Payment Obligation During the COVID-19 Crisis

The inability to pay wages due to the Covid-19 crisis and the compulsory closure of the company – in this case a hairdresser salon – does not relieve the employer fromhis obligation to continue to pay wages, ruled the Subdistrict Court in Rotterdam on August 27th, 2020. Not surprising, but surprising enough is that the Subdistrict Court completely rejected the claim for payment of the statutory increase (imposed by Dutch law) as a result of the late payment.

Article 7: 625 of the Dutch Civil Code stipulates that the employer owes a statutory increase if the wages are paid late. For the 4th to 8th working day late, the statutory increase is 5% and for each subsequent day the statutory increase is 1%, with a maximum of a 50% increase. The to-be paid amount can thus increase considerably. The court does have the power – if it deems necessary – to limit the increase to a limited amount.

In this case, the claim for payment of the statutory increase was completely rejected because according to the Subdistrict Court allocation would be unreasonable in this situation. The hairdressing salon, a sole proprietorship, had no income at all for a while. The employer tried to pay the salaries and continued to pay this amount immediately after receiving the advance on the NOW (loan subsidy program introduced by the Dutch government in response to the Covid-19 crisis) from the relevant authority.

Source: ECLI:NL:RBROT:2020:7335

Should you have any questions, please contact Amanda Brouwers.