It happens more often than you think: an employee and employer clash over how work should be done, how communication should take place, or about the company’s direction. The atmosphere deteriorates, conversations become difficult, and eventually the conflict ends up in court. But when has an employee gone so far that they lose their transition payment? And when has an employer behaved so badly that they must pay additional compensation (the fair compensation)?

The Court of Appeal of Arnhem-Leeuwarden gave a clear answer in July 2025: that bar is set high.

What Was at Stake in this Case?

The employee had worked at EPI Synthetic Surface Materials B.V. as an account manager since 2017. In 2019, he received more responsibilities and joined the management team. At the end of 2021, friction arose over his role and way of working. In 2022, he left the management team and returned to his old position. However, tensions remained, partly because the employee regularly criticized the strategy and policy. Attempts to resolve this through an improvement plan and later through mediation (intervention by a neutral third party) failed.

The employee subsequently reported sick and the employer ultimately requested termination of the employment contract due to a permanently disrupted employment relationship.

The subdistrict court terminated the contract as of January 1, 2025, awarded a transition payment of €23,620, and reduced the non-compete and relationship clause from two years to six months. Both parties appealed.

Relevant Legal Rules

In employment law, there are several core rules that played a role in this case.

First, there is the g-ground (permanently disrupted employment relationship), the reason to terminate a contract when the relationship between employer and employee is truly broken. It must go so far that normal cooperation is no longer possible.

Additionally, in some cases a dismissal prohibition during illness applies. This stipulates that an employee may not be dismissed during illness. However, there are exceptions, for example when the reason for dismissal is completely separate from the sick leave. Finally, the concept of seriously culpable conduct. Only if an employee seriously misbehaves (for example: theft, fraud, or violence) can this lead to them losing their transition payment. For an employer, the rule is that they only have to pay additional compensation, a so-called fair compensation, if they behave in a seriously culpable manner.

What Did the Court Decide?

The court confirmed the subdistrict court’s judgment that there was an irreparable breach of trust and that the contract had to end on that ground. Mediation had not provided a solution and in a small company, as was the case here, there was no realistic possibility of relocating the employee. Although the employee was ill, according to the court the dismissal had nothing to do with that; the cause lay in the deadlocked cooperation.

The employee’s behavior was described as critical and sometimes difficult, but not as transgressive or seriously culpable. This was therefore insufficient to assume that he had acted in a seriously culpable manner. The transition payment therefore remained in place.

The employer’s behavior was also examined. There was no evidence that the employer had deliberately aimed for dismissal without good reason, or that there was a work environment that made people ill. There was therefore also no reason to require the employer to pay additional compensation.

Conclusion

This judgment makes clear that a critical or difficult employee does not automatically lose their transition payment. Only in cases of truly serious misconduct can the court decide to refuse that compensation. However, something similar applies to fair compensation. Only in cases of serious misconduct will an employer be ordered to pay additional compensation on top of the transition payment.


In short: disrupted relationship? Yes. Seriously culpable conduct? No. High standards apply and that is precisely the intention.