{"id":1870,"date":"2016-12-01T18:32:12","date_gmt":"2016-12-01T17:32:12","guid":{"rendered":"https:\/\/www.hocker.nl\/de-druk-om-het-goed-te-doen\/"},"modified":"2017-07-04T17:21:17","modified_gmt":"2017-07-04T16:21:17","slug":"de-druk-om-het-goed-te-doen","status":"publish","type":"post","link":"https:\/\/www.hocker.nl\/en\/de-druk-om-het-goed-te-doen\/","title":{"rendered":"The bigger they are, the harder they fall"},"content":{"rendered":"

Dismissal of managing directors under the Dutch Work and Security Act (WWZ)<\/strong><\/p>\n

The WWZ is not just relevant to \u2018ordinary\u2019 employees. The position of managing directors with employment contracts has likewise changed as a result of this new Act. To what extent, though? A recent case before the Rotterdam District Court shows the pitfalls and possibilities for both shareholders and managing directors.<\/p>\n

Not much protection against dismissal<\/strong><\/p>\n

Before the WWZ took effect, it was possible to dismiss managing directors relatively easily, provided the right procedure had been followed. \u2018Relatively easily\u2019, in the sense that a loss of confidence was usually sufficient to dismiss the managing director, basically, without any compensation having to be awarded. It was then up to the director to bring the matter to court, with it often being asserted that the dismissal was \u2018manifestly unreasonable\u2019 due to the absence of any file supporting the decision. Courts did not readily accept this argument. The bigger they are, the harder they fall; that was the thinking. In exchange for there not being much protection against dismissal, managing directors typically enjoyed a very generous remuneration package and a long notice of termination period. Nevertheless, settlements were often reached with managing directors as well, and the sub-district court formula was regularly applied. Nuisance value, avoiding bad publicity and goodwill were just some of the many reasons for giving a director a sum of money, even though the director was perhaps not entitled to this under the letter of the law. This was sometimes a consequence of a \u2018golden parachute\u2019 clause which had been included in the director\u2019s employment contract and which gave the director a bit of financial security.<\/p>\n

Is this practice so different now under the WWZ?<\/strong><\/p>\n

The case which I will talk about here involved a managing director who, his employer believed, was not performing well. For several years in a row, financial targets had not been met, and the director had not come up with a plan to turn things around. The organisation had high employee turnover, with the director pursuing a policy of buying people out instead of coaching and training them. The employer also felt that the director set his own priorities and did not sufficiently take into account the corporate group\u2019s instructions and procedures. About a year earlier, all of this had prompted the employer\u2019s works council to express concern about the director\u2019s leadership.<\/p>\n

\u201cI\u2019m not a managing director\u201d<\/strong><\/p>\n

After an extraordinary meeting of shareholders was convened to discuss dismissing the managing director, he was terminated by the shareholder (the parent company in Spain), subject to the applicable notice period. The director refused to go along with this. He brought an action in the district court, in which he alleged \u2013 briefly stated \u2013 that there was no reasonable ground to dismiss him and that, moreover, he was not a managing director. The issue which the director raised regarding his status as a managing director was very interesting. If the director had not been appointed as a managing director (pursuant to the company\u2019s articles of association) and was thus a director in title only, the employer could not have terminated the employment contract through a shareholders\u2019 resolution. In that instance, the normal termination proceedings would have had to have been conducted before the sub\u2011district court, which in any event would have bought the director several months’ time (and income). Yet, as the shareholder\u00a0and\u00a0<\/em>the director had signed the registration form with the chamber of commerce listing the director as a managing director, and the director had actually acted as a managing director, too, the district court brushed aside this argument.<\/p>\n

Defence: three grounds for dismissal<\/strong><\/p>\n

In its defence, the employer claimed that the director was not performing satisfactorily, the employment relationship had become strained, and the employment contract could be terminated based on \u2018other circumstances\u2019 \u2013 in employment-law jargon, the \u2018catch-all ground\u2019 (set out in Article\u00a07:669(h) of the Dutch Civil Code).But this \u2018catch-all ground\u2019, wasn\u2019t it intended for specific circumstances, such as long-term imprisonment and illegal workers? Surely, the intention was not to have it encompass cases which did not justify dismissal based on unsatisfactory performance or a strained employment relationship?Indeed, the \u2018catch-all ground\u2019 should not in principle be viewed as the \u2018if all else fails\u2019 option. Still, in formulating the WWZ, the legislature had noted that the catch-all ground could be used for situations in which there was a difference of opinion with a manager about the policy to be followed. The court (of course) would be the one, however, to determine whether such a situation was in fact present.<\/p>\n

No improvement plan, yet the employment contract ends, anyway<\/strong><\/p>\n

The district court held in this case that unsatisfactory performance was not an issue, as an improvement plan had not been implemented. The employment relationship had not become strained, either, in the district court’s view. Ultimately, however, the court\u00a0did<\/em>\u00a0accept the employer\u2019s reasoning and ruled that there was a difference of opinion about how the director was performing his job. That was enough to have the termination fall under the \u2018catch-all ground\u2019.<\/p>\n

Limited compensation<\/strong>The director, whose gross monthly salary (including allowances, bonuses and so forth) totalled nearly EUR\u00a010,000, left the company with a gross transitional payment of more than EUR\u00a066,000. This was but a fraction of his claim for more than EUR\u00a0250,000 gross, which he thought he was entitled to, since, according to him, the employer had engaged in \u2018seriously culpable conduct\u2019. That wasn\u2019t so, the court said. Another blow for the director was that his non-competition clause was upheld, forcing him to look for another position outside the industry.<\/p>\n

Tips<\/strong><\/p>\n

\u25ba\u00a0Although it is advisable to submit a written appointment decision to demonstrate that an employee is a managing director under the company’s articles of association (thus halting any further discussion about the director’s status), this can also be proved in other ways. In this case, a registration form with the chamber of commerce, signed on the shareholder\u2019s\u00a0and\u00a0<\/em>the employee\u2019s behalf, was decisive, in addition to the fact that the employee had actually acted as a managing director.<\/p>\n

\u25ba\u00a0While a managing director can in principle be dismissed on account of a \u2018difference of opinion\u2019, this difference of opinion must also be shown and explained under the WWZ. Hence, there needs to be something of a file. If not, the main risk is that a higher severance payment will have to be made. There has not yet been any case law dealing with such a situation.<\/p>\n

\u25ba\u00a0Under the WWZ, multiple disputed matters may be resolved in a single action. For example, the case discussed above related not only to the amount of the severance payment, but also to a release from the non-competition clause.<\/p>\n

\u25ba\u00a0There is less reason under the WWZ to agree on a \u2018golden parachute\u2019 (that is, a contractual severance payment), because the rules concerning transitional payments apply to managing directors as well. All the same, the transitional payment will, of course, usually<\/p>\n","protected":false},"excerpt":{"rendered":"Dismissal of managing directors under the Dutch Work and Security Act (WWZ) The WWZ is not just relevant to \u2018ordinary\u2019 employees. The position of managing directors with employment contracts has likewise changed as a result of this new Act. To what extent, though? A recent case before the Rotterdam District Court shows the pitfalls and… View Article<\/a>","protected":false},"author":14,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[42],"tags":[],"class_list":["post-1870","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"yoast_head":"\nThe bigger they are, the harder they fall - H\u00f6cker<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.hocker.nl\/en\/de-druk-om-het-goed-te-doen\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The bigger they are, the harder they fall - H\u00f6cker\" \/>\n<meta property=\"og:description\" content=\"Dismissal of managing directors under the Dutch Work and Security Act (WWZ) The WWZ is not just relevant to \u2018ordinary\u2019 employees. The position of managing directors with employment contracts has likewise changed as a result of this new Act. To what extent, though? A recent case before the Rotterdam District Court shows the pitfalls and... View Article\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.hocker.nl\/en\/de-druk-om-het-goed-te-doen\/\" \/>\n<meta property=\"og:site_name\" content=\"H\u00f6cker\" \/>\n<meta property=\"article:published_time\" content=\"2016-12-01T17:32:12+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2017-07-04T16:21:17+00:00\" \/>\n<meta name=\"author\" content=\"Martyn Top\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Martyn Top\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.hocker.nl\\\/en\\\/de-druk-om-het-goed-te-doen\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.hocker.nl\\\/en\\\/de-druk-om-het-goed-te-doen\\\/\"},\"author\":{\"name\":\"Martyn Top\",\"@id\":\"https:\\\/\\\/www.hocker.nl\\\/#\\\/schema\\\/person\\\/c0309ee8213e49b21b352fc414902f68\"},\"headline\":\"The bigger they are, the harder they fall\",\"datePublished\":\"2016-12-01T17:32:12+00:00\",\"dateModified\":\"2017-07-04T16:21:17+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.hocker.nl\\\/en\\\/de-druk-om-het-goed-te-doen\\\/\"},\"wordCount\":1185,\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.hocker.nl\\\/en\\\/de-druk-om-het-goed-te-doen\\\/\",\"url\":\"https:\\\/\\\/www.hocker.nl\\\/en\\\/de-druk-om-het-goed-te-doen\\\/\",\"name\":\"The bigger they are, the harder they fall - H\u00f6cker\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.hocker.nl\\\/#website\"},\"datePublished\":\"2016-12-01T17:32:12+00:00\",\"dateModified\":\"2017-07-04T16:21:17+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/www.hocker.nl\\\/#\\\/schema\\\/person\\\/c0309ee8213e49b21b352fc414902f68\"},\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.hocker.nl\\\/en\\\/de-druk-om-het-goed-te-doen\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.hocker.nl\\\/en\\\/de-druk-om-het-goed-te-doen\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.hocker.nl\\\/en\\\/de-druk-om-het-goed-te-doen\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.hocker.nl\\\/en\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"The bigger they are, the harder they fall\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.hocker.nl\\\/#website\",\"url\":\"https:\\\/\\\/www.hocker.nl\\\/\",\"name\":\"H\u00f6cker\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.hocker.nl\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.hocker.nl\\\/#\\\/schema\\\/person\\\/c0309ee8213e49b21b352fc414902f68\",\"name\":\"Martyn Top\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/f46253b9b49b7a5058d30a2a735f207860bcd7614bb026144b7e17522659ebec?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/f46253b9b49b7a5058d30a2a735f207860bcd7614bb026144b7e17522659ebec?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/f46253b9b49b7a5058d30a2a735f207860bcd7614bb026144b7e17522659ebec?s=96&d=mm&r=g\",\"caption\":\"Martyn Top\"}}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"The bigger they are, the harder they fall - H\u00f6cker","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.hocker.nl\/en\/de-druk-om-het-goed-te-doen\/","og_locale":"en_US","og_type":"article","og_title":"The bigger they are, the harder they fall - H\u00f6cker","og_description":"Dismissal of managing directors under the Dutch Work and Security Act (WWZ) The WWZ is not just relevant to \u2018ordinary\u2019 employees. The position of managing directors with employment contracts has likewise changed as a result of this new Act. To what extent, though? A recent case before the Rotterdam District Court shows the pitfalls and... View Article","og_url":"https:\/\/www.hocker.nl\/en\/de-druk-om-het-goed-te-doen\/","og_site_name":"H\u00f6cker","article_published_time":"2016-12-01T17:32:12+00:00","article_modified_time":"2017-07-04T16:21:17+00:00","author":"Martyn Top","twitter_misc":{"Written by":"Martyn Top","Est. reading time":"6 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.hocker.nl\/en\/de-druk-om-het-goed-te-doen\/#article","isPartOf":{"@id":"https:\/\/www.hocker.nl\/en\/de-druk-om-het-goed-te-doen\/"},"author":{"name":"Martyn Top","@id":"https:\/\/www.hocker.nl\/#\/schema\/person\/c0309ee8213e49b21b352fc414902f68"},"headline":"The bigger they are, the harder they fall","datePublished":"2016-12-01T17:32:12+00:00","dateModified":"2017-07-04T16:21:17+00:00","mainEntityOfPage":{"@id":"https:\/\/www.hocker.nl\/en\/de-druk-om-het-goed-te-doen\/"},"wordCount":1185,"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.hocker.nl\/en\/de-druk-om-het-goed-te-doen\/","url":"https:\/\/www.hocker.nl\/en\/de-druk-om-het-goed-te-doen\/","name":"The bigger they are, the harder they fall - H\u00f6cker","isPartOf":{"@id":"https:\/\/www.hocker.nl\/#website"},"datePublished":"2016-12-01T17:32:12+00:00","dateModified":"2017-07-04T16:21:17+00:00","author":{"@id":"https:\/\/www.hocker.nl\/#\/schema\/person\/c0309ee8213e49b21b352fc414902f68"},"breadcrumb":{"@id":"https:\/\/www.hocker.nl\/en\/de-druk-om-het-goed-te-doen\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.hocker.nl\/en\/de-druk-om-het-goed-te-doen\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.hocker.nl\/en\/de-druk-om-het-goed-te-doen\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.hocker.nl\/en\/"},{"@type":"ListItem","position":2,"name":"The bigger they are, the harder they fall"}]},{"@type":"WebSite","@id":"https:\/\/www.hocker.nl\/#website","url":"https:\/\/www.hocker.nl\/","name":"H\u00f6cker","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.hocker.nl\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.hocker.nl\/#\/schema\/person\/c0309ee8213e49b21b352fc414902f68","name":"Martyn Top","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/f46253b9b49b7a5058d30a2a735f207860bcd7614bb026144b7e17522659ebec?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/f46253b9b49b7a5058d30a2a735f207860bcd7614bb026144b7e17522659ebec?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/f46253b9b49b7a5058d30a2a735f207860bcd7614bb026144b7e17522659ebec?s=96&d=mm&r=g","caption":"Martyn Top"}}]}},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.hocker.nl\/en\/wp-json\/wp\/v2\/posts\/1870","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.hocker.nl\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.hocker.nl\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.hocker.nl\/en\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/www.hocker.nl\/en\/wp-json\/wp\/v2\/comments?post=1870"}],"version-history":[{"count":7,"href":"https:\/\/www.hocker.nl\/en\/wp-json\/wp\/v2\/posts\/1870\/revisions"}],"predecessor-version":[{"id":2008,"href":"https:\/\/www.hocker.nl\/en\/wp-json\/wp\/v2\/posts\/1870\/revisions\/2008"}],"wp:attachment":[{"href":"https:\/\/www.hocker.nl\/en\/wp-json\/wp\/v2\/media?parent=1870"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.hocker.nl\/en\/wp-json\/wp\/v2\/categories?post=1870"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.hocker.nl\/en\/wp-json\/wp\/v2\/tags?post=1870"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}