Supreme Court: partial termination of employment contract? Transition compensation due!

If an employee's employment contract ends at the initiative of the employer, the employer must pay a transition fee. But an employment contract is not divisible. What about if the employment contract is partially terminated anyway? This plays out, for example, if the employee remains partially disabled after two years of illness and faces a reduction in hours with his employer. The employment contract does not end completely, but the employee sees part of his accrued transition compensation go up in smoke. How to deal with this? The Supreme Court has now given a decisive answer: the employee will then receive a pro rata transition compensation under circumstances.

What was going on?

The case before the Supreme Court involved a teacher with nearly full-time employment in secondary education. After two years of illness, the teacher was declared partially disabled. For this reason, it was decided by mutual agreement with the employer that the teacher would work less. The employer terminated the employment, after which a new employment contract was immediately concluded for 55 percent of the original working hours. To compensate for the lost working hours, the teacher wanted to receive (partial) transition compensation from the employer. The employer did not want this.

The subdistrict court ruled in favor of the employee but the court concluded that the parties had apparently not intended an end of employment and thus no transition fee was due. The employee took the case to the Supreme Court.

Supreme Court ruling

The Supreme Court ruled that in the event of partial dismissal, in special cases, an employee may be entitled to partial transitional compensation. The special cases to which the Council refers are the partial loss of jobs due to business economic reasons or the employee's permanent partial disability. In addition, the Supreme Court states as a requirement that the reduction in working hours must be substantial and structural. The Council ruled that this is the case if the employee has reduced work by at least 20 percent and that this reduction is reasonably expected to be permanent.

Importance for practice

Thus, the Supreme Court has provided clarity. What conclusions can be drawn from this ruling?

• If an employee is forced by circumstances to make a substantial and structural reduction in his work scope, he may be entitled to partial transitional compensation.
• In my opinion, this also applies if the scope of work remains the same, but the salary is forced substantially (>20%) and structurally reduced, for example if the employee can no longer do his own job.
• The manner in which the modification is made does not matter. In the case of both (i) a partial termination and (ii) a total dismissal followed by a new, modified employment contract and (iii) modification of the employment contract, the rule applies each time.
• In a termination by mutual agreement, there is a certain reflex effect of the rule formulated by the Supreme Court. The employee is otherwise unlikely to agree to the partial termination.

Questions about this topic, for example because you employ a long-term sick employee who also remains with you after the WIA examination? We would be happy to help you!