BenefitsBit: Supreme Court: Partial transitional payment when reducing the employee’s working hours
The Supreme Court ruled last Friday that, in short, a partial amendment of an existing employment agreement due to circumstances on the account of the employer, leads to the liability of a partial transition payment.
This concerns the special situation where circumstances lead to a substantial and structural reduction of the working time of the employee.
A remarkable judgment, considering the law does not provide for a partial termination by the employer, nor for claiming a partial transition payment in the event of a reduction of working hours. Nevertheless, the possibility of a partial transition payment in the aforementioned special situation must be accepted, according to the Supreme Court. This is regardless of whether the reduction of the working hours is constructed through (i) a partial termination, (ii) a dismissal followed by a new, modified employment agreement or (iii) the adjustment of the employment agreement.
According to the Supreme Court, this special situation occurs, for example, in the event of a necessary partial dismissal based on economic, technical or organisational reasons or following an employee’s partial incapacity for work (as occurred in the underlying case).
The Supreme Court has also indicated what is considered a substantial and structural reduction of the working time of an employee. A reduction is substantial when it comes to a reduction of at least 20%. For a structural reduction of working time, the reduction should reasonably expected to be permanent.
The Supreme Court notes that the transition payment is intended as a compensation for (the consequences of) dismissal, as well as to enable the employee to facilitate the transition to another job with the aid of the financial means involved. The amount of the transition payment is calculated on the basis of the last earned salary. If the entitlement to a partial transition payment would not be accepted, the employee would miss out on a part of the transition payment if an overall termination would take place after a substantial and structural reduction of the working time (on the account of the employer).
With this decision of the Supreme Court the right to a transition payment has been extended. Employers should be aware of this when, for example after long term illness or a necessary partial dismissal based on economic, technical or organisational reasons, the employer intends to continue (partly) with the employee.
More info? Contact Maureen te Poel, Lucas Hoogervorst or your regular Loyens & Loeff advisor.
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Maureen te PoelCounsel Attorney at law
Maureen te Poel, attorney at law, is a member of the Employment & Benefits practice group. She has over 21 years of experience as a lawyer, of which 8 years in the M&A department. The last 13 years she has been focusing on all-round employment law, with a particular focus on the employment aspects of M&A-deals and restructurings, co-determination procedures, remuneration structures and sector-specific regulations on remuneration.T: +31 20 578 54 64 E: firstname.lastname@example.org