GMW Legal Upadte- The Nuon vs. Olbrych-case: More Protection for Expats

In its judgment of 24 February 2012, the Supreme Court of the Netherlands ruled on the application of article 6 of the Dutch Labour Relation Decree (LRD, in Dutch: BBA) in international employment relations and broadened the LRD’s scope in this regard.
Article 6 LRD requires the employer to obtain the Dutch Dismissal Authority’s (UWV WERKbedrijf) permission in order to terminate an employment contract by notice. Without the permission, termination does not have legal effect, leaving the employment contract in force. As a consequence, an employee who declares to be available for labour can start a legal procedure and claim payment of the salary. When article 6 LRD is not applicable, termination by notice will be valid when formalities such as the notice period are taken into consideration by the employer.
In Nuon vs. Olbrych-case the Supreme Court had to answer the question whether article 6 LRD applies to an employee whose stay in the Netherlands is uncertain after termination of the employment contract. Olbrych, a US national was working since 2005 for Nuon in the Netherlands. Although the employment contract was for three years, Nuon decided to terminate the contract in 2006. Nuon had omitted to obtain the Dismissal Authority’s permission as it was of opinion that Olbrych would not be covered by the protection of article 6 LRD, as Olbrych would return to the US and his dismissal would not affect the Dutch labour market. This argument was in line with the previous verdict by the Supreme Court in 1987 in the case of Sorensen vs. Aramco. In that case, the Supreme Court stated that article 6 LRD applies when the termination would affect the Dutch labour market.
In Nuon vs. Olbrych-case however, the Supreme Court decided in line with the High Court’s reasoning that the protection of the Dutch labour market includes protection of individual employees from unfair dismissal. The LRD did apply to Olbrych based on the facts that Dutch law was applicable to his employment contract; the work was performed in the Netherlands and Nuon was seated in the Netherlands. These circumstances established the connection with the Dutch legal sphere and implied the application of LRD, regardless of Oblrych’s intention to stay in the Netherlands after the end of the labour relation.
The Supreme Court refers to a change in the LRD in 1998 affecting the LRD’s purpose. Prior to 1998 it was also compulsory for the ‘employee’ to obtain the Dismissal Authority’s approval when terminating the employment contract by notice. The Supreme Court interprets the change in the LRD in 1998 to be a shift in its scope towards protection of the employee from unfair dismissal.
In conclusion, the Nuon vs. Olbrych judgment broadens the protection of international employees from unfair dismissal when enough ties with the Dutch labour market are proven. It is no longer necessary to prove ones future stay in the Netherlands.
by Elena Deliran
GMW Advocaten