Dormant employment: permissible or not?

20 May 2019

Marieke ten Broeke

If an employer terminates employment after two years of illness, the employee is entitled to the transition payment. That is why some employers opt for “dormant” continuation of the employment; no work is done, and the obligation to pay wages has lapsed. In actuality, however, the employee continues to be employed, so that no transition compensation has to be paid.

In the past period, several courts have weighed the question of whether this is a justified course of action, or whether the employment contract ought to be terminated and a transition payment be paid. Courts have assessed this question differently. As a result, there is uncertainty among employers about the legal admissibility of dormant employment. The matter has now been referred to the Supreme Court by the Limburg sub-district court for a preliminary ruling. Until the Supreme Court has commented on this issue, the state of limbo will continue.

In the meantime, it would be wise for employers to bear in mind that dormant employment may have to be terminated within the not too long term, and the transition payment will become due.