Is an oral termination of the employment contract by mutual consent legally binding?
Termination of the employment contract
The employer and employee can terminate an employment contract, and there is a different legal regime for each termination. There are strict rules for employer termination to protect the employee from the far-reaching consequences of dismissal. Termination by mutual consent is also possible, the so-called 'met wederzijds goedkeuren'. This type of termination has to be agreed in writing, in an agreement that outlines the terms of termination (beeïndigingsovereenkomst). Generally, a settlement agreement (vaststellingsovereenkomst) is used for termination by mutual consent. This is a specific type of termination agreement to end or prevent a conflict between the parties.
Oral termination
Even though the termination agreement between an employee and employer is governed by law, sometimes it occurs that one of the parties claims the employment contract was orally agreed between the parties.
This happened in the case before the District Court Zeeland-West-Brabant. The employee terminated his contract with immediate effect on 4 October 2021 and claimed unpaid salary, holiday allowance and vacation days over August and September. The employer argued that the employment contract was terminated mid or, in any case, end of July in consultation and by mutual agreement, which had not been confirmed in writing, so the employee had no claim. Furthermore, the employer argued that the employee had not done his work as of 1 August 2021 or even earlier.
Written termination needed
According to the court, an agreement terminating an employment contract is only valid if it has been entered into in writing, as stated in Article 7:670b paragraph 1 of the Dutch Civil Code. Therefore, the oral termination of the employment contract by mutual consent claimed by the employer could not stand in court.
Partial non-performance of the employee
Regarding the employer's claim that the employee did not perform all of his work in the last period, the court considers the following. Article 7:628(1) of the Dutch Civil Code stipulates that if an employee does not work or only partially performs the agreed work, the employer must, in principle, pay the full salary. However, the employer is only not liable to pay salary if, in all reasonableness, the non-performance of work should be at the employee's expense. Since the employer could not sufficiently prove this was the case, he was obliged to pay the full wage.