Supreme Court provides (more) guidelines regarding the fair payment
A subdistrict court granted an employee a fair payment (billijke vergoeding) of €70,000. Later, the court of appeal granted the employee a considerably lower amount of €25,000.
Case law shows that in some cases the court explains in its judgement how the fair payment is calculated, while in others the court provides little insight into how the calculation is made. To what extent does a court have to specify how the fair payment is calculated? In its judgment of 8 June this year, the Supreme Court answered this question.
The Supreme Court ruled that a court should provide insight into the circumstances that led to the decision on the level of the fair payment, but, the court of appeal is not required to state reasons for deviating from the amount determined by the sub-district court. Not even if this is a considerably lower amount than that was granted to the employee by the sub-district court.
Also, the Supreme Court stated that the amount of the fair payment is by its nature difficult to substantiate.
Last year, in the so-called New Hairstyle judgement of 30 June 2017, the Supreme Court provided a non-exhaustive list of point of views for determining the amount of the fair payment:
- the wages that the employee would have earned if the employment contract had continued;
- the degree to which the employer acted seriously culpably; and
- whether the employee has found other employment, or is expected to find any employment in the future, and the expected income received therefrom.
The Supreme Court’s judgement of 8 June 2018 confirms that the calculation of the fair payment is highly dependent of the circumstances of the case and the assessment of the court.
Since the new employment law legislation entered into force in 2015, employees in the Netherlands whose employment agreement has ended are entitled to the fair payment / fair compensation (billijke vergoeding) in exceptional cases only. In those cases, the fair payment is granted in addition to the transition payment (transitievergoeding), if the employee has acquired the right to a transition payment. There is a formula for calculating the transition payment, but there is no formula for calculating the fair payment.
More info? Contact your regular Loyens & Loeff advisor.
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