Will I also be reimbursed for my reduction-of-working-time days (ADV days) if my employer goes bankrupt?

If an employer goes bankrupt, the UWV ensures that employees receive their (outstanding) wages for a certain period under the wage guarantee scheme. Disputes may arise about which wage components fall under (outstanding) wages. In the case before the Central Appeals Tribunal, the central question was whether unused ADV days were eligible for reimbursement. Solicitor Willem Jansma will discuss this issue in this blog.

Employees in the event of bankruptcy

In the event of bankruptcy, the trustee usually terminates all employment contracts shortly after the bankruptcy is declared. On the basis of Article 40 of the Bankruptcy Act (Faillissementswet), the notice period is then a maximum of six weeks. The wages for the period after bankruptcy are an estate debt, but there are often insufficient funds in the estate to actually pay employees. The UWV wage guarantee scheme exists to prevent employees from being left empty-handed.

What is the wage guarantee scheme?

If an employer goes bankrupt or can no longer pay, the UWV can temporarily take over the employees’ wage payment obligations. This is called the wage guarantee scheme. The intention is to ensure that employees are not left without income in the event of bankruptcy or inability to pay on the part of the employer. The UWV will then pay, among other things, outstanding wages, holiday pay and accrued vacation days. The UWV is then subrogated to the rights of the employees and subsequently reports to the trustee.

What is and is not covered by the wage guarantee scheme?

The UWV will reimburse (i) the outstanding wages for the last 13 weeks before dismissal, (ii) the wages for the applicable notice period, (iii) the holiday pay and the accrued vacation days for a maximum of one year. Other claims are generally not covered, unless the law or case law explicitly equates them with wages or vacation. Ultimately, the UWV determines whether a claim falls under the wage guarantee scheme.

ADV days

This regularly leads to discussions, for example, regarding scheduled days off, ADV hours or other time-for-time arrangements. This was also the case in a recent ruling by the Central Appeals Tribunal. The central question in that case was whether scheduled days off (ADV days) should be reimbursed by the UWV as if they were vacation days. The employee believed this was the case, but the UWV refused to reimburse them.

Background

The employee in question had worked at a concrete products company since 1989, which was declared bankrupt in September 2023. The UWV took over the vacation hours, but did not pay compensation for all scheduled days off.
The employee stated that the scheduled days off had the same character as vacation days and that he was therefore entitled to compensation for the entire year. The UWV argued that a leisure time entitlement can only be considered a holiday if it is intended to give the employee paid leave for rest and relaxation. Because ADV days are primarily intended to shorten working hours, they do not qualify as vacation according to the UWV, and the UWV refused to provide benefits.

Ruling

The Central Appeals Tribunal agreed with the UWV and the court. Scheduled days off are intended as a reduction in working hours, not as a holiday. They therefore do not count under the broader Article 64 (1) subsection c of the Unemployment Insurance Act (WW). The UWV was therefore right to only reimburse the days in the 13-week period and notice period.

It does not matter that the employer would have paid out the ADV days upon termination of employment (outside of bankruptcy). Legislators have deliberately chosen not to include all claims under the guarantee, thereby limiting the scope of the wage guarantee scheme. The employee can still submit their claim to the trustee, but payment is unlikely to occur in practice. The chance of payment is therefore slim.

What can you do if your employer owes outstanding wages or goes bankrupt?

Report your claim to the UWV immediately if you notice your employer is no longer paying, and submit your claims to the trustee if your employer is declared bankrupt. This is necessary in order to claim any remaining amount later.

Please contact AMS if you are unsure whether your claims have been correctly included. Cases such as the one giving rise to this ruling demonstrate that disputes can arise over the precise scope of the wage guarantee. AMS Advocaten can advise you in such a case and, if necessary, initiate proceedings on your behalf.