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Suppose: you part ways with your employer during a reorganization with a settlement agreement. The social plan, which applies to your settlement agreement, states that you can be re-employed within 26 weeks if a suitable vacancy arises. But what if that vacancy is filled internally? Do you still have the right to return? In a recent ruling, the court of appeal considered such a situation. The employee claimed that the employer had violated their return guarantee. The subdistrict court agreed with the employee, but the court of appeal thought otherwise. In this blog, I explain what the court of appeal ruled and why it is relevant for HR and employers.
The employee had worked at P&O Ferries since 1989 and held the position of Chief Engineer (hwtk). In 2021, his employment ended due to a reorganization following the closure of the Hull-Zeebrugge route. He received a severance payment of over three hundred thousand euros and signed a settlement agreement in which the social plan was declared applicable.
The social plan included a return guarantee: if a vacancy for the same position or duties arose within 26 weeks after dismissal, P&O had to offer it to the last dismissed employee from that job group.
Shortly after his departure, the employee heard that there was again a need for a hwtk. He reported this and claimed - based on the social plan - the right to return. P&O refused because the position was filled internally. The employee then went to court.
The subdistrict court largely sided with the employee. According to the subdistrict court, P&O had wrongly not used the return guarantee because the work for hwtk had structurally returned. P&O was ordered to pay compensation of €6,583.76 plus compensation for tax disadvantages.
On appeal, the issue was the interpretation of the return guarantee. The central question was: when is there a "vacancy" within the meaning of the social plan? And: does an internally filled position also fall under this?
The court of appeal tested the provision against the so-called collective labor agreement (cao) standard. This means that provisions in collective labor agreements and social plans must be interpreted objectively, as an average outsider would understand them.
P&O argued that the guarantee only applies if a vacancy is posted externally, i.e., towards the labor market. If a position is filled internally, there is no "vacancy" within the meaning of the social plan. The court of appeal found this argument convincing.
The court of appeal referred to Article 7:681 paragraph 1 sub d of the Dutch Civil Code. This article provides protection to employees whose employment contract is terminated for economic reasons. If the work is resumed within 26 weeks and the employee is not allowed to return, this can lead to fair compensation.
However, this legal protection does not apply to employees who leave via a settlement agreement. Therefore, a provision comparable to this legal protection is often included in a social plan, as in this case.
The court of appeal ruled that the provision in the social plan did not offer broader protection than the legal regulation. This means that the guarantee only applies if the position is posted externally, not if an internal reassignment takes place. And that was the case here.
Because the hwtk position was filled internally, there was no vacancy as intended in the social plan, according to the court of appeal. P&O therefore had no obligation to offer the employee that position. The court of appeal overturned the previous ruling of the subdistrict court and dismissed the employee's claim. In fact, the employee must repay the previously received compensation.
This case shows how important precise formulations in a social plan are. What is meant by "a vacancy"? What is understood by "return guarantee"? And how far does it extend?
The interpretation according to the cao standard makes it clear that agreements in a social plan cannot simply be interpreted in favor of the employee, especially if they seem to deviate from legal rules.
Moreover, it is good to realize that the difference between 'internal filling' and 'external posting' is significant. As HR or employer, it is wise to explicitly record this in the social plan to avoid discussions afterward.
For HR and employers, this ruling is a good reminder:
For questions please contact Renée Huijsmans-Zwijnenburg, partner & attorney at law Employment, Employee Participation & Mediation.
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