Employers are legally required to make every reasonable effort to support the reintegration of an employee who is unfit for work. But what happens if, after 104 weeks of incapacity for work, the UWV concludes that the employer has failed to fulfil its reintegration obligations? In that case, the UWV may impose a wage sanction (loonsanctie) on the employer. This means that the employer can be required to continue paying the employee’s wages for up to an additional 52 weeks. What are the rules governing a wage sanction? How can an employer prevent a wage sanction from being imposed? And what options are available if the employer is nevertheless faced with a wage sanction?
What is a wage sanction?
An employer is legally required to continue paying the wages of an employee who is unfit for work for a maximum period of 104 weeks, during the so-called waiting period. In most cases, it is agreed that the employer will continue to pay 100% of the employee’s salary during the first year of sickness and 70% during the second year. If no specific arrangements have been made, the statutory obligation is to pay 70% of the employee’s wages during both the first and second year of sickness, subject to a maximum of 70% of the statutory maximum daily wage. During the first year of sickness, however, the employee must receive at least the statutory minimum wage.
Around week 88 of the employee’s incapacity for work, the employee must apply for a WIA benefit from the UWV.
As part of this application, the employee must submit the reintegration report, which contains all key documents prepared during the employee’s period of sickness absence. If the UWV, on the basis of this report, concludes that the employer has failed, without a valid reason, to make sufficient efforts to reintegrate the employee, it may extend the employer’s wage payment obligation by up to 52 weeks. This extension is known as a wage sanction. As a general rule, a wage sanction requires the employer to continue paying 70% of the employee’s wages, subject to a maximum of 70% of the statutory maximum daily wage, unless the parties have agreed otherwise regarding the employee’s entitlement to wages during the third year of sickness absence.
Administrative and Substantive Wage Sanctions
The UWV may impose an administrative wage sanction if the reintegration report submitted with the WIA application is incomplete or has been submitted late. Once the missing documents have been provided and approved, the UWV may shorten the duration of the sanction.
Once the UWV has determined that the reintegration report is complete, it proceeds to assess the employer’s reintegration efforts on the merits. In doing so, the UWV considers the following questions:
- Has a satisfactory reintegration outcome been achieved?
- If not, were the reintegration efforts sufficient?
- If not, was there a valid justification for this?
- If not, can the shortcomings still be remedied?
According to the UWV, a reintegration outcome is considered satisfactory only if it results in a (partial) return to work of a structural nature. The UWV defines this as either employment with the employee’s current employer on a permanent basis, or employment with another employer for a period of at least six months. If a satisfactory reintegration outcome has been achieved, no wage sanction will be imposed.
If the reintegration outcome is not considered satisfactory, the UWV will assess whether the employer’s reintegration efforts were nevertheless sufficient. The employer’s efforts will generally be regarded as sufficient if:
- sufficient investigation has been carried out into the employee’s reintegration possibilities within the employer’s own organisation; and
- a timely search has been undertaken for suitable opportunities outside the employer’s organisation (a so-called second-track reintegration programme); and
- the employer has taken appropriate measures where the employee failed to cooperate sufficiently with the reintegration process (for example, by suspending or discontinuing wage payments).
If the employer has made sufficient reintegration efforts, the UWV will not impose a wage sanction.
If the UWV concludes that the employer’s reintegration efforts were insufficient, it will then assess whether the employer had a valid justification for those shortcomings. Such a justification may exist, for example, where all suitable positions within the organisation are already occupied by other employees. In that situation, the employer cannot reasonably be expected to dismiss another employee in order to redeploy the employee who is unfit for work. If the UWV finds that a valid justification exists, it will not impose a wage sanction. However, if no valid justification can be identified, the UWV will finally assess whether the shortcomings in the reintegration process can still be remedied. Only where the shortcomings cannot be remedied will the UWV refrain from imposing a wage sanction. If the shortcomings can be remedied, the employer may be given additional time to do so, accompanied by a wage sanction.
Decision Period
The UWV’s decision imposing a wage sanction must be issued no later than six weeks before the end of the waiting period. Once the waiting period has expired, the UWV is no longer authorised to impose a wage sanction.
Reduction of the Wage Sanction Period
A wage sanction is imposed for a standard period of 52 weeks, regardless of the nature or severity of the shortcomings identified. If the employer believes that it has subsequently fulfilled its reintegration obligations or remedied the administrative deficiencies, it may submit a request for reduction of the sanction period (bekortingsverzoek) to the UWV. In this request, the employer must demonstrate that it has now complied with its obligations. The UWV must decide on the request within three weeks of receipt. If the UWV determines that the employer has fulfilled its obligations, the wage sanction will end six weeks after that decision.
If the UWV fails to decide on the request within the prescribed period, the resulting delay will be compensated by a corresponding reduction in the remaining duration of the wage sanction.
Objecting to a Wage Sanction
The employer may also file an objection against the wage sanction decision within six weeks. During the objection procedure, the UWV conducts a full reassessment of the decision in light of the facts and circumstances put forward by the employer. In the course of this review, the UWV may not rely on new or different shortcomings as grounds for maintaining the wage sanction. If it is subsequently established that the UWV imposed the wage sanction incorrectly, the employer may submit a claim for compensation. This may include reimbursement of, among other things, the wages that were wrongly paid during the sanction period and the associated employer costs and social security contributions.
Expert Opinion
An employer may request an expert opinion (deskundigenoordeel) from the UWV on whether it has fulfilled its reintegration obligations adequately. If the UWV concludes in that expert opinion that the employer’s reintegration efforts were sufficient, it may not subsequently depart from that assessment when reviewing the employer’s reintegration obligations at the end of the waiting period. In other words, the UWV is bound by its earlier expert opinion when deciding whether a wage sanction should be imposed.
Conclusion
A wage sanction can have significant financial consequences for employers. It is therefore essential that employers comply with their reintegration obligations in a timely and diligent manner and ensure that the reintegration report is prepared carefully and comprehensively. If a wage sanction is imposed, it is always advisable to assess whether there are grounds for reducing the sanction period or filing an objection against the decision.
Do you have any questions following the above? If so, please feel free to contact the lawyers at Ko & Co Advocaten for a no-obligation consultation.
Hian Li Ko | Ko & Co Advocaten
