Controversial ruling on dismissals

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In August 2002, a Dutch court made a controversial ruling, in interim injunction proceedings brought by trade unions, allowing more lenient dismissal rules which apply to temporary employment agencies to be applied by an information and communications technology (ICT) company, CMG, which seconds workers to other firms.

A recent request to dismiss 118 of its employees by an information and communications technology (ICT) company, CMG, has attracted considerable attention. In the Netherlands, dismissals must generally be approved by the labour market authorities (NL9909160F), currently the relevant Centre for Work and Income (Centrum voor Werk en Inkomen, CWI). Generally, the 'last-in first-out' principle governs dismissals, but temporary employment agencies are an exception to this rule: if there is insufficient work, other criteria such as quality may be applied to collective dismissals. CMG claimed that it is in fact a 'secondment company', hiring out ICT employees to user firms. As such, it should be possible to exercise the more lenient rules on the order of dismissal that apply to temporary employment agencies. The CWI agreed with this view, and approved the order of dismissal proposed by the company.

Attempts by trade unions to obtain a court ruling forcing the CWI to apply the normal rules have failed so far. In interim injunction proceedings on 15 August 2002, a court in The Hague found that CMG could apply the rules applicable to temporary employment agencies in dismissing its employees.

During the proceedings, a spokesperson for the Service Sector Union (Dienstenbond CNV) affiliated to the Christian Trade Union Federation (Christelijk Nationaal Vakverbond, CNV) argued that CMG cannot be considered a secondment company because placement activities falls outside the scope of its core business. Moreover, the seconded employees do not work under the supervision of the user company. CMG admits that this is true - the underlying rationale is that CMG is thus not obliged to pay the seconded employees in accordance with the collective agreement applicable to the user company (NL0111102F).

Some specialists in labour law were somewhat surprised by the court’s ruling. This could lead to secondment companies systematically seeking to use the more lenient dismissal rules in the future. According to a spokesperson for the General Association of Temporary Work Agencies (Algemene Bond voor Uitzendbureaus, ABU), this happens seldom, if at all, at present. If this should change, the consequences for all employees who are seconded on a regular basis would be significant. In addition to ICT specialists, this group includes consultants, accountants and staff at catering companies.

It remains to be seen whether the interim injunction court’s ruling will be upheld in appeal proceedings initiated by the unions.

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