Employment Update, The Netherlands - September 2008

29 August 2008

Stella Evers

Cases

Transfer of undertakings and seconded employees

Background


The EU Directive 2001/23/EG, also known as the Acquired Rights Directive (the “ARD”), applies to the transfer of undertakings through an asset transaction. In the Netherlands, the ARD Directive is incorporated in the articles 7:662-666 Dutch Civil Code.

If a transaction qualifies as a transfer of undertaking as defined in the ARD, all ‘engaged’ employees transfer to the acquirer of the business by operation of law. In that case, all employment benefits of transferred employees will transfer to the acquirer by operation of law (with the possible exception of pension entitlements). Article 7:663 Dutch Civil Code sets the condition that, in order to be considered ‘engaged’, an employee should be employed by the transferor at the time of the transfer.

Facts

Within a Dutch group of companies all employees are employed by X B.V. X B.V. seconds its personnel to the other companies within the group. One of those companies is Y B.V.

Y B.V. transferred its business to a third party. The employees of X B.V. who were seconded to Y B.V. claimed to have transferred to the third party under the regime of the ARD/Dutch law by operation of law. The third party, however, invoked article 7:663 Dutch Civil Code, stating that there was no employment contract between the transferor and the employees at the time of the transfer.

In 2006 the court decided that, in spite of the condition mentioned in article 7:663 Dutch Civil Code, the employees transferred to the third party by operation of law and thus remained entitled to the employment benefits included in their original contracts with X B.V. With reference to the Botzen and d’Urso rulings of the European Court of Justice, the court concluded that an employee who has been working for a long time (i.e. 20 years) for the same factual employer, which factual employer is part of a group of companies of which the formal employer also is a member, may rely upon the protection of the ARD.

The third party appealed this decision.

Ruling

The appellate court recognised that the structure chosen in the above case may circumvent the (objectives of the) ARD. It therefore decided to ask preliminary questions of the European Court of Justice on this specific situation.

Effect on employers

Depending on the view taken by the European Court of Justice, we may see the scope of ‘engaged’ personnel expanded to include temp workers employed within the same group of companies.

Payment of salary to an addicted employee

Background

An employer is not obliged to pay any salary for a period during which the employee has not performed any activities for the employer on a ground attributable to the employee.
However, in cases of inability to work due to sickness of the employee as defined in Dutch law, the employer should continue payment of salary up to a certain extent for a maximum period of 104 weeks.

Facts

The employee, a plasterer, was caught (by the employer) using drugs in the company car. It then transpired that the employee had been addicted for approximately 12 years. The employee and employer agreed that employee would have himself admitted to a drug rehabilitation centre and that employee would take unpaid leave during his stay there. On the day of his admission, the employee reported in sick.

The employee claimed payment of salary (in respect of sickness) for the period of his stay in the drug rehabilitation clinic.

Ruling

In two instances, the court ruled that the employee was indeed unable to work due to sickness as defined in Dutch law. It also ruled that the agreement that the employee would take unpaid leave during his stay in the drug rehabilitation clinic, conflicted with the aim, nature and meaning of the sick-pay provisions in Dutch law and might therefore be nullified by the employee.

Effect on employers

Employers should be aware that they may be obliged to continue payment of wages in cases of addiction, as the addiction may be seen as a sickness. Any deviating agreement with an employee may be nullified by the employee.

Work permit and seconded employees

Background


According to article 2 sub 1 of the Foreign Nationals Employment Act (Wet Arbeid Vreemdelingen; ‘WAV’) an employer that wants to hire an employee from outside the European Economic Area (EEA), must, prior to the employer having the employee perform any work, obtain a work permit.

Facts

X, a transport company, hired personnel from Z for the loading and unloading of cargo (supply of personnel). The Health and Safety Inspectorate raided the premises of X and established that 23 of the employees seconded by X from Z, did not have the required work permits. A fine of €184,000 was subsequently imposed on X.

X tried to recover the fine from Z, stating that not X but (only) Z was responsible for the employees having the correct documents, since Z was the employees’ formal employer.

Ruling

The court ruled that the term ‘employer’ in article 2 sub 1 of the WAV refers to both the formal employer and the factual employer. It is irrelevant whether there is a contractual arrangement or a relationship of authority between the factual ‘employer’ and the employee, whether there is any remuneration for the activities and/or whether the factual ‘employer’ is aware that a work permit is required.

The court therefore dismissed X’s claims for recovery.

Effect on employers

Employers should be aware that they should check whether any foreign national performing any kind of work at their premises has the required work permit.

Traffic fines

Background


The company, as license plate holder, had been confronted with fines for speeding offences committed by one of its employees whilst using a company car. Could these fines be recovered from the employee? Until recently it was held that such recovery was not possible.

Facts

On 13 June 2008, the Dutch Supreme Court ruled that the license plate holder (the employer) might indeed recover the fines from the actual driver (the employee). Any different opinion would create an unjustified distinction between employee’s using a company car and employee’s who use their own car for business trips. Only in cases of encouragement by the employer (e.g. in cases of an impossible assignment which cannot be fulfilled unless the employee violates speed limits), may the fine not be recovered from the employee.

Effect on employers

Employers should be aware that, unless they have encouraged the employee to break traffic regulations, they may recover all traffic fines from employees driving company cars.