UWV has to Compensate the Transactional Allowance, despite Changes in the Employment Contract during the Two-year Prohibition on Termination

An employer who had terminated the employment contract with an incapacitated employee during the two-year prohibition on termination period in order to enter into a new employment contract for suitable work, had not lost its entitlement to compensation for the transitional allowance for that reason, because there was no partial termination of the employment contract, i.e. the working hours were substantially and structurally adjusted.
On November 21, 2017, a teacher at an educational institution had fallen ill.
As of February 1, 2019, the employee started working at the LC-Teacher level in the context of her reintegration.
As of November 19, 2019, the UWV granted the employee a wage-related WGA-benefit.
The degree of incapacity was set at 42.45%.
On December 19, 2019, the educational institution and the employee entered into a settlement agreement showing that:|
• the employment relationship would be terminated by mutual consent as of October 1, 2019;
• the employee simultaneously entered into a new full-time employment contract for the position of LC-Teacher, while retaining her seniority;
• the position of an LC-Teacher was not appropriate for the employee in view of the established limitations and the classification into this profile only took place in order to enable execution of the agreed tasks of a vocational training (BPV)-consultant;
• with effect of November 19, 2019, the scope of the employment contract would be reduced to 0.6 part-time;
• in connection to the termination of the employment contract, the employee would receive a compensation of over € 26,000
After payment of the compensation, the employer submitted an application to the UWV for compensation of the transitional allowance. The UWV rejected the application because it had not met the precondition that the employment contract was terminated after expiration of the two-year prohibition on termination during illness. The objection the employer submitted to the UWV was declared unfounded as well. Also the appeal the employer subsequently filed with the Court was declared unfounded. The Court was not convinced by the employer's defence that the date of October 1, 2019 had been a mistake.
The employer was more successful, however, when it subsequently lodged an appeal with the Central Appeals Tribunal. Although the Central Appeals Tribunal did not follow the employer's argument of a clerical error (the date was too frequently repeated in the settlement agreement, according to the Tribunal), but it did not lead to the conclusion that the employment contract had been terminated per October 1, 2019. The job change as of October 1, 2019 corresponded to a reassignment into a suitable position, where the employment contract was changed without a dismissal. Therefore, no transitional allowance was due.
The Central Appeals Tribunal annulled the UWV decision on the objection and instructed the UWV to make a new decision on the employer's objection. Since, during the hearing, the UWV representative had already acknowledged that an application for compensation of a transitional allowance due as of November 19, 2019 would be granted, it was clear that the decision would still be in the employer’s favour.

The employer had somewhat encountered self-inflicted problems in the above case by mentioning the termination of the employment contract in the settlement agreement on a date prior to the end of the two-year prohibition on termination period. Fortunately for the employer, it all ended well in the end.
The Central Appeals Tribunal pointed to its own decision in 2019 in the so-called “Column” case. The Central Appeal Tribunal then considered that, despite the fact that the Civil Code does not provide for the possibility of partial termination of an employment contract, the possibility of a partial dismissal with the associated entitlement for the employee to a partial payment of the transitional allowance, does exist in the special case when:
• forced by circumstances, in particular in the event of partial loss of a job due to business economic reasons or in the event of permanent partial labour incapacity, it will be required to:
• a substantial reduction in the employee's working time (i.e. at least 20%) and
• a structural reduction in the employee's working time (that is: expected to last)
The Tribunal considered that it does not matter whether the partial termination of the employment contract took place due to:
• partial termination;
• dismissal followed by a new amended agreement; or
• adjustment of the employment contract.
According to the Central Appeals Tribunal, this implies that reassignment to a suitable position with a lower salary cannot be equated with partial termination of the employment contract and that the resulting reduction in salary does not give entitlement to the transitional allowance. This implies that the employer will still be entitled to compensation of the transitional allowance if the employment contract is partially terminated at a later stage.
From the UWV representative’s statements, quoted by the Central Appeals Tribunal at the meeting of the Tribunal, some more important things can be deduced.
On November 19, 2019, the 104-week waiting period for the WIA had not yet expired, but the two-year period of the prohibition on termination during illness (which is usually three days longer) had. According to the ruling of the Central Appeals Tribunal, the UWV-representative put the two on the same page by stating that "the 104-week waiting period (the two years of labour incapacity)" was completed on November 19, 2019. Strictly speaking, the two years of the prohibition on termination did not expire until November 22, 2019. Employers who would be “punished” by the UWV for termination of the employment contract after 104 weeks (and therefore not until after two years) could find an argument in it to still claim compensation for the transitional allowance.