On 22 June 2018, the Supreme Court issued a ruling on the relevance of dismissal schemes under a Social Plan.

The case concerned an employer agreed Social Plan with the trade unions in the context of a reorganisation. In the Social Plan, the redundant employees were designated according to the principle of reflection. The Social Plan also included a so-called volunteer scheme and a place maker scheme. As a consequence, the actual departure of employees deviated from the agreed Social Plan. This circumstance was a reason for the Tax Authorities to argue that a so-called RVU was in place, with a final levy (52%) for the employer’s account.

According to the Supreme Court, the dismissal scheme must be assessed on the basis of the (objective) criterion of whether the benefits are intended to bridge or supplement the income of the (former) employee until the retirement date. With an ‘objective’ criterion the Supreme Court means: according to general social standards, irrespective of the intention of the withholding agent.

The subjective motives of the withholding agent to offer benefits are irrelevant in this context. This also applies to the intentions and the choices made by the employees to opt for the scheme. Other than required by the Dutch Ministry of Finance, the actual outflow of employees and the amount of the agreed severance payments are not decisive.

We are in the opinion that a Social Plan in which the reflection principle is (objectively) applied does not qualify as an RVU (Early Retirement Scheme) even if it is combined with voluntary and place-maker schemes. The employer does not have to demonstrate that the actual outflow of older employees deviates (10%) from the social plan in case of absence of voluntary and place-maker schemes.