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24 February 2020 / article

Fraud justifies (extrajudicial) annulment of the employment contract

The central question in this judgment of the Supreme Court is whether an employer may nullify the employment contract on the ground that the contract was concluded under the influence of fraud by the employee and, if so, whether the additional requirement that the employment contract has been (almost) completely useless must be met in order for the contract to be nullified.

What was going on in this case?

In 2016, an employee applied for the position of psychotherapist and care director at a care provider. He stated on his curriculum vitae that he was a member of various specialist associations and that he had obtained several degrees. He was hired for an indefinite period of time in January 2017 and was also appointed as a statutory director. Not much later, the employer was informed by a specialists' association that the employee had never been a member of that association and that nothing was known about his educational background. The healthcare provider informs the employee by e-mail that the false information provides for an urgent reason for dismissal and that they intend to dismiss him as a statutory director, which also terminates the employment contract. The shareholder's decision to appoint him and the employment contract are subsequently (extrajudicially) annulled on the grounds of fraud. The employer also requests the subdistrict court to order the employee to repay the salary that has already been paid.

Judgment of the Subdistrict Court and Court of Appeal

The Supreme Court ruled that, despite the closed system of the law on dismissal, the employer may invoke the (extrajudicial) annulment in the event of fraud. The closed system of the law on dismissal does not stand in the way of this, because it does not aim to protect an employee who commits fraud when entering into an employment contract. It is also not required that the employment contract has become (almost) completely useless. However, the Supreme Court does state that the annulment may be reversed in whole or in part if it is difficult to reverse the consequences of the employment contract that have already taken effect. In addition, it is of course possible that the employer's request for annulment of the employment contract on the grounds of fraud may be unacceptable according to standards of reasonableness and fairness. It can thus be taken into account when the employer benefitted from the employment contract.

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