THE BOTTOM LINE
- Choice-of-Law Clauses Have Limits: A Dutch court has ruled that selecting a foreign law (in this case, Danish) in an employment contract does not override the mandatory protective rules of Dutch law for an employee working in the Netherlands.
- Procedural Failures Can Be Fatal: The court invalidated a summary dismissal for two key reasons: the employer’s own actions created the ambiguity for which it fired the employee, and it failed to act immediately upon discovering other alleged misconduct.
- Wrongful Dismissal Voids Non-Competes: Because the company was found to be seriously at fault for the dismissal, it forfeited its right to enforce the employee’s non-compete clause, on top of being ordered to pay significant compensation.
THE DETAILS
This case serves as a sharp reminder for multinational companies employing staff in the Netherlands. The dispute involved a Dutch-based company (part of a Danish group) and its Netherlands-based Account Manager. Their employment contract explicitly stated it was governed by the Danish Salaried Employees Act. When the relationship soured, the company dismissed the employee on the spot. The Gelderland District Court was asked to rule on the validity of the dismissal and the applicable law.
Citing the EU’s Rome I Regulation, the court affirmed a critical principle: a choice-of-law clause cannot deprive an employee of the protection afforded by the mandatory legal provisions of the country where they habitually work. After comparing Danish and Dutch law, the court concluded that Dutch dismissal regulations offered the employee greater protection and therefore applied Dutch law to the dispute.
The court then dismantled the employer’s justification for the summary dismissal. The company fired the employee for two main reasons: taking an “unauthorized and surreptitious” trip abroad and previously falsifying appointments. The court dismissed the first reason, noting that the company itself had created a confusing situation by reassigning the employee’s duties and cutting her access to key software, effectively sidelining her. While the employee should have informed her employer of her travel, her actions could not be deemed “surreptitious” given the ambiguity created by the company. The second reason failed on procedural grounds; the company had discovered the alleged falsified appointments weeks before the dismissal, violating the strict requirement for immediate action in a summary dismissal case.
The financial and contractual consequences for the employer were severe. The court deemed the dismissal unlawful and the employer’s conduct “seriously culpable.” It awarded the employee a fair compensation package of €60,000, payment in lieu of the proper notice period, a statutory transition payment, and back pay. Crucially, the court also ruled that due to the employer’s seriously culpable actions, it could no longer enforce the non-compete clause in the contract. This highlights that the cost of a mishandled termination extends beyond financial penalties to the loss of key contractual protections designed to safeguard business interests.
SOURCE
Rechtbank Gelderland
