Supreme court: notification not to renew temporary employment contract must always be in writing
Employers are by now used to the fact that employees on fixed-term contracts must be informed in good time and in writing whether the contract will be extended or not. If an employer fails to do so or does so too late, the employee is entitled to compensation of up to one month's salary. What if the employer did give timely oral notice that the temporary employment contract will not be extended and the employee subsequently has a new job? Is the employee then still entitled to the compensation?
Duty to notify
The legal obligation to notify means that the employer must inform the employee in writing no later than one month before the expiry of the fixed-term employment contract, whether or not the employment contract will be continued and, if so, under what conditions. If the employer completely fails to comply with the obligation to notify, the employee is entitled to compensation of one month's salary. If the employer is late, the employer must pay the compensation pro rata for the period the employer is late. The employer will have to prove that the notification was actually given on time. The obligation to notify in writing applies to temporary contracts of six months or longer of which the end date is set on a calendar date. So contracts for the duration of a project or for replacement due to illness are not subject to the obligation to notify. The obligation to notify does not apply to temporary employment contracts with a so-called temporary agency clause either.
Purpose
The idea behind the obligation to notify in writing and the associated compensation in case of failure to (fully) comply is that the employee has timely clarity on whether or not the employment relationship will continue. After all, the employee will have to look for other work to safeguard his income. The legislative history shows that a written obligation to notify was deliberately chosen to strengthen the employee's position. The written requirement serves to protect the employee, as is also the case with, for example, the probationary period clause and the non-competition clause.
Supreme Court
The case, which was decided by the Supreme Court on 7 October 2022, involved an employee with a fixed-term contract for the duration of seven months until 1 December 2019. On 30 October 2019, thus one month before the expiry of the contract, the employer had orally informed the employee that his contract would not be renewed from 1 December 2019. The employee then started looking for a new job and found one with effect from 1 December 2019.
The employee claimed payment of one month's salary because the employer had not informed him in writing about the non-renewal of his contract. The subdistrict court rejected the employee's request. The court of appeal decided in the employee's favour and ruled that the employee was entitled to the notification compensation, even though it was clear to the employee that he had to look for and find another job and did not suffer any financial disadvantage. According to the court of appeal, a statutory rule can only be overruled by the court in very exceptional circumstances. The court has even less room when it comes to mandatory law, as is the case with the written notification obligation.
The Supreme Court endorses this and points out that the legislator deliberately chose that the employer, who does not comply with the duty to notify in writing, is liable to pay the compensation. The compensation also serves as an incentive for the employer to comply with the duty to notify in writing that the temporary contract will bot be renewed. This means that the compensation is always due in case of non-compliance with the obligation to notify in writing, even if it was clear to the employee by other means that the employment contract would not be continued or that the employee did not suffer any disadvantage due to non-compliance with the obligation to notify in writing.
Obligation employer
Thus, the employer must always ensure that the decision not to renew a temporary employment contract is confirmed in time and in writing to prevent the employee from successfully claiming the compensation. Note that the notification is only effective if it has reached the employee or if the failure to reach it is due to the employee himself or comes for his own account. This means that the employer must be able to prove that the employee has received the notification. Therefore, the advice is to always send the letter confirming non-renewal by registered mail in any case as well.
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