The Netherlands Supreme Court recently addressed the applicability of the Extraordinary Decree on Labour Relations ('BBA') to an employment contract between a Dutch employer and an American employee. The applicability or otherwise of the BBA is relevant to the answer to the question of whether permission to terminate employment is required when giving notice to terminate an employment contract. In this judgment the Supreme Court extended the scope of the BBA. This has consequences for the practicalities of dismissing expats.
Preventive test on dismissal; permission to terminate employment
Dutch legislation on the termination of employment provides for what is known as a preventive test on dismissal. In the Netherlands, an employment contract may only be terminated by the employer after it has received permission from the UWV WERKbedrijf. This is laid down in the BBA. This protection against dismissal does not apply to everyone. Certain groups are exempted, such as the clergy and teachers. In addition to this, there needs to be participation on the Dutch labour market. If a Dutch company in Belgium employs a Belgian to work in Belgium, then the BBA does not apply, even if Dutch law is declared applicable in the employment contract. In that situation the employer can dismiss the employee without prior permission from the UWV WERKbedrijf, given that the BBA does not apply.
The Nuon/Olbrych case
Very recently, in the Nuon/Olbrych case, the Supreme Court upheld a notable decision of the Court of Appeal in Amsterdam with regard to the applicability of the BBA. The Supreme Court upheld that an employee's attachment to the Dutch labour market is no longer a decisive factor in determining whether permission from the UWV WERKbedrijf is required before giving notice to terminate the employee's employment contract.
The case concerned an employee, a US citizen, who was working for his employer in the Netherlands for one year. The employer gave notice that it was terminating the contract of employment without having obtained prior permission to terminate employment, which the employee did not accept, arguing that the BBA applied to him. According to the employer, however, the BBA did not apply, because it assumed that the employee would not fall back on the Dutch labour market. After all, the employee was an American, had retained his house in the US and had even unequivocally stated that at the end of his contract of employment he would be returning to the US.
The Court of Appeal ultimately ruled that the BBA did apply and that the employer should therefore have sought permission to terminate employment from the UWV WERKbedrijf before proceeding to give notice to terminate the employee's employment contract. The Court argued that the principal aim of the BBA, the protection of the Dutch labour market, had lost importance, among other things as a result of the increased importance of the European Union and the free movement of employees within it. According to the Court it should now be accepted that the BBA in fact offers protection against unjustified dismissal and that this aim deserves emphasising. Therefore an expat should not be treated differently from their Dutch colleagues who are able to rely on the protection against dismissal offered by the BBA, even if the expat returns to their country of origin at the end of their employment.
Thus the Supreme Court passed a judgment on 24 February 2012 in which it declared the dismissal of the expat without permission to terminate employment to be unlawful.
Forewarned is forearmed
In practice, the judgment above means that an employer cannot simply give notice to terminate an expat's employment contract unless it has first obtained permission to terminate employment from the UWV WERKbedrijf, prior to giving notice. Therefore, in most cases it is advisable to err on the side of caution and apply for permission to terminate employment from the UWV WERKbedrijf, for expats as well.