Central Appeals Tribunal: employee with a fixed-term contract without an interim termination clause retains entitlement to unemployment benefits after a settlement agreement

Statutory exclusion ground and the situation

Article 19(4) WW contains an exclusion ground providing that an employee is not entitled to unemployment benefits until the remaining term of the fixed-term employment contract has expired if the employee cooperates in the termination of that contract without an interim termination clause having been agreed. The rationale is that the employee relinquishes the right to wages for that remaining period and that it is not intended for the employee to then claim benefits from the UWV.

In this case from the province of Gelderland, the employee had a fixed-term employment contract without the possibility of interim termination. Employer and employee decided to end the employment contract earlier by mutual consent through a settlement agreement. That settlement agreement included an interim termination clause. The UWV refused to grant unemployment benefits, invoking Article 19(4) WW, because the interim termination clause was not included in the original employment contract.

Two lines in the case law

In recent years, administrative courts have ruled differently on this situation, leading to legal uncertainty.

In 2021, the Amsterdam Administrative Court held that an interim termination clause can validly be agreed later in a settlement agreement, as this is also a written agreement between employer and employee. The exclusion ground therefore did not apply and the employee received unemployment benefits. This approach was also followed by the Gelderland Administrative Court in 2022 in the case that was later reviewed by the CRvB on appeal.

By contrast, in 2022 the Rotterdam Administrative Court ruled that an interim termination clause is only valid if it is included in the original employment contract (or an addendum thereto). According to that court, a clause included in a settlement agreement did not meet the statutory requirements, meaning the exclusion ground applied and the employee was not entitled to unemployment benefits.

The Central Appeals Tribunal provides clarity

In its 2024 ruling on appeal in the Gelderland case, the CRvB confirmed the approach taken by the Amsterdam Administrative Court. According to the CRvB, the law only requires that the interim termination clause be agreed in writing. In Article 19(4) WW, the legislator refers to Article 7:667(3) of the Dutch Civil Code and thereby explicitly aligns with civil law. There are no indications, according to the CRvB, that an interim termination clause must be included in the original employment contract or in an addendum thereto. An interim termination clause laid down in a settlement agreement also satisfies the written form requirement.

Detrimental act or culpable unemployment?

Legal literature has also raised the question whether an employee commits a detrimental act or becomes culpably unemployed if they cooperate in the early termination of a fixed-term employment contract that originally did not contain an interim termination clause. The prevailing view is that this is not the case. An employee may cooperate in an interim termination at the employer’s initiative, provided that a written interim termination clause is or is subsequently agreed.

Conclusion

The CRvB has provided clarity. The UWV’s position that only an interim termination clause in the employment contract itself is sufficient has been rejected. Such a clause may be included in an addendum, but also in a settlement agreement. A fixed-term employment contract without an interim termination clause can therefore be terminated early through a settlement agreement in which an interim termination clause is included, without the employee losing the right to unemployment benefits.

Want to know more? Please contact our Employment Law team.

Not yet a subscriber? Sign up for our newsletter here.