On November 8, 2019, the Supreme Court ruled on the pros and cons of dormant employment, ending the existing uncertainty. The good news is that accounts should be quite simple as you don`t have any transactions to report. So you really only need to submit a balance sheet and notes. And the best news is that you don`t have to pay the annual filing fee for a dormant business. But if you don`t meet your deadline, you`ll still receive a penalty and maybe a fine. According to the Supreme Court (ECLI:NL:HR:2019:1734), a dormant employment contract violates good employment practice under Article 7:611 of the Dutch Civil Code. If there are reasonable grounds for an employee to request termination of the employment contract, if it is plausible that the employee will not recover within 26 weeks, or if the employee can perform appropriate replacement work within that period, and if reinstatement in another position is not possible within a reasonable time, an employer is obliged to cooperate in the termination of the employment contract. If the employer has a legitimate interest in maintaining a dormant employment contract, an employer may decide not to accept the request to terminate the employee`s employment relationship. Wondering (as an employee) if your job can be called a dormant job? Or do you want (as an employer) to know what is expected of you? Contact Blatter Legal! We are happy to help you with any questions about a dormant employment contract. An employer may deliberately wish to maintain a dormant employment contract in order to avoid paying a transitional allowance. However, an employee will be more than happy to receive the transition allowance. The Supreme Court`s decision is therefore beneficial for the employee.
The Supreme Court ruled that the amount of the transitional allowance must not exceed the transitional allowance that the employer would have had to pay to the employee if the employee had terminated the employment contract. If the payment of the transitional allowance means that the employer is experiencing financial difficulties, the court may decide that, for example, the employer may pay the amount in instalments or that the payment is suspended until a certain time. The Supreme Court ruled that this was the case, citing Parliament`s intention to put an end to the phenomenon of dormant employment. To this end, the legislator created the Transitional Law on Equalization. The Supreme Court also answered the question of whether an employer is required by the standard of a good employer (according to Article 7:611 of the Dutch Civil Code) to accept a proposal by the employee unable to terminate the ”dormant employment relationship”, according to which the employee is entitled to severance pay. In principle, employers are not obliged to take the initiative to terminate the dormant employment contract. The Supreme Court merely adopted the obligation for employers to accept a proposal from an employee with a dormant employment contract, to terminate his employment contract and to pay him the statutory severance pay. If you recently retired but have been inactive for several years, you may still be eligible for your employer`s transition allowance. According to the Supreme Court, since an employer can be compensated, financial reasons are no longer considered a valid reason for not terminating a dormant employment contract.
6The Employers` Compensation Act aims to eliminate the main reason why employers do not terminate employment contracts and instead let them rest. The law entails amendments in several laws and adds an article 7:673e to the Civil Code. This provision provides that, at the request of the employer, the UWV pays compensation in respect of the statutory severance pay due by the employer if the contract has been terminated due to prolonged illness and the employee has lost more than 80% of his earning capacity. The indemnity corresponds to the statutory severance pay plus the cost of retraining, but is limited to the severance pay without severance pay due on the first day of termination of the contract, the salary paid during that period, whichever is less. But even after the law came into force, employers still resisted the urge to terminate employment contracts. However, the law has led some lower courts to change their minds and accept the argument that the employer was intentionally obstructing or that, as a good employer, he should have terminated the employment contract.8 As a result, there has been a split in the lower courts and discussions on the right track.9 If your business is already up and running, to make it dormant, you need to do the following: Remember – anything else could mean that you lose your dormant company status. 9The Oberster Gerichtshof answers the first three questions together, since they all relate, in essence, to the question whether a worker may cause a contract to be amended or even terminated. In the Supreme Court`s view, this principle that an employer may propose changes to the employment contract due to changing circumstances at work and that the employee participates in the discussion in all appropriate ways cannot be reversed in order to provide the employee with influence over the employment contract. The last question essentially concerns whether, in certain circumstances, good management nevertheless implies that a dormant contract must be terminated – and that severance pay must be paid – if the employee requests it and the employer does not have a reasonable interest in renewing the contract. If you`re focusing on another business or want to take time off for personal reasons, this is a relatively easy way to put your business on hold to keep your options open. And for sole proprietors, registering a dormant business means you can protect a company`s name, even if you`re not yet ready to switch to a limited liability company. The Supreme Court does not share this view.
According to the Supreme Court`s decision, employers are now required to accept a proposal from an employee with a dormant employment contract to terminate that employment contract by mutual agreement, subject to the granting of statutory severance pay. The principle of good employment practice is based on this obligation for employers. An exception to the obligation to terminate the dormant employment contract and pay the statutory severance pay may be accepted in cases where the employer has a legitimate interest in not terminating the employment contract, e.B. .