Not terminating a dormant employment contract is in violation with good employment practices
Many employers currently continue the employment contract after two years of illness (the moment that the prohibition against termination of employment during an employee’s illness and the obligation to continue payment of wages in principle end), in order to prevent them from having to pay statutory transition compensation in the event of termination of the employment contract.
However, the court in The Hague recently ruled that continuing a so-called dormant employment contract - depending on the circumstances of the case - may constitute a violation of good employment practices (Court of The Hague 28 March 2019, ECLI:NL:RBDHA:2019:3109, (in dutch)). The court ruled that in view of the Act on Reimbursing of Transition Compensation (“Wet compensatie transitievergoeding”) one cannot uphold that continuing a dormant employment contract does not constitute a violation of good employment practices. The underlying idea behind this act is to prevent the continued existence of a dormant employment contract by reimbursing the employer for transition compensation which was paid to the employee after two years of illness. For more information on the Act on Reimbursing of Transition Compensation, please refer to our news-item of 28 November 2018: "COMPENSATION FOR TRANSITION PAYMENT IN 2020? MAKE SURE YOUR ADMINISTRATION IS IN ORDER AND PAY ATTENTION TO THE TIME FRAMES.".
In view of this ruling, there is an additional risk associated with a dormant employment contract. Not only is there a risk that the ill employee recovers and claims a resumption of his/her (suitable) duties and (partial) continued payment of salary, but also that continuing a dormant employment contract constitutes a violation of good employment practices. As a result of the latter, the employer will nonetheless need to terminate the employment contract.