Amanda Brouwers – Attorney-at-law, Schelstraete C.S. Advocaten
Recently I have been asked regularly whether an employee could be required to meet the employer by accepting less salary or by accepting a scale down of other employee benefits due to the Covid-19 crisis. This is a hot topic in the media as well: insurance multinational Aon has asked its employees worldwide to accept a cut down in gross salary of 20% for the remainder of this year in exchange for employment guarantee during this period.
Is this possible under Dutch law?
Employees can of course be asked to meet the employer during these difficult times. If the need for this is substantiated, this can cause employees to agree voluntarily. But what if employees don’t agree voluntarily?
Under Dutch law, employment conditions cannot simply be changed unilaterally by the employer, certainly not when it concerns an essential part of the employment agreement, such as salary. There must be a substantial business interest on the side of the employer, which interest should be so substantial, that the employee’s interest should reasonably be set aside.
In the Netherlands the NOW-measure is in place. An employer whose turnover falls back by 20% or more due to the measures taken by the Dutch Government, the Dutch Government pays a part of the gross salary of the employees in the coming months up to 90%. In principle it is up to the employer to file a request for this measure and to inform his employees about it. The condition attached to this arrangement is that the employer is not allowed to terminate the labour agreement based on financial circumstances during this period: doing so will result in a fine.
The NOW makes it less necessary for employers to request a cut in salary from their employees: a substantial part of the labour costs are subsidised. If the employer does not qualify for the NOW because the turnover did not fall back by 20% or more, there will in principle not be a substantial business interest on the part of the employer. Enforcing acceptance of a cut down in salary will therefore be difficult.
One could argue that an exception could be made in the event that full payment of the salaries – despite the NOW – will result in bankruptcy of the company. But even Dutch department store chain V&D was ordered by the Dutch Court to reverse a one-sided cut down in salary of 6% in 2015. Shortly after the company went bankrupt.
If this happens, the employee will as a result lose his job. The question raises – hindsight based – whether the employee would not have been better off accepting the cut down in salary (or other employee benefits), if this could have saved his employer.
Employment law related questions? Please contact our colleague Amanda Brouwers.