A recent decision by the Gelderland District Court shows yet again that dormant employment in the Netherlands comes with risks.¹ In this article, we briefly set out what dormant employment is and what the associated risks are.

Sick employees

In principle, sick employees retain the legal right to continued payment of a wage for 104 weeks. This term runs parallel to the waiting period for WIA (Work and Income according to Labor Capacity Act) benefits. Both the obligation to continue to pay a wage during illness and the waiting period of 104 weeks may be extended by up to 52 weeks if the Employee Insurance Agency (“UWV”) is of the opinion that insufficient redeployment efforts have been made. This means that, in principle, the obligation to continue to pay a wage expires after this period of 104 weeks and a sick employee is, in principle, entitled to WIA benefits.

Dormant employment

Despite the fact that sick employees are no longer entitled to a wage after 104 weeks, their employment continues. This is known as dormant employment. Employers often deliberately used to leave the dormant employment in place (even when there was no prospect of recovery) because employees were only entitled to a transition payment on termination of their employment contract.

Since April 2020, the Transition Payment Compensation Scheme ("Compensation Scheme") has allowed employers to apply to UWV for compensation of transition payments they make after long-term illness. The scheme was introduced...

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