Claims for unfair dismissal employee can mount steeply!

In a recent labour dispute, an employee is dismissed summarily. The employee goes to the court. The subdisctrict court quickly concludes that there was no lawful reason to dismiss the employee. What are the financial consequences for the parties? Dutch contract lawyer Sander Schouten addresses the different compensations that employees are entitled to in cases of unjustified dismissal.

Unjustified summary dismissal

The employee in this case did not agree to his dismissal. In such cases the subdistrict court has to decide whether the dismissal was justified. In this case the court found that this was not justified. However, the employee accepted the termination of the employment and even found a new job. The proceedings therefore only addressed the issue of the amount of compensation claimed by the employee.

Compensation for unlawful contract termination

Under article 7:672 of the Dutch Civil Code (DCC), if an employee is unjustifiably dismissed, he is entitled to the wages if the employment had been terminated observing the period of notice. In this case the employee was dismissed on 5 December 2015. However, the contract should have been terminated at the end of the month, observing the period of notice of 2 months. The subdisctrict court grants an amount in wages for the period from 5 December 2015 to 1 March 2016.

Transitional compensation (article 7:673 DCC)

The employee also claims transitional compensation. Employees with an employment contract of 2 years or more are legally entitled to a transitional compensation in cases of involuntary termination or non-continuance of the employment contract. This compensation is also granted by the court, increased by the interest commencing one month after the day that the employment contract was terminated.

Fair compensation (article 7:681 DCC)

These are the standard compensations to which the employee is entitled. Then there is the fair compensation. The subdisctrict court is free to determine this compensation. The court can, taking into account the circumstances of the case, grant the employee compensation if the employer terminated the employment contrary to the rules for dismissal. This fair compensation was introduced in the new dismissal law. However, the amount of this compensation is solely to the discretion of the court and this results in varying compensations.

Creative calculation of fair compensation

This subdisctrict court judge uses his very own calculations. He assumes a hypothetical continuance of the employment contract of 2 years. No longer, because, according to the judge, the future is always uncertain. Assuming the wages the employee missed due to his (unjustified) dismissal, he arrives at a certain figure. He deducts part of the wages that the employee now earns at his new employer. Only part because, according to the judge, this employment is also uncertain. He then also deducts the transitional compensation and the wages already granted for the period of notice. He eventually arrives at the amount of €6,700. This in itself is a fairly reasonable method. Could this be the new subdisctrict court formula? Only time will tell.