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Wednesday, May 18, 2016

Sick Employees: To Pay or Not To Pay, That's the Question

By Camiel Koster , filed under: Civil

In our employment law practice, clients often ask us for how long they have to continue paying employees' salaries when they are out ill. Unfortunately, there is no straight answer, unless it is explicitly stipulated in the employment agreement or Collective Labor Agreement. Here is why.

Article 7A:1614c Civil Code stipulates that an employee is entitled to a continued salary for a "relatively brief period of time". It depends on all the circumstances in a specific case as to how brief this period, in fact, is. This could be as brief as two weeks. However, there is a judgment by the Court of First Instance whereby the relatively brief period was set at 23 months (the employee was over the age of 60 and employed for almost 30 years). The case was appealed, but the Court of Appeal did not (have to) rule on this topic.

The circumstances which play an important role in determining the length of a continued salary when an employee falls ill are the duration of the employment and the age of the employee. The longer the employee has been in service, and the older (s)he is, the longer the relatively brief period will be. Furthermore, the type of illness may play a role, especially if the illness is work related. If the illness is work related, the brief period may be longer compared to the situation whereby the illness was not caused by or at work.

So, is there a "safe range"? More or less; somewhere between six weeks and six months, depending on the aforementioned circumstances, excluding extreme situations.

The above guidelines are not applicable when an employee is SZV insured. In that case, article 5(6) of the Ordinance on Sickness Insurance (in Dutch: "Landsverordening Ziekteverzekering"), the employer has to pay 80% of the salary and claim reimbursement from SZV. If the employer does not pay the 80%, it risks a fine of NAfl. 10,000 or (in theory at least) imprisonment of maximum one year. Moreover, this Ordinance dictates that if the employer does not pay, SZV must pay the employee.

Please note that, as per “Labor Office Guidelines”, after one year of (continued) illness, the Secretary-General of the Labor Department will grant a dismissal permit, unless the employee can prove that he will recover and may resume work (part-time) within three months.