The Rotterdam Subdistrict Court recently ruled on the dismissal of a director who had called in sick. One of the questions which played a role in the case was whether the director was entitled to invoke the prohibition against termination of employment during an employee’s illness. The court ultimately came to an interesting decision.
The individual in question had been the director of a private limited company since January 2001. On 24 March 2011, the director receives from the company’s lawyer a letter concerning an investigation into his entrance into certain contracts of suretyship. The company in turn, on 6 April 2011, suspends him as director because, according to its supervisory board, his position has become untenable. Shortly before his suspension, a telephone conversation takes place with the director in which he is told about everything that has gone wrong on his watch and is informed that he will be suspended if he does not voluntarily resign his position. The word dismissal is however not mentioned.
On that same 6 April 2011, a special shareholders’ meeting is convened for the purpose of dismissing the director. On 7 April 2011, the director, who has not yet received the notice convening the shareholders’ meeting, calls in sick.
The director invokes the prohibition against termination of employment during an employee’s illness: he had called in sick prior to receipt of the letter to convene. The court does not accept this argument: the director had known he would be suspended if he did not resign voluntarily, and he knew why. In its view, the suspension announced on 6 April 2011 must be regarded as a prior notice of dismissal, and the director had been aware of this when he called in sick. The dismissal is upheld and the relevant salary claim rejected.
Is the decision right?
The court refers to the ‘Van Kalmthout’ judgement of 22 August 2000 of the Court of Appeal of ‘s-Hertogenbosch. In this judgement, the court of appeal, citing the Levison/MAB judgement of the Netherlands Supreme Court of 13 November 1992, ruled that, when it comes to the protection of directors, the protection from termination of employment during illness provided under Art. 7:670 §1 Netherlands Civil Code (BW) to ‘ordinary’ employees during illness must be applied analogously: an employee cannot invoke such a prohibition if their illness commenced after the Employee Insurance Agency (UWV) began processing the relevant application for a dismissal permit.
Crucial in this regard is the moment of receipt by the director of the letter to convene the shareholders’ meeting for the purpose of carrying out the director’s planned dismissal. If calling in sick takes place prior to such a convening, the company must request the court to terminate the employment agreement, as, in that case, the prohibition against termination does apply.
In this case, the court was not impressed by the director’s quick ‘strategic’ calling in sick. This is perhaps comprehensible, but the court nevertheless is guilty of false reasoning based on a foregone conclusion, namely by equating a telephonic prior notice of suspension with a written letter to convene a special shareholders’ meeting. That the director could have known, on 7 April 2011, that he would be dismissed, is far too thin an argument for depriving him of his protection from dismissal. After all, even with an ‘ordinary’ employee, it’s not on to tell him/her that, e.g., in connection with restructuring, you might request a permit to dismiss him/her.
In other words, this decision clearly leaves something to be desired. It is also a missed opportunity that the Van Kalmthout judgement of the ’s-Hertogenbosch Court of Appeal has not been codified in de Work and Security Act (WWZ). In the same connection, it can also be stated that the director missed the WWZ boat.