Reuring in the bed of sleeping workers

In November 2019, the Supreme Court handed down the Xella decision. This decision put an end to the practice of so-called "dormant employment contracts. The Supreme Court ruled that employers are obliged to cooperate with the employee's proposal to terminate the employment contract due to long-term incapacity for work while granting the transition compensation (the 'Xella norm'). That transition compensation may then be eligible for compensation by the UWV, under the compensation scheme. We have already written several blogs on this subject, including this.

The Xella decision has led to a slew of case law, and several questions remain unanswered. For example, can employees who reached the end of the 104-week period ("waiting period") before July 1, 2015 also rely on the Xella standard? Does the Xella standard only apply if the employer is entitled to compensation? And until when exactly does the Xella standard work backwards? These questions are now before the Supreme Court, and on Valentine's Day of this year, the opinions of A-G De Bock to the Supreme Court on this matter were already published. We are happy to inform you about them in this blog.

Conclusion I: Types of sleepers and the Xella standard

A-G de Bock's first conclusion concerns the question of which employees are subject to the Xella standard. Indeed, the Supreme Court's decision raised the question of how to deal with employees for whom the waiting period had expired before July 1, 2015 - the time when the regulation on the transition compensation came into effect - but whose employment contract had not yet been terminated.

In that context, De Bock distinguishes three categories of workers:

• The "deep sleepers": employees whose two-year waiting period expired before July 1, 2015, and whose authority to dismiss also arose before July 1, 2015.
• The "semi-deep sleepers": employees whose two-year waiting period expired before July 1, 2015, but the power to dismiss only arose after that. After all, that power does not arise at the same time. An employer acquires that power by means of a dismissal permit from the UWV, which can only be applied for after the two years have passed.
• The "belated sleepers": employees whose original waiting period ended before July 1, 2015, but where a wage sanction was imposed by the UWV, as a result of which the waiting period only ended after July 1, 2015.

The A-G is clear: the Xella standard applies to all categories of dormant employment, in the sense that the employer must cooperate with an employee's request to terminate the employment. This is therefore a general rule that is not time-limited and applies regardless of whether the employer may be entitled to compensation from the UWV.

Transition Compensation

The question of whether each of these categories of employees is also entitled to the transition compensation must be answered with "no" because we only know the transition compensation as of July 1, 2015, and thus the transition compensation for deep sleepers is zero. For semi-deep sleepers and late sleepers, the employer does owe transition compensation.

For you as an employer, of course, the relevant question is whether this transition compensation is also eligible for compensation by the UWV. This is a question that A-G de Bock does not answer, but is currently before the highest administrative court. Lower administrative law jurisprudence is divided on the answer to that question. This is because the end of the waiting period in all of the above cases ended before July 1, 2015, and the statutory regulation strictly speaking dictates that there is no right to compensation then. But the final word on that, then, has not yet been said.

Conclusion II: From when does the Xella standard apply?

This "temporal effect" is also where the second conclusion hooks in. That concerns the question of whether the Xella standard applies retroactively to before the Xella decision. After all, that decision was not issued until 2019. According to A-G de Bock, the Xella standard including transition compensation does indeed apply retroactively from July 1, 2015.

This means the following. Suppose an employee with dormant employment requested his employer to terminate his employment in 2016, with the award of the transition allowance. However, his employer did not comply because the employee would reach the state pension age in 2017 anyway, so the transition compensation would no longer be due. With retroactive effect, this employee can now still invoke the Xella standard and claim the severance pay. However, this is subject to the normal five-year statute of limitations. This transition compensation will most likely not be eligible for compensation by the UWV, because the employment contract was terminated due to reaching the state pension age, not due to long-term disability (which is a requirement).

Situation completed?

The A-G has brought much needed and desired clarity to the "personhood" and "temporal" effects of the Xella standard. The Supreme Court may now adopt these opinions or come to different conclusions. Whether this answers all Xella questions we dare doubt. For example, does the duty for employers to "wake up" dormant employees also apply?

The last word in this legal saga has not yet been said. Naturally, we will keep you informed of developments. If you have any questions on this topic yourself, please feel free to contact us using the form below and our Team Labor will be happy to assist you.