Employer's obligation to provide information on termination by mutual agreement

The judgment given on 26 March 2013 by the ‘s Hertogenbosch Court of Appeal has re-emphasised just how important it is for an employer to point out to an employee the financial and other consequences of termination by mutual agreement and to give the employee enough opportunity to take legal advice. The judgment is in line with legal precedent of the Dutch Supreme Court on this tenet, but it has now been quite some time since such judgment was published.

The case was as follows. An employee had been employed as an optician at Pearle Benelux B.V. (‘Pearle’) for roughly eighteen months. Before starting work there, the employee had been self-employed for many years. Shortly after starting work, the employee appeared, in Pearle's opinion, to be under-performing. This was ground for Pearle to call the employee in for a meeting and to present him with a settlement agreement, the aim being to terminate the contract of employment by mutual consent (with due regard for the notice period) on 1 June 2012. The meeting lasted an hour and at the end of it, the employee signed the agreement. So far so good?

No, not for Pearle. Three days later, the employee revisited 'his' decision. He alleged that he had been pressurised by Pearle and he asked them to rescind the termination. Pearle refused to cooperate and denied the employee any further access to his work. In preliminary relief proceedings the employee claimed annulment of the settlement agreement, and claimed to be re-employed as an optician.

The claims - despite the fact that the preliminary relief judge stressed that Pearle's conduct did not deserve “a beauty prize” - were rejected.

The employee appealed and the Court of Appeal ruled differently, considering the following in support:

• Pearle failed to announce that a meeting would be held with the employee about his performance;
• The meeting itself was attended by three of the employee's colleagues on behalf of Pearle, whereas the employee himself had nobody assisting him;
• There is no reason to believe that Pearle pointed out to the employee the (potential) consequences of the termination on his future income. This is particularly relevant, since the employee had been self-employed for a long time before starting work (and Pearle knew that) and it was therefore highly likely that the employee would be unable to claim unemployment benefit under the Werkloosheidswet [Dutch Unemployment Insurance Act], or at least would only be able to do so for a maximum of three months, and would then end up living on benefits;
• The employee was ‘pushed’ by Pearle to sign the settlement agreement during the meeting. Pearle should have given the employee more time to overthink the proposal, so that he could also take legal advice;
• There is reason to believe that Pearle knew (directly or otherwise) that the employee had been receiving treatment for autism for some time at a mental health facility.

The Dutch Court of Appeal found that Pearle did not check, or at least did not adequately check, whether the employee was aware of the consequences of the termination of the employment contract. Pearle failed to take sufficiently into account the employee's legitimate interests, financial and other, and as a result abused the circumstances. There is no reason to believe that the employee agreed unambiguously with the settlement agreement. The contract of employment was deemed to be ongoing and Pearle was ordered to continue to pay the employee's wages - with retroactive effect to 1 June 2012 - in full.

An employer must therefore - in a more general sense - prepare an employee as much as possible for projected termination of the employment contract and give him a reasonable period (of at least a few days) to consider the termination proposal and the chance to seek legal advice on the matter. Prudent action on the part of the employer that means that drawn-out (and therefore costly) proceedings like these can be avoided.