Court of The Hague in preliminary relief proceedings, 11 January 2013, LJN: BY8165

Introduction

The Dutch Executives’ Pay (Standards) Act (Wet Normering Topinkomens (‘WNT’)) entered into effect on 1 January 2013. This act sets limits on the income of top-ranking officials of, inter alia, health care institutions. The Dutch Association of Officials in Health Care (Vereniging van bestuurders in de zorg (‘NVZD’)) has tried to get a court in preliminary relief proceedings declare that health care institutions do not fall under the scope of the WNT.

NVZD’s Claims

The NVZD has argued that health care institutions do not fall under the scope of the WNT, because health care institutions are not public institutions or institutions closely related thereto. Moreover, this sector is for the most part financed from premiums and only for a small part from taxes. In addition, the NVZD has argued, inter alia, that standardization of income by the State is in conflict with the right to property.

The Court in Preliminary Relief Proceedings

The Court in preliminary relief proceedings has ruled that since the claim is aimed against the State as legislator and its purpose is to have part of the act declared inapplicable, reticence of the Court is in order. NVZD’s argument that health care institutions are private-law legal persons and should therefore not be categorized under the first regime of the WNT is ignored, since it is an established fact that health care institutions are charged with a certain public function. In other words: health care institutions do fall under the scope of the WNT. As for the question of whether the entitlement to salary should be regarded as property so that there is property law infringement, the Court in preliminary proceedings has ruled that there is indeed interference with property law. The Court, however, has ruled that such interference is indeed allowed, because it is provided for by law, serves a justified public interest and is proportionate. Regarding the proportionality, the Court has considered that there is a justified balance between the public interest and the protection of individual rights. For instance, the standard from the WNT is a socially accepted salary maximum and a reasonable transitional arrangement is in place. The other arguments of the NVZD were also rejected, so that the claim was denied. The Court was of the opinion that health care institutions serve a public interest and are partly financed from public means and it is therefore not unreasonable that the State interferes in order to standardize the income of officials of health care institutions. In conclusion, health care institutions simply fall under the scope of the WNT.

Conclusion

Hospitals and other health care institutions fall under the scope of the WNT, which means that the income of top-ranking officials of these institutions is limited to the maximum remuneration of EUR 187,340 in salary, plus a number of components. Incidentally, this judgment has no consequences for the income of, for instance, medical specialists. After all, the WNT only relates to top-ranking officials.