The closed legal dismissal system only allows the resolutive condition in the employment contract to a very limited extent. Nevertheless, it may be wise to include it, but think carefully about the wording of such a condition.
In a recent judgment of the Court of Appeal in The Hague (for the fans: ECLI:NL:GHDHA:2021:356) the resolutive condition in the employment contract of a highly skilled migrant was discussed, but it did not end well for the employer.
Employers who employ highly skilled migrants, or other categories of labour migrants for whom there is an obligation to have a work permit, often struggle with the risks of losing or not being granted such a permit. If a permit is not obtained, the employment contract cannot be executed. If the permit expires during the term of the employment contract, the employee is suddenly no longer allowed to work. Apart from the question of whether the employer owes the employee a salary in such cases, the employer would prefer that no employment contract be created or that it be terminated.
A solution to the problem that no permit is obtained at the start of the contract can still be found in a condition of employment. In that case, the employment contract does not start until the employee is entitled to work. This usually works out well. It is a different story for an employee who loses his or her right of residence during the course of the employment contract. We regularly see a resolutive condition included in the employment contract for such cases. The idea is that once the condition is met, the employment contract ends by operation of law.
I myself sometimes advise to include such a condition in an employment contract, for very specific situations and with the advice to the employer that the condition cannot be invoked just like that. This is because the resolutive condition is at odds with the ‘closed dismissal system’ that we have in the Netherlands.
In the case I referred to above, things did not turn out well for the employer. The employer was of the opinion that the employment contract had even been terminated retroactively because the residence permit would no longer be valid given that the employee no longer met the conditions for this permit. At that time, there was no question of a revocation decision by the Immigration and Naturalisation Service (IND), although this decision was in order.
In its judgment, the Court of Appeal put first and foremost that the protection of the employee that is characteristic for the employment contract, which is expressed, among other things, in the (closed) legal system of dismissal law, implies that the validity of a resolutive condition in an employment contract can only be accepted in exceptional cases. A condition that cannot reasonably be reconciled with that system cannot lead to a termination of the employment contract by operation of law. Whether such a condition is compatible with the legal system must be examined from case to case, according to the Court of Appeal. Moreover, an employment contract cannot be terminated with retroactive effect, just as the court cannot dissolve or terminate the employment contract with retroactive effect, neither in the first instance nor in the second instance.
Perhaps you already handle such cases with caution. In practice, we have noticed that both the drawing up of resolutive conditions in an employment contract and the invocation of such conditions require a great deal of thought. Drafting a condition is a tailor-made job and it is of great importance that the condition was not within the employer’s sphere of influence. Moreover, there may be other ways of dealing with the risks.
Would you like to include a resolutive condition in the employment contract or, for example, a condition precedent to the commencement of employment or a condition precedent? We will be happy to advise you.
For more information or advice please contact Reinier Wolters, firstname.lastname@example.org.