the run-up to) the improvement process and investment in the relationship – through mediation, for instance – seems to make little sense in view of the dysfunction. However, for a dismissal on grounds of dysfunction, the improvement process is a requirement and for a termination on grounds of the disrupted employment relationship, the employer must have really invested in a structural improvement of the relationship.
Therefore, in the situation mentioned above – before the introduction of the i-ground – there was not yet a sufficient ground for dismissal and the employment contract could not be dissolved.
The i-ground now makes it possible to dissolve the employment contract on a combination of grounds for dismissal. For a dismissal on the i-ground, it is required that an employer cannot reasonably be expected to allow the employment contract to continue, due to a combination of different, non-fulfilling grounds for dismissal.
However, in those cases, the court does have the option to award the employee additional compensation amounting to 50% of the transitional allowance. The amount of the compensation depends on the extent to which the grounds for dismissal put forward are sufficient.
HOW DOES IT WORK IN PRACTICE?
It seemed to become a dead letter in practice. Dismissal requests on the i-ground were rejected en masse. This was mainly because subdistrict courts used the criterion that there had to be an “almost sufficient ground for dismissal”. If this criterion was not met, the dissolution request was rejected. Recently, this criterion no longer seems to be followed by all subdistrict courts. A dissolution request on the i-ground is still not easily granted, but the first dissolutions have now been published.
The following is striking in those judgments. A common mistake is that employers fail to substantiate the i-ground separately. In those cases, the court did not get around to a substantive assessment. So, as an employer, you will have to actually substantiate why a combination of different, non-full grounds for dismissal still justifies dissolution of the employment contract. To do so, as an employer, you have to indicate and substantiate exactly which circumstances from two or more of the grounds for dismissal led to the employer not being able to be expected to continue the employment relationship.
In all awarded rulings that have been published so far, a higher transitional allowance has been awarded to compensate for the fact that there is no fully-fledged ground for dismissal. In almost all those rulings, the full additional compensation of 50% has been awarded. Subdistrict courts seem to use this extra compensation as a lubricant, as it were.
CONCLUSION
It is clear that there is no uniform assessment framework yet. A number of points of attention do follow from case law so far:
– Of importance in a request for dissolution on the i-ground is that, as an employer, you must put forward concrete facts and circumstances that make dissolution on the i-ground reasonable.
– A number of subdistrict courts have ruled that to rely on the i-ground, there must be at least one almost sufficient ground for dismissal. This seems to be abandoned in more recent case law.
– The court can award additional compensation to the employee in the event of a dissolution on the i-ground. This has also been used consistently so far.
In short, the introduction of the i-ground seems to have resulted in only a minimal relaxation of dismissal law for the time being. If it follows from future case law that courts are more lenient in handling a dissolution on the i-ground, we will inform you.
