Media reports about de Volksbank speak of a sickening atmosphere at the top of this ‘state bank’. The CFO literally fell ill on August 12, 2020. As of September 5, 2020, his dismissal as statutory director followed. Since then, the dismissal has been litigated. On June 15, the court ruled that the prohibition on termination due to illness applies and that the CFO is therefore entitled to continued payment of his salary of € 23,000 gross per month. So what’s the story when it comes to dismissal of a sick statutory director?
Step 1: Is there an employment contract?
First it had to be decided whether there is an employment contract. Because on paper, the relationship between the CFO and de Volksbank was called a ‘contract for services’. On 6 November 2020, the Supreme Court determined how to establish whether a working relationship qualifies as an employment contract; this can be summarised simply as ‘being before appearances’ (Dutch: wezen gaat voor schijn).
According to the Court of Appeal, the rights and obligations arising from the paper contract agreement indicate an employment contract: the CFO must comply with various regulations and instructions regarding compliance and integrity and an annual appraisal interview takes place, he receives a gross monthly payment, is entitled to holiday pay, paid holidays and wages during illness. There is therefore an employment contract, with all the associated protection, such as against dismissal during illness.
Step 2: Was he sick before the invitation to the General Assembly?
It follows from previous case law that the statutory director can (only) invoke the prohibition of termination if he has fallen ill before he has received the invitation to the General Meeting regarding his upcoming dismissal. That seems obvious. But what if the formal, written invitation has not yet been received before the sick report, but from other correspondence and announcements it should have been clear to the director that his resignation was imminent?
In this case, various talks took place between the CFO and the Supervisory Board at the beginning of August 2020, expressly about his possible dismissal. On 11 August 2020, he also received a settlement agreement to terminate the (contract) relationship. But no official invitation to a General Meeting; this he only received on August 13, while he had called in sick on August 12. According to the court, this means that the CFO can invoke the termination ban: de Volksbank should therefore not have been allowed to terminate the employment contract in the General Assembly.
Step 3: Is he really sick?
The employee/director can of course only invoke protection against dismissal during illness if it is established that he/she is really ill (incapacitated for work). It is up to the employer to have this established by engaging a company doctor. That was omitted in this case. The Court of Appeal therefore assumes that the CFO was incapacitated for work on and after 12 August.
As an employee, the CFO of de Volksbank can therefore invoke protection against dismissal during illness. The dismissal decision of the General Meeting of 5 September 2020 therefore has no effect. He is entitled to wages of € 23,000 gross per month until at any time the employment contract is legally terminated, or a judge decides otherwise.
In passing, the Court of Appeal gives an additional tip for the employer in such a case:
“It is the responsibility of the shareholder or the Supervisory Board to carefully choose the moment at which the dismissal procedure starts, in order to prevent a strategic sick report. In addition, a quick check by a company doctor can be called in, so that if there is actually a strategic sick report, the delay can be limited.”
We have acted both for (sick) directors and for employers in these kinds of issues. Do you have a question about this topic? Please feel free to contact me.