Employer has to Pay Equitable Compensation for Failure to Extend Employment Contract with Sick Employee

Since an employer had failed to express the reason why the employment contract with a chronically ill employee had not been extended, the Sub-district Court assumed that the chronic illness had been the reason. Therefore the employer had acted seriously culpably and, for that reason, had to pay the employee an equitable compensation.
An employee was employed by chain of toy shops under a fixed-term employment contract. In the employment contract a notice had been included in advance, saying that the contract would not be extended after the agreed term had expired. Unfortunately, when the term of the employment contract actually expired, the female employee was ill. The employment contract was not extended.
The employee argued that the failure to extend the employment contract was due to her illness. According to the employee, this was in conflict with the statutory prohibition of discrimination on grounds of a chronic illness or disability. This argument resulted in proceedings before the Sub-district Court, in which the employer was ordered to prove that the employee's chronic illness had not played a role in the decision not to extend the employment contract.
In order to meet this burden of proof, the employer submitted a written statement from a company HR-employee. In this statement, this HR-employee declared that she, at no time, had given the employee reason to believe that her employment contract would be extended. Furthermore, the HR employee declared that the decision not to extend the employment contract was made in consultation with the management and that the reasons had been other than the illness. What the other reasons were, had not been specified in the statement.
When the employee herself had previously inquired about the reasons, the employer had only replied that she was not obliged to express the reason for the decision.
Then the Sub-district Court had to assess whether the employer’s statement had provided a reasonable degree of certainty that the chronic illness had not played a role the decision not to extend the employment contract. According to the Sub-district Court, this was not the case. Conversely, the fact that the employer had not given the employee any reason to expect an extension of the employment contract was countered by the fact that the opposite had not been the case either, according to the Sub-district Court. After the -what the Sub-district Court called “standard”- notice in the employment contract, the employee had never received any signal that the employment contract would not be extended.
Moreover, the employee performed well and there were no problems regarding the person. The Sub-district Court acknowledged that an employer is not obliged to provide reasons why the employment contract had not been extended, but according to the Sub-district Court, this did not mean that absence of this substantiation might not play a role in the assessment of the evidence.
Next, the Sub-district Court’s conclusion was that it had insufficiently been substantiated that the chronic illness had not played a role in the decision on extension of the employment contract. This implied that the employer had committed seriously culpable acts or omissions, which enabled the Sub-district Court to grant a fair compensation.
In accordance with case law of the Supreme Court, the amount of this fair compensation should be related to the seriousness of the employer's culpable act or omission. Fair compensation is not a punishment; it is intended to prevent employers from opting for termination of an employment contract in a seriously culpable way. All the circumstances of the case can play a role in fixing the amount of the compensation, including the consequences of the dismissal.

As requested by the employee, the Sub-district Court set the amount of the fair compensation at €10,000 gross. In case of extension of the employment contract, the employee would have been permanently employed and she would not have been able to return to work until 1 September 2024 at the earliest. During this period, she would have received a sickness benefit of approximately € 700 per month less than the salary she would have received. The loss of income therefore amounted to €8,400. Due to the mental anguish and acting in violation of the prohibition of discrimination, the Sub-district Court found the amount of €10,000 gross appropriate.

The law has adopted various prohibitions of discrimination the employer shall adhere to, including the one for discrimination on grounds of a chronic illness or disability.
If an employee provides sufficient evidence to give reason to believe that an employer acts in violation of a prohibition on discrimination, it is up to the employer to prove the opposite. Probably, the employer in the above case may have thought that he could get away with the notice in the employment contract in advance, stating that the employment contract would not be extended after expiration of the agreed term, and with the written statement from the HR employee that no expectations of the opposite had ever been raised. The Sub-district Court. however, was not impressed by the notice in advance, which it dismissed as being “standard”. This is understandable, since, in practice it is quite common that, despite a notice in the employment contract that the employment contract will not be extended once the agreed term has expired, the employer later decides whether he/she will actually not extend the employment contract. This is also what seems to have happened in the above case, since, apparently, there had also been some management decision.
Employers whose intention it is not to extend the employment contract of a chronically ill employee or of an employee with a labour incapacity should take into account that they are expected to express the reason for not extending the contract and, if necessary, to also substantiate this reason.