The resolutive condition in the employment agreement and the entitlement/right to the transition payment

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Date:
09 Aug 2018

Employers oftentimes wish to include a resolutive condition in the employment contract. Is this legally permissible? And is the employee entitled to a transitional compensation in the event the employment agreement ends due to the occurrence of a resolutive condition?

By:
Joost Verlaan

Admissibility of a resolutive condition in the employment agreement

The Supreme Court has in principle considered the employment agreement under a resolutive condition to be permissible, albeit exceptionally. The employer can successfully rely on the resolutive condition if the following conditions are met:

  1. The condition may not conflict with the statutory dismissal system. The resolutive condition may not, for example, include termination of the employment contract in the event the employee becomes long-term sick;
  2. The occurrence of the resolutive condition must be objectively determinable. This means that the employer may not influence whether the condition has occurred;
  3. The employment agreement must be ‘devoid of content’ by the occurrence of the condition.

Based on the specific circumstances of the case, a case by case assessment needs to be made of whether the resolutive condition is legally valid. In the case-law of the lower courts the following resolutive conditions are considered to be legally valid (i) the cessation of a program in case of a learning-employment contract, (ii) the failure to obtain a vocational training  degree, (iii) failure to pass a Dutch language test, (iv) the withdrawal of the required legal permission for the performance of the function; and (v) the withdrawal of a Schiphol Pass.

The transition payment

In the event the employment agreement has, up until the moment of its termination, lasted at least 24 months, the employee is in principle entitled to a transition payment if at the initiative of the employer the employment agreement is not to be continued/prolonged.

The law does not regulate whether the employee is entitled to a transition payment if the employment agreement ends by the occurrence of a resolutive condition.

If the employer invokes the resolutive condition, then it could be argued that the employment agreement is terminated at his request. After all, in such a case there is a termination by operation of law and the employment contract is not continued at the initiative of the employer. Based on that idea, the employee is entitled to the transition payment.

The court of Midden-Nederland (ECLI:NL:RBMNE:2018) recently rendered a more nuanced order. That matter dealt with a security guard whose legally mandatory license – the license is mandatory for any security guard pursuant to article 7 of the Wet Particuliere Beveiligingsorganisaties en Recherchebureaus (“Law on private security firms and detective agencies”) – had been revoked by the Commissioner of Police on suspicion of a serious offence. Revoking the legally required permission for the performance of the function resulted in the fact that the employee could no longer be allowed to work in that position. The court considered that the employer under those circumstances, did not have the option to either or not continue the employment agreement with that employee, or to offer him an alternative position (within the organisation). It was the opinion of the court that the employment agreement had therefore not been terminated at the initiative of the employer, so that the employee would not be entitled to a transition payment.

Based on the aforementioned ruling, it could be concluded that invoking a resolutive condition does not necessarily imply that an employee is entitled to a transition payment. The occurrence of a resolutive condition needs to be assessed regarding content on a case by case basis.