Practice areas: Employment Law
An employee who has worked for the same company for more than 22 years built an impressive career. He rose through the ranks to become Senior Counsel International, overseeing all legal and security matters outside the United States, and was appointed as a statutory director in 2017. Over time, however, his role was gradually stripped of its responsibilities. When the employer eventually dismissed him on grounds that did not withstand judicial scrutiny, the result was an expensive legal battle. In March 2026, the Amsterdam Court of Appeal awarded him a fair compensation payment of €759,264 (gross).
The employee joined the company in 2002. Twenty years later, he had become Senior Counsel International and a statutory director. A series of reorganizations then fundamentally changed his position. More responsibilities were transferred to the United States, and his direct reporting line to senior management disappeared. By the final reorganisation in 2024, little remained of his original role.
The relationship between the parties deteriorated. They negotiated a severance package but failed to reach an agreement. Instead, the employer decided to dismiss him. The employer relied on six different grounds, including the alleged misuse of confidential information and obstruction of an internal investigation. On 30 September 2024, he was removed as a statutory director. This also brought his employment contract to an end with effect from 1 February 2025.
Under Dutch law, a statutory director has a dual legal position. He or she is both a director under company law and an employee under employment law. From a corporate law perspective, dismissal is relatively straightforward. The shareholders’ meeting that appointed the director may also remove that director, without the preventive dismissal protection that applies to most employees.
That does not mean, however, that an employer can dismiss a statutory director without consequences. If there is no reasonable ground for dismissal under employment law, the director may still be entitled to statutory transition compensation. Where the employer has acted with serious culpability, the court may award the employee an additional amount of fair compensation. This case demonstrates how substantial those financial consequences can be.. (Would you like to know more about the legal position of a director appointed by the articles of association? If so, please see the following blog: Director appointed by the articles of association or titular director?)
The employee challenged the dismissal before the courts and was successful. It was ruleed that no reasonable ground for dismissal existed and that the employer had acted in a seriously culpable manner. It therefore awarded fair compensation of €500,000 gross. Both parties appealed.
The Court of Appeal (ECLI:NL:GHAMS:2026:893) assessed the case on the basis of an ex tunc test. This mean only the facts and circumstances at the time of the dismissal are relevant. . It concluded that those facts did not constitute a valid dismissal ground.
Importantly, the Court emphasized that statutory directors are not subject to a lower threshold for dismissal. They are equally entitled to protection under Dutch employment law, including the requirement that the employer acts as a good employer. According to the Court, the employer had allowed the conflict to escalate. Once negotiations over a severance arrangement reached a deadlock, it failed to take the employee’s concerns about the reorganizations seriously or to explore alternative solutions.
The employer also overreacted to the employee’s external speaking engagements. They demanded extensive explanations about events he had attended and even threatened financial penalties. Even though he had represented the company at conferences for more than twenty years without ever needing prior approval.
In addition, the employer refused mediation, conducted an internal investigation in a careless manner without sharing its findings with the employee, and ultimately relied on dismissal grounds that proved unsustainable. Taken together, the Court considered this to amount to seriously culpable conduct.
When calculating the amount of fair compensation, the Court followed the principles established by the Dutch Supreme Court in the landmark New Hairstyle judgment. The Court assumed that, had the employer acted properly, the employment relationship would have continued for approximately another ten months. Mediation would have taken place, the parties would have continued discussions, and the employment contract would not have ended until 1 December 2025.
The employee’s loss of income over that period amounted to €556,284 gross, including approximately €24,000 in pension contributions. In addition, the Court awarded €245,980 for the loss of shares and stock options. Unemployment benefits received during the same period were deducted. The resulting fair compensation amounted to €759,264 gross. Together with the statutory transition payment of €251,784 that had already been paid, the employer’s total financial exposure exceeded €1 million.
This judgment confirms that, even where a statutory director can be removed relatively easily under company law, Dutch employment law continues to impose important safeguards. Employers must have reasonable ground for dismissal and must act as a good employer throughout the process.
Simply relying on multiple dismissal grounds will not suffice if those grounds cannot be substantiated. Where a role has gradually been hollowed out and negotiations over a departure have stalled, careful handling of the situation is essential. Escalating the conflict, refusing mediation and conducting an inadequate internal investigation may ultimately prove far more expensive than resolving the dispute properly.
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