1.12.2020

Irregular termination, still worth considering

On July 17, 2020, the Supreme Court handed down the Nayak decision,1 which ruled - in brief - that in the event of a damaging termination of the employment contract by the employer, the right to and the amount of the transition compensation must be determined based on the situation that regular termination had occurred, regardless of the employer's intention. In 2017, Ms. Stekelenburg and Janse de Jonge wrote an article on the benefits of irregular termination.2 Following the calculation methodology as now prescribed by the Supreme Court, we take stock again in this article.

First, the benefits of compensatory termination are listed. Next, the Nayak decision is discussed. Then some lower court decisions are discussed. It concludes with a reconsideration of irregular termination.

Advantages of compensatory termination

The 2017 contribution by Ms. Stekelenburg and Janse de Jonge explained why irregular termination could be worth considering. On the one hand, the financial benefits were discussed, namely saved employee insurance premiums, pension contributions, ZVW contributions, less accrual of vacation days, earlier surrender of lease car, laptop and cell phone, and a lower transition compensation. To that list can also be added the (sometimes) no (or pro rata less) payment of a bonus. In total, savings of about 25 to as much as 70% can easily be realized. On the other hand, more practical advantages were identified such as the immediate commencement of the short expiration periods from the WWZ and a smaller chance of calling in sick during the remaining duration of the employment contract (or within four weeks thereafter). Needless to say, these practical advantages can also yield significant financial benefits. Furthermore, there are also practical benefits that do not directly have a financial component to them. For example, after closing a business unit or letting go of a management layer, the employer usually wishes to shape the company without the presence of the departing employees. After all, then there is no more work for 1 HR 17 July 2020, ECLI:NL:HR:2020:1286. 2 J anse de Jonge and Stekelenburg, "Irregular termination, worth considering?", Labor Law 2017/16. the redundant employees or the employer fears that the leavers will negatively affect the working atmosphere.

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