The WNT entered into effect on 1 January 2013. This act stipulates, inter alia, that in the event of termination of an employment agreement the parties may not agree a higher severance pay than €75,000 gross. The Courts are not bound by the WNT. However, it appears from the judgments mentioned below that the Courts do attribute a certain consequential effect to the WNT.

Subdistrict Court of Breda

This case (Court of Zeeland-West-Brabant, 20 June 2013, LJN: CA3725) concerned the rescission of the employment agreement of a director of a housing association. With regard to the severance pay the housing association took the position that the director should be regarded as a top officer within the meaning of the WNT. The director, however, disputed that the WNT applied to him.

The Subdistrict Court considered that the director can be regarded as a top officer within the meaning of the WNT. He is a nominal director and a member of the management board. Even if he would not be a member of the highest executive body, he is in any case the highest subordinate of this body. Although courts are not bound by the maximum severance pay of the WNT, the Subdistrict Court held that this does not mean that it should not take this act into account. Also for a court the WNT is normative to the assessment of matters brought before it. According to the Subdistrict Court, the WNT would be weakened if parties would stop agreeing on severance pays and would go to court, because this would give the court carte blanche. The Subdistrict Court therefore took the provisions of the WNT into account and granted a severance pay of €75,000 gross.

Subdistrict Court of Leeuwarden

The case that was presented to the Subdistrict Court of Leeuwarden (Court of Noord-Nederland, 4 July 2013, 2013:4102) concerned the rescission of an employment agreement of a member of the board of a foundation. In 2006 the parties made arrangements about compensation in the event of dismissal, including a considerable amount of redundancy pay. The foundation wished to honor the arrangements made and requested the Subdistrict Court to apply Section 1.6 of the WNT, which mentions, in brief, that any higher compensation shall be unduly paid, unless such payment arises from a judicial decision.

The Subdistrict Court considered that if fairness apparently requires a higher compensation to be awarded than the maximum amount mentioned in the WNT, the WNT does not preclude this. In the case at issue, however, the Subdistrict Court could not give a substantive adjudication as to whether fairness required compensation requested to be granted. It is true that the Subdistrict Court is not bound by the WNT, but a certain consequential effect should be attributed to this law. Therefore, on the basis of the above, the Subdistrict Court did not award the redundancy pay offered by the foundation.

Tips

  • Although the Subdistrict Court is not bound by the WNT, these judgments show that the WNT is indeed taken into consideration when determining a severance pay.
  • A redundancy pay also falls under the WNT, unless it arises from a CAO that has been declared generally binding or a statutory regulation.
  • Under certain circumstances transitional law will apply to already existing agreements on contractual severance pay.