Labor Law: Possible changes in Court formula in dissolution procedures

Labor Law: Possible changes in the Court formula applied in general in the Netherlands Antilles in dissolution procedures in relation to employment contracts

The formula developed in the Courts in the Netherlands to award compensations to employees whose employment contract has been dissolved has been renewed.

The most important change is that the manner in which the years of service are being weighted has been changed. Under the current formula the years of service before the employees 40th year count for 1 month’s salary. This has been amended that the years of service before the age of 35 shall count for half a month’s salary and the years of service between the age of 35 and 45 will count for one month’s salary. Under the current formula the years between 40 and 50 count for 1½ month salary. In the new formula the years between 45 to 55 will count for 1½ month salary and years worked from the age of 55 onward for 2 months salary. In the current formula the years after 50 count for 2 months salary. There will also be more emphasis on the correction factor in the particular circumstances of each case such as the employee’s labour market position and the employer’s financial situation.

Schematic overview

Current formula
Up to 40th year: 1 month’s salary
40th-50th year: 1½ month’s salary
50th year and up: 2 month’s salary

New formula
35-45: ½ month’s salary
45-55: 1½ month’s salary
55 and up: 2 month’s salary

This new formula will be introduced in the Netherlands as of 1 January 2009 and the specific details and application of the formula will be shaped by day to day practice.

It is not clear if the Courts in the Netherlands Antilles will apply this amended Court formula, as the formula has been developed for the Netherlands labor market, which differs from the Netherlands Antilles labor market. However, since the old court formula has been adapted by the Netherlands Antilles courts and applied by these courts in labor matters, it is not unlikely that also the amended court formula will be adapted by the Netherlands Antilles courts.

(Source: VanEps Kunneman VanDoorne)

January, 2009

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