High Equitable Compensation due to Deliberate Termination of the Employment Contract in Violation of the Law

An employer who had deliberately terminated the employment contract with a Belgian resident employee in violation of the law in order to force the employee to litigate before the Dutch Court regarding the end of the employment contract, had to pay the employee more equitable compensation. When the Sub-district Court set the level of the compensation, a determining factor was that the present case should ensure a deterrent effect.
In 2015, a fuel supply company entered into an employment contract with an employee who resided in Belgium. Dutch law was declared applicable to the employment contract.
In 2017, the employee's wife had passed away and in 2019 the employee had fallen ill a number of times. He had to undergo several operations then. Long periods of absenteeism due to illness were also quite common in 2020 and 2022. From 2015 to 2019, the employee's performance was assessed as "exceeding the expectations" and, in 2020 and 2021, as "meeting the expectations". During the period of illness in 2022, the employee had been replaced ad interim. While the employee was still ill, the employer informed him that his position would permanently be taken over by his replacement. Negotiations about another suitable position for the employee yielded no results.
In June 2023, the employer submitted a draft petition to the employee in which the Belgian Court was requested to terminate the employment contract with the employee. Under a European Regulation, the competent Court of the employee’s country of residence has jurisdiction to hear any proceedings brought by the employer. But in the end, the petition was not filed. Instead, the employer terminated the employment contract with the employee observing the two-months’ notice period. The grounds given for the termination were: malfunction, a disturbed employment relationship and other circumstances, or a combination of these grounds. The employer paid a transitional allowance of almost € 30,000.
This termination of the employment contract conflicted with the law. The employer should either have obtained the employee's consent for the termination, or he should have requested the Belgian Court to terminate the employment contract. Thus, the employee had no other option than to take legal action against the employer. Since the employee was the plaintiff now, the main rule under the European Regulation applied that the Court of the country of the respondent has jurisdiction. Thus, it forced the employee to litigate before the Dutch Court. He decided to abide by the termination of the employment contract as such, but claimed the awarded equitable compensation of € 470,000 for terminating the employment contract in violation of the law.
The employer acknowledged that the employment contract had illegally been terminated, but stated that this was not seriously culpable since the duration of legal court proceedings before the Belgian Court was unworkable. Since the employee had refused to cooperate in proceedings before the Dutch Court, the employer stated that this had forced him to terminate the employment contract in violation of the law.
The Sub-district Court pointed out that termination of an employment contract in violation of the law entitles the employee to equitable compensation, without an additional requirement that the employer needs to have acted in a seriously culpable way. When determining the amount of the equitable compensation, all circumstances of the case should be taken into account. This may include how long the employment contract would have lasted were the employer’s culpable actions wished away. Regard may also be had to the consequences of the dismissal. In view of the employee’s age (61), the Sub-district Court assumed that, without termination of the employment contract, the employee would have remained employed by the employer until his retirement. There was no evidence of any ground for a legally valid termination of the employment contract. The employer had failed to give explanation of the employee‘s malfunctioning and no improvement program had ever been offered. No compelling factor was found to suggest any effort made to restore a disrupted employment relationship. And there was no mention of any other circumstances that might be a ground for dismissal.
By computing the sum of the missed salary and pension damages, reduced by the amount of the unemployment benefit, the employee had calculated the damage, caused by the dismissal, to be approximately € 940,000. The equitable compensation claimed was half of this amount. The Sub-district Court found the calculation reasonable. According to the Sub-district Court, the employee's job prospects were uncertain, given his age, but the Sub-district Court also found it unlikely that the employee would not find any work at all until his retirement age.
The Sub-district Court took also considered that the equitable compensation should provide rehabilitation for the seriously culpable behaviour of the employer who had acted contrary to good employer practices by dismissing the employee during a difficult period for him, during illness, without even discussing the alleged malfunctioning with him.
According to the Sub-district Court, equitable compensation is also a means of alerting the employer to the need to adjust its behaviour. In that case, the equitable compensation may not have a punitive character but, according to the Sub-district Court, it should have a deterrent effect to prevent employers from choosing to terminate an employment contract in a seriously culpable manner.
On this ground, the Sub-district Court granted the requested equitable compensation of € 470,000.

Employment contracts that have a connection with the legal sphere of another country, e.g. because the employee resides abroad, require special attention. Insofar as the other country is a country of the European Union, the European Regulations regulate what the applicable law will be and choose the competent Court in matters of disputes arising from the employment contract. Deviating provisions in employment contracts, such as declaring Dutch law applicable or declaring the Dutch Court the competent one, are not necessarily legally valid.
In principle, the applicable law is the law of the country where the work is habitually carried out, but there are exceptions to this. The law of another country can be declared applicable in an employment contract, but this does not affect the effectiveness of mandatory provisions of the law of the country that would have been applicable without this choice of law.
The competent Court is the Court of the respondent’s country. For claims by an employer it implies that they shall always be settled by the Court of the employee's country.
This system entails that a Dutch Court may have to apply foreign law or that a foreign Court may have to apply Dutch law. To make things even more complicated, it can even be the case that the Court which has to apply the law of another country applies certain parts of the law of its own country. This is the case if they are so important that the Court has no other option but to apply them, even if another country’s law applies. For the Dutch Court such provisions of “overriding mandatory rules” in cases of an employment contracts are: provisions regarding working hours, working conditions and minimum wage.
In the above case, it was the Belgian Court which should decide on the employer's request to dissolve the employment contract. It is well known that such proceedings before the Belgian Courts take a very long time. That was why the employer decided to use a trick: by terminating the employment contract in violation of the law, the employee was obliged to take legal action against the employer. Thus, the Dutch Court would have jurisdiction.
For this trick, however the employer had to pay dearly.
The Sub-district Court blamed the employer for having forced the employee to take legal action in the Netherlands by deliberately acting in violation of the law and for terminating the employment contract during illness without good grounds. These two accusations gave the Sub-district Court the opportunity to make use of the option, offered by the legislature, to determine the amount of the equitable compensation in such a way that it will combat opting for voidable terminations by employers because they may be more advantageous for them than opting for properly terminating employment contracts or for retaining them.