SEVERANCE PAYMENTS UNDER THE LAWS OF THE NETHERLANDS ANTILLES
The employer’s obligation to award severance pay is mandatory
The Netherlands Antilles Severance Ordinance obliges the employer to award an employee whose employment terminates, a single payment (article 3 Paragraph 1). This single payment is a ‘statutory payment’ as distinct from compensation for e.g. early termination of an employment agreement, usually also called a severance payment.
An exception is made to this obligation in the fourth paragraph of the article mentioned in the case of “an employee enjoying the benefit of a pension or payment in lieu of pension or old age benefit, made available upon termination of his employment”.
The employer’s obligation to award severance pay concerns imperative law from which parties, as the third paragraph of Article 3 of the Ordinance shows, can only be deviated from to the advantage of the employee.
In a case judged by the Supreme Court (NJ 1989/364), the employee was entitled to a pension of ANG 3,724 per year at the moment of reaching the pensionable age. This amount was lower than the applicable legal old-age pension then, which was ANG 5,964 per year. In order to avoid the obligation to make severance payment -at any rate, thus it appears- the employer then wrote, two days before the actual retirement, a letter to the employee, in which it is indicated that the pension would be supplemented for life up to ANG 5,695 per year. In the same letter, it is indicated that, as a consequence of this supplementation, there is no right to severance payment. This letter reached the person in question a few days after his retirement.
The (ex)employee subsequently still demands severance payment. The Court of First Instance denied employee’s claim, among other things, because, before the employee retired, he was promised that there would be a supplement up to ANG 5,695 per year.
The employee then appealed and the Court ordered the ex-employer, by interlocutory ruling, to prove that the employee was given the enjoyment of a pension of ANG 5,965 per year before or at the end of the employment, and was informed thereof. After hearing witnesses, the Court judged in its final judgment that the evidence had not been produced, and awarded the employee’s claim.
The ex-employer lodged an appeal in cassation against this decision. In cassation, the judgment laid down by the Court in the interlocutory ruling, underlying the order to produce evidence, is, among other things, contested. This ruling implies that, for the application of the severance payment regulation, it is important at what point in time the employment is terminated, in the sense that, if the employee has not been given the enjoyment of a pension at that moment, as referred to in article 3, paragraph 4, in connection with paragraph 5 of those regulations, or the employer has not informed the employee of such, the right to severance payment is created for the employee, which the employer may not unilaterally tamper with.
The Supreme Court deemed the argument put forward against this judgment well-founded. It is alleged: “Pursuant to paragraph 4 of article 3, the employee cannot claim the benefit referred to in the first paragraph, if “at the end of his employment” he has been given the enjoyment of a benefit. These wordings do not induce to the restricted opinion of the Court. With these wordings, and with notably the word “at”, that does not point to a strict term, it rather tallies that also the requirement has been met that the employee at the end of his employment has been given the enjoyment of a pension in a case like the present one in which the statement made by the employer before the end of the employment, whereby the employee is given the enjoyment of a pension, reached the employee a few days after the end of the employment. This explanation is not contrary either to the purport of the severance payment regulations, namely providing if there is no minimum pension or old-age provision.”
Karel Frielink
Attorney (lawyer) / Partner
