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If parties have agreed upon a fixed term employment contract and the employee wishes to resign before the term of the contract has expired, may the employee terminate his employment contract prematurely? Article 7A:1615e, paragraph 3 Civil Code of the Netherlands Antilles stipulates that an employment contract for a fixed term may only be terminated if this right to premature termination for both parties is agreed in writing. In other words the right to premature termination must be agreed in writing and must be applicable to both parties. 

If premature termination has not been agreed in writing then the employee may only resign prematurely if the employer has no objections. The employment contract is then terminated by mutual consent (another possibility in our closed dismissal/resignation system) and not by resignation. If the employer does not consent to premature resignation then the employee will, in principle, have to fulfill his contract.

To complicate things even further: if the employee nevertheless chooses to resign, current case law of the Supreme Court holds that the resignation itself is valid. The resignation is however wrongful and the employee is then liable for damages. The amount of damages is equivalent to the salary that the employer would have paid if the employee had fulfilled his employment contract.

An example: an employee has entered into an employment contract for a period of 12 months. The contract doesn’t include the option of premature resignation. The contract commences on November 1, 2007 which means that it terminates ipso jure (read automatically) on November 1, 2008. The employee however resigns on June 15, 2008 as he has had enough at his employer. The employee runs the risk that his employer will sue him for wrongful resignation, with the possibility that the Court of First Instance will order the employee to pay his employer damages equal tot the amount of salary he would have received from June 15 to November 1, 2008. It is therefore wise for employees to ensure that a provision is included in their employment contracts allowing premature resignation.

It is more difficult for an employer to dismiss an employee prematurely as he requires prior approval from the Directorate of Labor Affairs for it to be legally valid. Premature dismissal without the prior approval of the Directorate of Labor Affairs is invalid, and the employment contract is not terminated by the dismissal.

The employer is required to submit his motivation to the Directorate of Labor Affairs justifying the need for premature termination. The employee may in his turn submit a statement of defense. If the employer receives aforementioned approval from the Directorate of Labor Affairs he may terminate the employment contract prematurely while observing the applicable notice period.

NB. The date of dismissal/resignation is not the same as the date on which the employment contract is formally terminated. The date of dismissal/resignation is the date on which the first party lets the second party know that the employment contract will be terminated at a specific date in the future. The employee is not obliged to ask the prior approval from the Directorate of Labor Affairs before resigning.

William ten Veen
Attorney – Spigthoff Curacao

(29 June 2010)

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Filed under: legal by Karel.Frielink