Dismissal after 2 years of illness: this is what you really need to have in place as an employer
After two years of disability, the obligation to continue to pay wages expires. Many employers think that this also automatically ends the employment contract. This is a persistent misunderstanding. In reality, there is still quite a bit legally involved. Two recent judgments show what can go wrong if you don't act carefully as an employer.
Wage payment stops, employment does not
After 104 weeks of illness, you as an employer may stop paying wages, unless the UWV imposes a wage sanction. But the employment contract continues as usual, until it is legally terminated. This can be done through termination with UWV approval, with the employee's consent or with a settlement agreement. Simply assuming that the employment contract ends "automatically" leads to problems.
Notice period remains in effect
Another common misunderstanding: once the UWV has given permission for dismissal after two years of illness, you would be allowed to skip the notice period. Incorrect. Even then, the statutory notice period applies, unless you agree otherwise with the employee. In the case before the Central Netherlands District Court, the employer ignored that term and the employment ended immediately after the salary continuation period. The court ruled that the employer had wrongfully terminated and imposed liquidated damages in the amount of three months' wages.
Vacation days remain
Accrued vacation days during illness also do not simply disappear. Employees simply continue to accrue vacation days during illness. And upon termination of employment, those days must be properly paid out unless they have lapsed. But that lapse is subject to strict conditions.
According to the Court of Appeal of The Hague, the employer must inform the employee in good time about the risk of lapse and enable him or her to actually take vacations. If this does not happen, the vacation days simply remain, even if the employee is ill for a long time.
Don't forget other wage components as well
In addition to outstanding vacation days, as an employer you must include other wage components in the final settlement. Think vacation pay, thirteenth month, structural bonuses or gratifications. In the case before the District Court of Midden-Nederland, the employer also had to pay a gratuity because it had been consistently awarded in previous years. The fact that the employee was sick did not alter this.
Dormant employment? Employee can force termination
Some employers try to avoid the transition fee by continuing employment "dormant. That is risky. Since the well-known Xella ruling , it has been clear that an employee has the right to enforce termination as well as claim the transitional compensation. Continuing dormant employment without a legitimate reason is not legally accepted.
Moreover, in the event of dismissal after 104 weeks of illness, the transitional compensation will be compensated by the UWV under certain conditions. However, requirements must be met and a maximum applies.
Wage penalty? Then the counter starts again
If the UWV finds that the employer has made insufficient reintegration efforts, a wage sanction may follow. In that case you are obliged to continue to pay wages during illness for up to 52 weeks and you are not yet allowed to terminate the employment. The process does not start after two years, but only after the end of the wage sanction. And if an employee reports sick again after recovery and has worked for four weeks, the process can start again.
Conclusion: beware of legal pitfalls
Terminating an employment contract after two years of illness seems like standard procedure on paper. Yet recent case law shows that things go wrong if you as an employer do not act carefully. Consider observing the notice period, paying out accrued rights in full, and properly recording agreements.
Employers would be wise to provide proper legal guidance for the process. In this way, you prevent a formal conclusion from resulting in high costs or protracted proceedings. Do you have doubts? Get timely advice. This will prevent a seemingly closed file from opening up.
This blog was written by mr. Stijn Blom, employment lawyer at Arbeidsadvocaat.nl B.V. Stijn has extensive experience in employment law and supports entrepreneurs and employees on a daily basis with a variety of employment law issues. From dismissal cases to drafting watertight contracts and regulations - with his practical and personal approach, he helps employers and employees move forward. Want to know more? Visit Stijn's page.
Arbeidsadvocaat.nl is happy to think with you if you have questions about terminating employment during illness. Please feel free to contact us .
April 2025
