Dismissal director: violation of good employment practices?

An interesting employment case about the dismissal of a director. A director becomes incapacitated to work due to work-related stress. On the day that his reintegration process starts and the director shows up at work, he is given notice of dismissal. Is this a manifestly unreasonable dismissal or is this the underperformance risk of a director (under articles of association A document, drawn up when a Dutch company or legal person is set up, and which regulates the operations of the company and defines its purpose.
» Meer over articles of association Articles of Association)? The subdistrict court answers this in a recent ruling. Employment lawyer in The Netherlands Sander Schouten explains the case.

Director incapacitated to work due to stress

The claimant in this case was a director (under articles of association) at ATP (his employer), an international company. At a certain point the claimant called in sick due to stress-related complaints. The company doctor found that he was incapacitated to work due to illness. The report states that the stress complaints were, among others, work-related. The claimant stays home for 5 months. In consultation with the company’s Health and Safety doctor, the claimant and the employer agree on a reintegration treatment plan.

Director dismissed by the General Meeting of Shareholders

However, on the first day that the claimant was due to resume work, he failed to appear at the office (without notice). After a mediation process, the claimant eventually resumed work on 19 June. On that same day, the employer handed the director an invitation for the general meeting of shareholders for 19 July, where the item on the agenda was his dismissal. At this meeting the General Meeting of Shareholders decided to dismiss the director. The employer, taking into account the term of notice, terminated the employment contract. The claimant does not agree with the termination of his employment and engages an employment lawyer. He instigates proceedings in which he claims damages for manifestly unreasonable dismissal.

Underperformance risk of director

To assess the issue of whether the dismissal is manifestly unreasonable, the court finds, firstly, that the position of a director cannot be compared to that of a ‘normal’ employee. A director’s personal qualities to a large extent form the basis of the development and profitability of a company. If the results are disappointing or if a director has an insufficient base of support from the employees, shareholders can lose confidence in a director. A loss of confidence usually results in the director leaving. This underperformance risk of a director is usually taken into account when determining the employment conditions, such as, for example, higher remunerations, a bonus, a longer term of notice etc.

Employment lawyer in The Netherlands

In this case the court considers that the employer no longer had confidence in the claimant as a director. According to the employer, this was due to, on the one hand, the manner in which the claimant behaved during the reintegration process, and, on the other hand, with his (unsatisfactory) performance prior to his incapacity to work. However, the court finds that the employer can be blamed for this latter reason. Before he called in sick, the claimant was never confronted with complaints by employees or about his management style. In that respect the employer acted contrary to the requirements of proper employment practices. The court also finds that the fact that the employer did not offer the claimant a realistic opportunity to reintegrate (he was dismissed on the first day that he resumed work) is culpable. The court finds that the dismissal was manifestly unreasonable and awards damages to the claimant.