10 March 2021
An employer is obliged to inform an employee no later than one month before the end date of his/her temporary employment contract whether the contract will be extended or not.
This notification obligation applies to employment contracts longer than six months. The law provides that the notice must be given in writing.
The notification fee is the sanction for failure to notify or for late notification. This is equal to one gross monthly salary. If the employer gives notice, but this is too late, the employee is entitled to the notification fee pro rata.
The obligation to notify has been included in the law so that an employee with a temporary contract is not left in uncertainty about whether or not they can continue their employment. But what if the employer has already removed the employee’s uncertainty by informing them orally in good time that the contract will not be extended? It is then unacceptable that the employer owes the notice fee, the court ruled in a recent lawsuit. However, the Arnhem-Leeuwarden Court of Appeal saw this differently.
In this case, the employer verbally informed the employee one month before the end of the employment that the contract would not be renewed. The employee then started looking for another job. He found this immediately after his employment. According to the employee, the notification was not valid, as it was only made verbally. The employer therefore had to pay the notification fine, according to the employee. The court initially ruled that the verbal notification was valid. After all, the employee knew that the employment contract was not renewed. He had suffered no disadvantage because the notice was given verbally. It was therefore not reasonable for the employer to have to pay the notification.
However, the court ruled that even in this case, the employer should have given notice in writing. Why did the court choose a different path? First of all, because the rule about the notice fee is “mandatory”. This means that the court cannot simply set this rule aside if the consequence thereof is not reasonable. In addition, the premise that an employer must behave well (“good employment practices”) implies that the notification must be made in writing.
The fact that the employee in this case knew that his employment contract was coming to an end and that he had not suffered any disadvantage as a result of the oral notification did not change this. The employer also stated that they had also given the notification in writing. The court ruled that the employer should have proved that they had sent the employee a letter giving them notice.
The above statement makes it clear that a verbal notification alone is not enough. Even if the employee is not at all uncertain about whether or not to continue the employment contract, the employer must give written notice.
The advice for employers is therefore to send the employee a letter no later than one month before the end of the employment contract in which you indicate whether or not an extension will take place. You can also include a notice period in the employment contract.
In that case, you must state in advance that the employment will not be continued after the fixed term has expired. In this way you can prevent yourself, as an employer, from having to pay the notification fee if you do not notify an employee, or if you notify them too late.
Please note that with the notification ‘no continuation’ you do not yet comply with the notification obligation if your organisation does want to continue the employment. In that case, do not forget to state the conditions of the continuation.
Do you have a question? Please do not hesitate to contact me.
Arnhem-Leeuwarden Court of Appeal 12 October 2020, ECLI (abbreviated): 9089
This article was previously published on Rendement.nl
