BBA applies to foreign employees

In principle, an employment contract can only be terminated with consent from the UWV administrative authority. For foreign employees, this rule does not apply in all cases. Nevertheless the Amsterdam Court of Appeal appears to have recently increased protection for foreign employees.

Dismissal permit
According to established jurisprudence, a dismissal permit pursuant to Extraordinary Labour Relations Decree 1945 (BBA) is required for an employment contract involving social and economic relations in the Netherlands and in particular, the Dutch labour market. If an employer employs a foreign employee, it is not always easy to determine whether this is the case. To assess this, the question of whether the foreign employee will resort to the Dutch labour market on dismissal is often considered. If this is not the case, in principle the BBA does not apply and no permission from the UWV is required in order to terminate the employment contract. However, the Court's decision modifies this to a certain degree.

Facts
The Court's decision considered whether the BBA applied to the employment contract in question. This case concerned an American employee who entered the service of a Dutch employer in June 2005. In fact, the employee was to work in Amsterdam. The employment contract was for a fixed term of three years and including a clause allowing both parties to give notice before the end of the term. The employment contract was governed by Dutch law. On 28 July 2006, the employer gave notice that the employment contract would be terminated towards 1 October 2006. The employer did not request the permission of the CWI (now UWV) for this.

Positions of the employer and the employee
The employer took the view that the BBA did not apply, because the employee was American and was recruited in the US. He did not speak Dutch and worked in an international department. The employee had also said that he would leave the Netherlands after the employment contract expired and he made use of the '30% ruling, which is a tax facility for foreign employees residing temporarily in the Netherlands. As it was clear at the time of the cancellation that the foreign employee would no longer resort to the Dutch labour market, the employer took the view that the BBA did not apply.

The American employee did not agree. He took the view that the employer wrongly failed to apply for permission for the dismissal. As he was employed in the Netherlands and had bought a house here, he had sufficient social and economic ties with the Netherlands. The employee should therefore have enjoyed the same protection as a Dutch employee.

Decision of the Court
The Amsterdam Court of Appeal handed down a surprising decision. Before considering the case, it established that for the purposes of protection from dismissal pursuant to the BBA, growing internationalization means that the interests of the Dutch labour market are very limited. Whether a foreign employee resorts to the Dutch labour market no longer makes much difference. More relevant is the protection that an individual employee enjoys pursuant to the BBA. As the situation of the American employee was sufficiently similar to that of an 'ordinary' Dutch employee, the international factor was barely still an issue. After all, the employee was employed on the basis of an employment contract that was governed by Dutch law, there was no (concrete) prospect of structural or long-term employment abroad, and the American employee performed the work in the Netherlands for a Dutch employer. The employer should therefore have applied for permission before terminating the employment contract.

What does this mean in practice?
This decision strengthens the protection of foreign employees in the Netherlands against dismissal. While previously, it was possible to avoid the BBA in cases in which the foreign employee would not resort to the Dutch labour market on termination of the employment contract, this no longer appears to be a determining factor. Even when it is clear, as in this case, that the foreign employee will return to the country of origin, in some circumstances, the consent of the UWV must still be requested.

How should the question of whether a foreign employee enjoys protection from dismissal now be assessed? That depends on a number of factors. The jurisprudence shows, among other things, that importance is attached to the location at which the work is performed, the employee's place of residence, the employer's location of establishment and the legal system governing the employment contract. All these factors (and any other relevant elements) determine whether the situation is similar enough to that of a Dutch employee. If there is not a sufficient distinction, the BBA applies and the employer must apply for a dismissal permit.