Wage Penalty Prevents Recourse of Sick Pay in Third Year of Illness

An employer wanted to recover the costs of the continued sick pay to an employee who had become labour incapacitated from the person who was liable for the fact that the employee had become labour incapacitated. The regress was granted for the first two years of illness, in which the employer had to continue to pay the wages, but it was rejected for the third year of illness, because the UWV had imposed a wage penalty on the employer.

A primary school employed a female teacher who had become permanently labour incapacitated as the result of an accident. She had been hit by a motorist whilst crossing the street on the pedestrian crossing. The insurer who had insured the consequences of the motorist's liability had acknowledged both the liability and the causal link between the accident and the labour incapacity. The school successfully recovered the costs for the sick pay during the first two years of illness from the insurer. The reintegration costs incurred by the school, were also reimbursed by the insurer.
Then, the UWV imposed a wage penalty on the employer.

The UWV believed that the employer had made insufficient efforts for the employee’s reintegration. The UWV criticized the report of the employer labour expert, which, according to the UWV, insufficiently clarified the employee’s employability in her own position and her employability on less onerous elements of other positions.
The UWV also blamed the employer for having terminated a parallel track because the employee believed that she would not be able to work anymore, whereas the occupational physician had declared that she still had employment opportunities. The wage penalty obliged the employer to continue paying the wages for one more year. The employer did not object to the imposed wage penalty. The UWV rejected the request to shorten the wage penalty period.
The employer asked the insurer to also recover the wages he had continued to pay during the third year of illness, but the insurer refused to do so. When the case was submitted to the Sub-district Court, the Court found for the insurer. According to the Sub-district Court, the wage payment in the third year of illness was no longer the result of the accident, but just a consequence of the imposed wage penalty.

The employer, however, lodged an appeal with the Court of Appeal, raising three complaints. First of all, the employer pointed out that, under the applicable CLA, in any case, the employee would be entitled to continued payment of 70% of the wages until the end of her employment contract.
Secondly, the employer argued that there were actually two causes of the damage: the accident and the wage penalty, that only combined could cause the damage and that, for that reason, the insurer should have compensated at least half of the damage. The employer pointed out that the insurance company now benefitted from the situation since otherwise it would have had to recourse the IVA-benefit, granted to the employee, to the UWV.
And finally, the employer argued that fairness entailed that the insurer should compensate the damage.
Unfortunately, these arguments did not convince the Court of Appeal.
Immediately after the end of the wage penalty period, the employer dismissed the employee. This fact was enough reason for the Court to deduce that, without a wage penalty, the employer would have dismissed the employee immediately after the second year of illness. In that case, the employee would not have been entitled to any wages.
The question of the causal relationship between the accident and the sick pay in the third year of illness had no relevance, according to the Court, because it was the employer’s fault, who had made insufficient reintegration efforts and who had not objected to the wage penalty. And, according to the Court of Appeal, this had been his own responsibility for the full 100%. There was no room for an equitable adjustment either, according to the Court, because that would be contrary to the intentions of the legislator, which was to promote the reintegration and labour participation of incapacitated employees by introducing the Eligibility for Permanent Invalidity Benefit Restrictions Act (Du: Wet Verbetering Poortwachter). According to the Court of Appeal, the fact that the insurer now benefitted from the situation did not change this, whereby the Court added that it was not even certain that the UWV would demand recourse. The Court pointed out that the employer had not stated either that the UWV had demanded recourse against the insurer after the third year of illness.
In the end, the Court of Appeal upheld the judgment of the Sub-district Court.

An employer can recover the net costs of the sick pay and the reintegration costs incurred from the person who is liable for the existence of the disability (= recourse). The UWV also has a right of recourse for the net costs of the paid Sickness Benefits and WIA benefits.
When the wage penalty was imposed, however, the question arose whether the wages during the third year of illness could also be recovered.
Advocates plea that there would not have been any damage if the accident had not taken place. And of course the employer rightly argued that the insurer should have reimbursed the net amount of the WIA benefit to the UWV if there had not been a wage penalty.
Opponents, however, plea that, in that case, the employer would no longer be stimulated by the wage penalty to make sufficient reintegration efforts.
We believe that in the above situation, it would have been more appropriate to have the employer and the insurer bear the costs equally. The Court of Appeal's failed to substantiate its opinion that it had been the employer’s own responsibility for the full 100%. And the argument that it is not certain that the UWV would take recourse overlooks the fact that, in any case, it could have readily done so.
Let me also say that the UWV seems to have taken a very strict stance towards the employer by imposing a wage penalty. Considering the fact that, in the end, the employee was granted an IVA-benefit, it is highly doubtful whether there really were any reintegration opportunities.