THE BOTTOM LINE
- A complex internal investigation lasting several months does not automatically invalidate a summary dismissal for cause; Dutch courts will assess the diligence of the investigation, not just the clock.
- Employees with very long service records who commit serious fraud can be denied their entire statutory severance pay, as courts are unlikely to view this as a “minor misstep.”
- Companies can successfully hold a fraudulent employee liable for a significant portion of the costs of the external investigation required to uncover the misconduct.
THE DETAILS
A recent ruling from The Hague Court of Appeal provides crucial clarity for businesses navigating the complexities of summary dismissal following a lengthy fraud investigation. The case involved an employee with 46 years of service who was fired for orchestrating a scheme to divert valuable scrap materials for personal gain. After a whistleblower tip, the employer, Shin-Etsu PVC, launched a four-month investigation using an external agency. A lower court initially invalidated the dismissal, arguing that the four-month period meant the firing was not “prompt” as required by Dutch law. This initial decision caused concern among employers, suggesting that thorough investigations could paradoxically weaken their legal standing.
The Hague Court of Appeal, however, comprehensively overturned this decision. It ruled that the “promptness” requirement is not a simple stopwatch test but depends on the specific circumstances. The court found Shin-Etsu’s actions to be diligent and justified. The investigation was complex, involving potential collusion with other employees and external companies, and took place on a secure site owned by a third party (Shell). The court approved of the employer’s methodical approach, which included covertly placing trackers in containers to gather concrete evidence before confronting the employee. This methodical approach, aimed at building an undeniable case, was deemed necessary and did not violate the promptness requirement.
This reversal has significant financial implications. With the summary dismissal now validated, the employee is not entitled to any severance pay (transitievergoeding) or damages for improper termination. The court specifically rejected the lower court’s use of a legal exception (the so-called “luizengaatje” or fairness gateway), stating that a prolonged, calculated fraud is not a “small misstep” that warrants leniency, regardless of the employee’s long tenure. Furthermore, the court confirmed that the employee was liable for the employer’s damages and could be held responsible for a substantial portion of the investigation costs, which the company was permitted to offset against the employee’s final salary payment.
SOURCE
Source: Gerechtshof Den Haag
