Category: Weblog

The legal status of the statutory director is unique. When a statutory director is employed by a company, this director is in fact not only a formal director of the company, but also an employee of the company. The statutory director therefore has a dual legal relation – one under company law and one under employment law. In this serie of blogs, we will discuss various aspects of this dual legal relation of the statutory director.

This blog series consists of the following four blogs:

1. Statutory or titular director?
2. The dismissal protection of the statutory director.
3. A step-by-step guide to the dismissal procedure of the statutory director
4. Post-dismissal of the statutory director: what comes next?

Blog 1: statutory or formal director?

Before we discuss the legal position of the statutory director and the rules regarding his of her dismissal in more detail, we will first clarify the distinction between a statutory director and a formal director. This distinction is crucial, although not always clear in practice. In this first blog, we will discuss the characteristics of and differences between the two positions.

Blog 2: the dismissal protection of the statutory director

The second blog focusses on the dismissal protection of the statutory director. We will examine what the dual legal relation – one under company law and one under employment law – means in the context of dismissal and highlight the key considerations.

Blog 3: a step-by-step guide to the dismissal procedure of the statutory director

In the third blog, we will provide a detailed, step-by-step guide to the dismissal procedure for a statutory director. As understanding and correctly following the required formalities is essential, we will outline these formalities and explain how to navigate them. Additionally, we will address the key points to consider after the dismissal of a statutory director.

Blog 4: post-dismissal of the statutory director: what comes next?

The fourth and final blog will explore the situation following the dismissal of a statutory director. We will discuss the important considerations and options available to a statutory director after (invalid) dismissal.

In recent years, there has been much to do about platform labour. Deliveroo, Helping, Uber: there has been regular litigation about how the legal relationship between these companies and the people working there should be qualified. Is it an employment contract, a flexible employment contract or should we speak of freelancing? Last month, the Amsterdam District Court made another dig at the proverbial issue by ruling that people who perform labour through Temper are freelancers. It is a remarkable ruling that seems to deviate from previous platform jurisprudence.

Temper is an online platform, on which users can take on (in many cases) one-off jobs. Examples include work as a barista, warehouse worker or cook. These jobs are offered on a digital noticeboard. About 100,000 people in the Netherlands have worked at least once via Temper.

When someone takes on a job, a model assignment contract is automatically concluded. However, according to trade unions FNV and CNV, this is a sham construction: there would be no freelancing, but a flexible employment contract. This is a relevant distinction, because in the first scenario Temper does not have to pay social security contributions. In the case of a flexible employment contract, employees are insured and also build up pension.

How does it work?

A worker creates an account on Temper. The first job takes the form of a trial. If workers subsequently want to take on more jobs, they must have a VAT number. Sometimes Temper also requires a worker to register in the trade register of the Chamber of Commerce. Furthermore, Temper offers workers the option of insurance. The party that placed the job on Temper receives an overview of the applications and may decide which worker(s) to invite. Via an external agency, invoices are prepared after the job is completed.

The criteria of Deliveroo

The subdistrict court assessed this construction using the Deliveroo criteria set by the Supreme Court: ECLI:NL:HR:2023:443, Supreme Court, 21/02090. On this basis, the court ruled that the bar of a flexible employment contract was not met.

Thereby, the authority relationship is an important issue in this case. This component is generally regarded as the most distinguishing criterion in qualifying an employment contract. According to the subdistrict court, in the construction made by Temper, there is no question of authority on the part of Temper, which plays no role in the work instructions in the actual work. In fact, that role lies with the contractor, who also determines the working hours. Temper applies some preconditions, but they are too thin for an authority relationship. The lack of authority is an important counter-indication that there could be a temporary employment contract.

Regarding the remuneration of employees, the court reached a similar verdict. In a temporary employment contract, wages are paid by the employment agency. In contrast, workers at Temper invoice clients, who then pay the workers directly. It is therefore completely outside Temper.

Nor is the nature and duration of work a strong distinguishing criterion in the case of Temper. For that, the work is too different in nature. These range from working in the warehouse to cooking in a restaurant. Moreover, it is rare for a worker to do more than two jobs at the same job. Importantly, workers at Temper are also not obliged to perform the work in person. Without Temper’s permission, they can be replaced by someone else.

Matter of weighing

The ruling is striking, but fits the picture of judges ruling differently on this type of platform work. For example, there was (the now bankrupt) Helping. This was an online platform on which cleaners could offer themselves available for work. Households could then select who they wanted to have cleaned their homes. According to the subdistrict court, this was an employment contract; however, the Court of Appeal saw this as a flexible employment agency. In addition, A-G De Bock concluded again earlier this year that Helpling cannot be qualified as a flexible employment agency and therefore, by definition, there cannot be a flexible employment contract.

It is striking that the subdistrict court in the Temper ruling – unlike in Helpling – mainly zooms in on the construction set up by Temper and not on how the construction works out in practice. After all, Temper could be said to be doing exactly what defines a flexible employment contract: bringing together demand and labour, which is performed under the hirer’s authority.

The fact that FNV and CNV are appealing is therefore no surprise. That, combined with the fact that the Dutch Tax Authority will start enforcing false self-employment again from 1 January 2025, means that there is an interesting future ahead in the field of platform labour. To be continued.

Dutch employment law is designed to offer a balanced approach to the rights and obligations of employers and employees. This equilibrium is particularly evident in the procedures and laws surrounding the termination of employment contracts. Understanding these procedures is crucial for both employers and employees to ensure that dismissals are handled legally and ethically.

Grounds for termination

Employers can terminate an employment contract on several grounds, such as:

1. Economic reasons: This includes financial difficulties, reorganization, or redundancy.
2. Performance-related reasons: Inadequate performance or persistent incompetence.
3. Behavioural reasons: Misconduct, such as theft or harassment.
4. Long-term illness or disability: If the employee is unable to perform their job after a reasonable period of illness (usually two years).
5. Mutual agreement: Both parties agree to end the employment relationship.
6. Personal circumstances: Such as relocation or imprisonment of the employee.

Termination procedures

1. Mutual Consent: The simplest and most amicable method is termination by mutual consent. This involves both parties agreeing to end the employment contract, often documented through a settlement agreement (vaststellingsovereenkomst).
2. UWV Procedure: For economic reasons or long-term illness, employers must obtain a dismissal permit from the Employee Insurance Agency (UWV). This process involves submitting a request for dismissal with supporting documentation. The UWV reviews the request and makes a decision, which can be appealed by either party.
3. Subdistrict Court Procedure: For reasons such as underperformance, misconduct, or a disrupted working relationship, employers must file a petition with the subdistrict court (kantonrechter). The court evaluates the evidence, holds a hearing, and then makes a decision.
4. Summary dismissal: in the event of urgent cause, the employment agreement can be terminated immediately. It is essential that the employer acts fast when being made aware of any conduct which might justify such a dismissal.

Notice periods

Dutch law mandates specific notice periods, which vary based on the length of employment:

• Less than 5 years: 1 month’s notice
• 5 to 10 years: 2 months’ notice
• 10 to 15 years: 3 months’ notice
• More than 15 years: 4 months’ notice

However, collective bargaining agreements (CAOs) or individual contracts may stipulate different notice periods.

Severance Pay

In cases of dismissal initiated by the employer, employees are typically entitled to a transition payment (transitievergoeding). This payment calculated as follows: 1/3 of the monthly wage (including holiday allowance, average bonusses and/or commissions earned), times the time in service.

Protective measures

Dutch employment law strongly protects employees against dismissal, e.g. through the following:

1. Preventative review: Employers must obtain permission from either the UWV or the subdistrict court before proceeding with a unilateral termination.
2. Prohibition on dismissal during certain conditions: Employees cannot be dismissed during pregnancy, illness (up to two years), or membership in a works council (due to such membership).
3. Right to appeal: Both employers and employees have the right to appeal against the decision of the UWV or the subdistrict court.

Employee rights and remedies

Employees who believe they have been unfairly dismissed can challenge the termination in court. If the court finds the dismissal to be unjustified, it can order reinstatement or award additional compensation to the employee.

Conclusion

Termination procedures and dismissal law in the Netherlands are designed to protect the rights of both employers and employees. These laws ensure that dismissals are carried out in a fair and transparent manner, providing a structured framework for resolving disputes. For employers, adhering to these procedures helps avoid legal complications, while for employees, it ensures their rights are safeguarded during the termination process. Whether you are an employer navigating the complexities of dismissal procedures or an employee facing termination, understanding these legal frameworks is essential. Seeking legal advice or consulting with a labor law specialist can provide further guidance tailored to specific

Within international concerns, employee participation can be complex. Because decision-making is often more layered, the influence of a Dutch director on the decision of the foreign manamgent is sometimes limited. However, that doesn’t mean that the Dutch Works Council has no role at all.

For the most part, the Dutch Works Councils Act (WCA) assumes a singular situation, whereby the entrepreneur who maintains an enterprise must consult the Works Council in the case of important decisions. Besides the possibility of setting up a COR, GOR or GemOR, the WCA offers companies the option of setting up an employee participation structure that benefits employee participation within the company. Within international concerns, however, in many cases this will not suffice to give the (Dutch) Works Council an important role.

Territoriality

The WCA has territorial effect, which means that the WCA must only be applied by companies established within the Dutch national borders. Therefore, when an enterprise in the Netherlands is maintained by an entrepreneur abroad, the WCA applies. This means that the WCA must also be complied with when a concern is partly established in the Netherlands. This will be difficult to apply in many cases, especially when a decision is taken by a foreign concern management. The reverse does not fall under the scope of the WCA: when a Dutch entrepreneur maintains a company abroad, that entrepreneur does not have to take into account the provisions of the Dutch WCA.

Although the WCA has so far not been adapted to international concern situations, case law has developed a number of principles that ensure that the Dutch Works Council still has to be consulted when the decision is taken at a higher, foreign level.

Attribution

With the principle of attribution, the decision of the concern management is attributed to the company where the Works Council is established. This may imply that the Dutch company must ask its Works Council for an opinion in order to implement a decision of the foreign concern management. This is the case when the higher-level decision (1) directly affects the company for which the Works Council was established and (2) the WCA-director is involved in the decision-making.

Direct intervention means that the decision would be subject to consultation if the WCA-director himself had taken the decision. The foreigen company’s decision to reorganise and what leads to social consequences at the Dutch subsidiary is a good example. There is involvement with the WCA-director when the director of the subsidiary also has a position within the foreign parent, which makes him actually involved in the decision-making.

Co-entrepreneurship

However, based on the attribution principle, the Dutch Works Council cannot stop or hold back the decision of the higher manament. As mentioned, the consultation right extends only to the cooperation of the Dutch lower management with the decision of the concern management.

To complement this, case law has developed the principle of co-entrepreneurship as well. Based on this principle, the management of the concern should be seen as WCA management, which gives the Works Council a direct consultation right and could possibly also litigate against (decisions of) the concern management.

Co-entrepreneurship exists when (1) the decision directly affects the undertaking where the Works Council is established and (2) the concern management exercises such systematic influence that it is considered to co-maintain the undertaking.

The second requirement is particularly important and is also the essential difference compared to the principle of attribution. The parent must co-determine decisions. This is the case when the concern management owns a substantial part of the shares, for example, or when the concern management actually takes all important key decisions. If the scope for the WCA-director to take decisions independently is limited, then this is a strong indication to argue for co-entrepreneurship.

In practice

Although these two principles have been developed in case law, the same case law shows that these two principles are applied with restraint. Moreover, there is a chance that when a foreign concern management realises to be in a situation where co-entrepreneurship or attribution can be important, this will often be too late.The role of the Dutch Works Council will then still remain limited. For the Dutch WCA director, however, there is a responsibility to properly organise co-determination within the company. It is therefore important for the Dutch entrepreneur to bring the WCA to the attention of the foreign concern management.

From 1 July 2024, employers with more than 100 employees will be obliged to record and report their employees’ commuting and business travel. This ‘reporting obligation work-related personal mobility’ stems from the Climate Agreement.

What does the reporting requirement entail?

The reporting requirement means that an employer must report kilometres travelled by its employees. There is no requirement to track actual CO-2 emissions.

The reporting obligation distinguishes between commuting and business travel. Commuting involves trips made by employees between their place of residence or stay and the location where work is performed. Business travel includes the trips an employee makes for work, excluding commuting. Business travel is broken down into: Lease and/or own fleet, mobility services and expense claims.

Furthermore, kilometres must be reported split by fuel type and means of transport. In terms of means of transport, cars, motorbikes, mopeds/scooters, (e-)bicycles, walking and public transport are covered by the reporting obligation. Other means of transport are excluded from the reporting obligation.

Who counts as an employee?

For the calculation of the 100 employees, all employees who work more than 20 hours per month under an employment agreement or on-call agreement count. Temporary workers, seasonal workers, self-employed workers and volunteers do not count in the calculation. For temporary employment agencies, temporary workers do count unless an temporary agency clause is included in the employment agreement.

When to report?

Employers employing more than 100 employees on 1 July 2024 must report employee business and commuting traffic for the second half of 2024 (or all of 2024) by 30 June 2025. Employers that hire more than 100 employees after 1 July 2024 will not yet have to report for 2024 in 2025. It is of course also possible to report voluntarily.

In conclusion

More information can be found in the Ministry of Infrastructure and Water Management’s handout. You can do the reporting yourself on the website of the Rijksdienst voor Ondernemend Nederland. If you have any questions, you can of course contact us.