Employment Contract Annulled on Account of an Error by Concealing Occupational Incapacity

An employer had correctly annulled the employment contract on account of an error of an employee who, on commencement of the employment, had concealed that she was ill when she had left the employment with her previous employer.

On 1 August 2021, a school for secondary education employed a part-time (0.8) teacher for a period of one year. On October 26, 2021, the employee reported ill. She had psychological complaints. The occupational physician’s report showed that the employee had already been ill for a year and that she had already received treatment for this illness for a long time. According to the occupational physician, the employee had already been ill on commencement of the employment. Prior to this commencement on 1 August 2021, the employee had worked full-time as a teacher at another educational institution. There, she had fallen ill on November 20, 2020 and had resumed work for 80% as of April 9, 2021. Since the employment contract with the other educational institution had expired on 1 August 2021, the employee had left the service there while still being ill.
When the employer asked for information, the employee told that she had worked for 80% at her previous employer in the end and that she believed that she could handle an 80% appointment at the employer as well. She stated that she had not willingly provided incorrect or incomplete information when she was appointed.
Subsequently the employer annulled the employment contract on account of an error.
Just in case the annulment would prove to be invalid, the employee was also summarily dismissed. The employer pointed out that the employee had not performed properly from the start. She had disciplinary problems in class and communication problems with her colleagues. On one occasion a teacher coach even had to take over the class.
When the Sub-district Court had to rule on the case, it put first and foremost that also an employment contract can be annulled on account of an error. According to the Sub-district Court, the protective function of employment law, which can hinder annulment of the employment contract, does not apply if the employee "commits the error". According to the Sub-district Court, the employee should have informed the employer about her partial labour incapacity, since the complaints might have an effect on the performance of her work and might lead to reintegration obligations for the employer. According to the Sub-district Court, the employee had not demonstrated her suitability for a 0.8 part-time job. Since it was plausible that the employer would not have recruited the employee if she had informed the employer about her partial labour incapacity, there was a causal relationship between the error and entering into the employment agreement. Therefore the employment contract had legally been nullified, according to the Sub-district Court.
The consequence of annulment of an employment contract is that the employment contract is deemed to have never existed. In principle, this would lead to an obligation on the part of the parties to undo the work that already has been performed on the basis of the annulled employment contract. The employee could, of course, return the wages received, but the respective work performance of the employee could not be reversed.
The Sub-district Court considered that the employee’s performance had not entirely been below what it should have been and also that the employee had still been familiarising with the job. Since, to a certain extent, the employer had also benefited from the employee's work, the Sub-district Court decided that the employee did not have to return the wages. The remuneration paid was not qualified as wages, however, but as compensation for the value of the employee's performance, enriching the employer, similar to what the law regulates for the “obligation to undo”.

The decision of the Sub-district Court offers employers an important opportunity to relieve themselves from a -possible long-term- allocation of costs related to an employee’s occupational incapacity.
After all, the employer may be burdened by the obligation of 104 weeks of continued payment of wages or sick pay, followed by possibly another ten years of partially disabled (WGA)-benefit.
The reference point for these costs in the above case is the fact that the employee had been employed by the employer on the first day of her labour incapacity. Of course it is possible for the employer in administrative proceedings regarding the Sickness Benefits Act or WGA benefit, to state that the labour incapacity had started prior to the contract with the employer. The employer may be successful with this statement, but in practice it will be a challenge to convince all interested parties. If the employment contract can be annulled on account of error, however, retroactively there has never been an employment contract and, therefore, the first day of labour incapacity cannot fall within the scope of the contract with the employer.
Moreover: In the above case the Sub-district Court assumed that the employee was culpable with regard to the employer’s error by stating that the employee should have informed the employer about her medical situation. But error of one party in an agreement is not necessarily attributable to the other party and it is even possible that the error is based on a wrong assumption of both parties. The question is whether annulment of the employment contract is also possible In that case. Is it possible in such a case to state that the employee is not entitled to the protection of employment law?
In a more general sense, it is not clear whether the Sub-district Court's statement that an employee who "commits an error" is not entitled to the protection of employment law is correct. The Supreme Court has ruled on this issue in the case of fraud, but not yet in the case of error.