Directors' and Officers' Liability for Overdue Salary and Severance Payment
In the run-up to the present ruling, a lot had already happened
between the parties. The employee had been in the employer's
service for seven years and had personally requested the
Subdistrict Court to rescind his employment agreement after the
employer had first done so, and had later withdrawn this
application because of the amount of the severance payment. The
Subdistrict Court then pronounced the rescission requested by the
employee and awarded him a substantial compensation. After that,
the employer refused to pay this compensation to the employee and
offered no recourse.
The Facts
When he received no payment, the employee started a new action
in which he made a claim against the (sole) director personally -
who was also the indirect shareholder of the employer - to pay the
severance payment and the overdue salary over a period of
disability, plus a 50% interest for late payment and statutory
interest.
As a ground for his claim the employee argued that the director,
as director of the employer, had acted unlawfully towards him by -
in summary - not paying the severance payment, and transferring the
proceeds of the sale of the employer's corporate assets from the
employer's equity and using them for other purposes, so that the
employer also offered no recourse.
Judgments of the
Court of Appeal and the Supreme Court
Both the Court of Appeal and the Supreme Court held that the
director, by submitting and then again withdrawing his application
for a rescission, was confronted with the realistic possibility
that the employment agreement with this employee would eventually
end through a rescission with a (substantial) compensation being
granted. In the opinion of the Court of Appeal, this implies that
the employer should also have understood that this would oblige him
to make payments.
Because the director had effected, or at least allowed, that an
amount of NLG 1,000,000 to which the employer was entitled was kept
out of the company at the date when the employer had to take into
account the existence of obligations to pay the employee, the
director had effected, or at least allowed, that the employer was
not able to perform his obligations towards the employee.
According to the Court of Appeal and the Supreme Court, it is an
established fact that the director has acted so negligently towards
the employee that he can personally be seriously blamed for this
act. For this reason, the director was personally liable under
Section 6:162 of the Dutch Civil Code for the damage the employee
had incurred as a result of the director's acts, and the director
was ordered to pay the various payments claimed.