Employment Law - December 2009

Potential 'dam burst' of employees' holiday entitlements on the horizon?

Employees who are absent due to sickness, and therefore unable to take advantage of their holiday entitlement, retain all of their rights to paid holiday leave. Moreover, an employee is entitled to compensation if he or she has not used up all of their accrued holidays when their period of service with an employer ends. This is how the European Court of Justice ruled in a recent decision.
 

Dutch law
Dutch law specifies that an employee who is unable to work due to illness is permitted to accumulate holiday leave only during the final six months of their incapacitation. An employee who is only partially incapacitated has a right to holiday in relation to the number of hours they are engaged in suitable employment. Employer and employee may together agree that the days on which the employee was unfit for work should be counted as days off. The latter circumstance can prove beneficial to the employee as a higher salary is paid during holidays than during periods of sickness. Nonetheless, the employee is obliged to retain the legal minimum of four weeks holiday excluding those days leave which have been traded in.
 

Court of Justice decision
The Court ruled in reference to the European Working Time Directive, firstly, that national law may dictate that no days' leave may be taken during periods of sickness provided that the employee is permitted to take this time off at a later date. Secondly, the Court decided that an employee who has been off sick enjoys the same right to days off as a counterpart who was at work. Thus, a sick employee accumulates a holiday entitlement equal to that of a healthy colleague. Finally, the Court ruled that an employee is due financial compensation when their period of employment ends and they still have leave in hand. Compensation comprises payment of salary covering holidays that have not been taken.
 

Implications
In principle, the rule applied in the Netherlands - that leave may only be accumulated during the final six months of a period of sickness and that those who are partially incapacitated build up leave based only on hours worked - is contrary to the Working Time Directive. This carries a number of implications.
 
Firstly, there is every possibility of the law being amended. This would mean employers being obliged by the government to retroactively grant unused leave to employees, or pay compensation.
 
In addition, there is a chance that employees will claim their right to holiday entitlement built up during sickness spells even before a possible change in the law takes place. This might involve negotiation or legal action through the courts. In that event, the Court would be confronted with a dilemma, as on this point Dutch law is contrary to the European Directive. The Court must apply the law but also interpret it in a way that as far as possible conforms with the Directive. It is therefore unclear how a Court would rule in such an instance. We can only wait and see whether employees who are, or who have been, unable to work due to sickness will successfully be able to demand their holiday entitlement or financial compensation.
 

Final comments
The subdistrict court in Utrecht considered just this question in a very recent case. Without explicitly deliberating on Dutch law being in conflict with European legal provisions, the Court ruled that an employee has the right to the minimum number of paid days leave per year irrespective of whether he is, or has been, sick. According to the Court, allowing sickness to have an impact on the number of days leave conflicts with the principle of being a 'good' employer. As an employer, be aware, therefore, that a potential 'dam burst' of employees' holiday entitlements may appear on the horizon.

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Young people to work longer on temporary contracts

If Minister Donner has his way, employers will be able to employ young people aged up to 27 years for a longer period on temporary employment contracts, starting from 1 January 2010. The Cabinet's aim is to avoid this particular age group from quickly losing their jobs as employers refrain from offering them permanent contracts during the current credit crunch.
 

Action required
Employees on temporary contracts are those who suffer first during an economic malaise. Severe cuts in permanent employment contracts have been made particularly in the construction branch and in industry. An unfavourable economic climate sees employers opting for temporary workers as the way to match numbers of personnel to market conditions. Employers feel themselves obliged to terminate a working relationship following a third temporary contract despite there being adequate opportunities for retaining an employee on a temporary basis. It is well proven that when the economy is in a dip, young people are more rapidly and severely affected than other groups of workers. Minister Donner has recognised that action needs to be taken on behalf of this group.
 

Extension of provisions
At present, a permanent employment contract is required to be concluded in the event of a fourth temporary contract, or following a 36-month period of employment. In the case of younger employees, the 36-month period would be extended to 48 months and a permanent contract would be required for the fifth, rather than the fourth, contract. In this way, the Cabinet aims to cut increasing levels of unemployment among the young in society.
 

Legal proposal
The legal amendment is an addition to the existing Article 7:668a of the Dutch Civil Code. In one way, the article provides scope for creating flexibility: the employer has the opportunity of offering additional temporary contracts. In another way, the article aims to generate security: after a particular period, or number of contracts, a legal path is set out for concluding a permanent employment contract.
 
The provisional date for implementation is 1 January 2010, with the legal amendment being dispensed with on 1 January 2012. The expectation is that by this time, employment market opportunities for younger people will be more favourable. However, the end date may be subject to change depending on how economic circumstances unfold.
 

Illegal discrimination on grounds of age?
The question arises as to whether the legal proposal is contrary to the Equal Treatment Act on grounds of age in employment (in Dutch: Wet Gelijke Behandeling op grond van Leeftijd bij de arbeid). This Act prohibits both direct and indirect discrimination on grounds of age unless there is a legitimate claim based on an exception laid down in the law or (another) objective justification. For instance, non-discrimination provisions do not apply to legal provisions covering employment or labour market policies aimed at promoting employment participation of certain age groups, insofar as this policy is established by or in compliance with this Act.
 
The new proposal sets an age limit of 27, thereby constituting a direct form of discrimination based on age. Given that the proposal is explicitly focused on employment policy concerning young people under 27 it can be argued that this constitutes an exemption under the WGBL and consequently, as such, there is no illegal discrimination.
 

In conclusion
In the current economic situation the legal proposal appears to be an appropriate response to combat rising unemployment among young people. These days the threshold for an employer to hold on to an employee is undoubtedly lower when there is the option to conclude further temporary employment contracts.
 
The proposal is currently before the Second Chamber of Parliament. We advise you to contact us should you have any questions concerning the impact of the proposal, the transitional arrangements and any possibilities that the amendment may offer to your company. 

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The sick employee: what is an employer entitled to know?

Bottom pinching in the workplace: is it (always) sexual intimidation?

Should 'bottom pinching' always be considered to be sexual intimidation for which an employer can be found liable or is it permissible in the workplace in certain circumstances? The Supreme Court recently delivered its opinion on the phenomenon.
 

Meant as a joke
When entering a recreation hall lit only by candlelight, where a Christmas reception was being held, a director of a charitable organisation pinched an employee's bottom and came out with, what in the view of the director was the humorous quip, "So, what are you doing here in this darkroom?" The employee did not appreciate the supposed joke and a few days later submitted a complaint and registered as sick citing psychological ailments. A significant role in this case was that the employee had suffered a traumatic experience in their youth.
 
Around a year later, the court dissolved the employment contract on the basis of the working relationship having broken down. Citing grounds of sexual intimidation, the employee then sought compensation from both the charity and the director via a definitive legal judgement claiming that the Court who dissolved the employment contract had not considered these circumstances in determining the level of severence compensation.
 

Traumatic youth experience
Amsterdam's Court of Appeal upheld the judgement of the subdistrict court that, contrary to the opinion of the employee, the charity had discharged its obligation by, for example, offering mediation between the director and the employee and issuing a letter of warning to the director. The charity had, thereby, taken the employee's complaint seriously and had made adequate efforts regarding re-integration. The claim against the charity was therefore rejected. The court also responded negatively to the question of whether the director was guilty of sexual intimidation. For the director, the incident of bottom pinching had not involved any ulterior sexual motive; the action - however unwanted - fitted more or less into the manner in which the director and the employee joked with each other. The employee had also not made it evident that he felt his integrity had been compromised. In the court's view, the seriousness of the situation was based only on the vehement reaction of the employee due to a traumatic experience in their youth - an issue that the director was unaware of.
 

Not sexually intimidating
The employee's defence that it was not a question of how the bottom pinching was meant but how he had experienced it failed to win over the Supreme Court. The Supreme Court held that an action could not simply be considered to be sexual intimidation based on whether the person involved had felt themselves to be intimidated. For this to be the case, it would require to be behaviour that an decent-minded person would interpret as being sexually intimidating. In this instance it had not been the case, was the Supreme Court's view.
 

In conclusion
This particular ruling by no means gives carte blanche to bottom pinching in the workplace. It remains important for you, as an employer, to take seriously any complaints concerning sexual intimidation or harrassment, to establish a complaints procedure that includes sanctions against this kind of behaviour and to apply the policy consistently. In this way, risks of being found liable can be reduced significantly. If you have yet to set up such a complaints procedure, you are welcome to contact us for advice.  

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Equal Treatment Commission views 'doorwerkcao' positively

In response to a request from the Vereniging van Doorwerkgevers and the LBV trade union, the Equal Treatment Commission (in Dutch: Commissie Gelijke Behandeling), herinafter referred to as: CGB, has delivered its assessment of the so-called 'doorwerkcao', a collective bargaining agreement (in Dutch: Collectieve Arbeids Overeenkomst), herinafter referred to as CAO, for people who have retired on a pension but wish to continue working.
 
The doorwerkcao has been set up by a foundation called "Stichting Senior Werkt" and is open to employees keen to continue in work following retirement. The arrangement allows employers to offer eligible employees unlimited temporary contracts. It includes a limited obligation to continue paying salary in the event of an employee becoming ill.
 

The CGB investigated whether the doorwerkcao involves a prohibited form of discrimination on grounds of age given that this CAO applies solely to employees on a pension. The CAO in question has a legitimate objective, namely to provide a regime of employment conditions both for employees who have retired and for employers who wish to retain or engage the services of these employees. CGB believes this is in line with the importance the government attaches to promoting the participation of older people in the workforce while also tackling the issue of discrimination against older people in the employment market.
 

The CGB believes it has been convincingly shown that in the current economic climate employers are reluctant to retain or hire retired employees for whom there is no applicable CAO and that a collective agreement, such as the doorwerkcao, is therefore needed to haul employers over the threshold. Cold feet on the part of employers is primarily due to the fear of retired employees suffering from long-term illness in combination with measures designed to protect against employment dismissal. In addition, it is problematic to arrange insurance for these employees that covers incapacity, industrial accidents and company liability. The doorwerkcao includes adequate provisions to cover such eventualities.
 

Consequently, the CGB has taken the view that offering the doorwerkcao exclusively to employees who have retired can be justified objectively and that it does not constitute a prohibited form of age discrimination.
 
The CGB was also asked whether the terms and conditions of employment contained in the doorwerkcao, which vary from those applicable to younger colleagues in the same company, resulted in a prohibited form of age discrimination. Understandably, the CGB was unable to give an overall decision as situations vary from company to company. The organisation has, however, made it clear that as an employee is engaged by Doorwerkgever B.V. (the company responsible for implementing the doorwerkcao) and is seconded to another firm, that firm is not then responsible for any differences in terms and conditions of employment in comparison to its 'own' workforce. Within that firm there is, therefore, no discrimination based on age.
 
The aforementioned is surprising given the Commission's earlier rulings in cases concerning comparisons between seconded personnel and permanently employed staff/local authority fill-in staff. In contrast to the situation concerning the doorwerkcao, the Commission in these cases judged that these groups could be compared with each other. The reason for this was that in these cases the employers themselves had the goal of achieving parity between both groups. This is not the case in the present situation given that the doorwerkcao is specifically tailored to those aged over 65, incorporating a package of employment conditions appropriate to their age which is not the same as that applying to those under 65.
 
In situations where the employer has agreed upon a CAO with the LBV trade union and the doorwerkcao can be applied directly, the CGB has drawn together the issues on the basis of which an employer can demonstrate objectively that age-related variations in terms and conditions of employment are justified. This is especially important where a broader age-sensitive personnel policy is in operation.
 
The original Dutch version of the above text has been taken from the website www.doorwerkgever.nl. The complete text of the Commission's ruling is available in Dutch via www.cgb.nl as ruling number 2009-77.