News & insights

Donald Volleberg appointed as counsel
We are proud to share that Donald Volleberg has been appointed as counsel as of 1 July 2024. This appointment underlines appreciation for his commitment and expertise. Donald Volleberg began his career at La Gro in 2014 and has since played a vital role as a lawyer and administrator. During his career, he has specialised in advising and litigating for banks and other financial institutions. His expertise lies in the broad field of financing and securities, where he has gained significant experience in litigation before various bodies. Donald is known for his no-nonsense approach and incisivenes. His ability to address complex legal issues clearly and efficiently has contributed to the success of many cases and the satisfaction of our clients. We congratulate Donald on his well-deserved appointment and look forward to his further contributions and successes in his new role.
Gerard Zuidgeest 1
Gerard Zuidgeest
Attorney at Law
Statutory minimum wages update
In the Netherlands, the minimum wage is regulated by the Minimum Wage and Minimum Holiday Allowance Act (“WML”). This does not cover employees working outside the Netherlands, unless they live in the Netherlands and their employer is also based here. Workers under 21 years of age are eligible for a percentage of the adult minimum wage and no minimum wage applies to workers under 18 years of age.  Until 1 January 2024, a monthly minimum wage applied (based on a maximum of 40 hours per week). As a result, the minimum wage per hour varied per sector because  in different sectors varying weekly work hours apply. From 1 January 2024, minimum wage is calculated by the hour. This makes abuse of authority and underpayment more apparent. The new minimum hourly wage is based on a 36-hour work week. Employees who work(ed) 40 hours a week therefore saw an additional increase in their minimum wage on a monthly basis, although it remains possible to compensate extra work hours with paid time off, provided this is covered in the collective bargaining agreement and agreed to in writing.  The minimum wage is a gross sum adjusted on 1 January and 1 July each year, usually according to the percentage change in contract wages in different sectors. After sharp increases in 2023, the minimum wage was increased with another 3.75% on 1 January 2024.  Many employees will see their wages rise again per 1 July 2024. Collective bargaining agreements usually provide for such increases, and not just for employees earning the minimum wage. But also for employees without a collective bargaining agreement, the legal minimum wage will increase by 3.08%.   Employers will therefore need to adjust their payroll where necessary to meet the new statutory minimum wages. In doing so, they must take into account the correct calculation of the minimum wage. Only certain (purely financial) wage components count toward the calculation of the minimum wage; income in kind and certain financial income components, such as vacation allowances and year-end bonuses, do not count. Furthermore, necessary expenses related to the employment may not be charged to the employee if this brings the wage below the minimum.   Employees that work more than the stipulated amount of hours (for example, 40 hours while the collective bargaining agreement requires 36 hours), will have to be compensated by their employers.   Improper payment of (minimum) wages can have financial consequences for employers. If an employee has received too little wages, he can claim the difference for up to five years after the fact. That includes salary payments below minimum wage. Such late salary payments may also be subject to a statutory increase, which can amount to 50% of the original salary amount. Furthermore, the Dutch Labor Inspectorate (Nederlandse Arbeidsinspectie) can impose administrative fines for non-compliance and in certain cases even shut down operations for three months in case of non-compliance with the WML.   How can La Gro be of assistance?  Do you have a question about (minimum) wage payment in the Netherlands? Are you confronted with a wage claim? Do you have a different question? Expertise in 18 legal fields enables La Gro to offer broad legal assistance. Feel free to contact me or one of my specialist colleagues.
Gerard Zuidgeest 1
Gerard Zuidgeest
Attorney at Law
Legislative proposal to regulate non-compete clauses
In March 2024, Minister Van Gennep published the announced legislative proposal Modernisation of the Competition Clause. The consultation phase ended in May 2024. The Minister is aiming for 1 July 2025 as the enforcement date. The main principles of the proposal are currently as follows:  The maximum duration of the non-competition clause may not exceed 12 months after the end of the contract and its duration must be justified;  A geographical limitation in the clause is mandatory; without it, the clause is null and void;  The condition that substantial business interest  must be motivated will extend to every contract, whether definite or indefinite, or the clause is null and void;  The employer must invoke the clause in writing no later than one month before the end of the employment contract, else it lapses, except in case  the employee resigns or the employment agreement is terminated by the court;  The employer must pay 50% of the last-earned monthly salary for each month that the non-competition clause is enforced after the end of the employment contract, unless the employee is found guilty of serious misconduct.   If an employer invokes the clause but fails to pay the compensation, the clause lapses, but the obligation to pay the compensation remains;  The court  may mitigate the clause, without lapse of the obligation to pay the compensation;  The employee has to repay the compensation in two cases: if the court annuls the non-compete altogether or if the employee  violates the clause despite the clause being invoked by the employer and the compensation has been paid;  In a settlement agreement, parties may agree that the clause will remain in effect without payment of the compensation;  Existing non-competition clauses remain valid without the obligation to motivate the clause or maintain a geographical limitation, but with a maximum duration of one year and one month’s written notice;  The House of Representatives has recently taken receipt of a motion that would restrict the use of a non-competition clause to employees earning at least one and a half times the average salary.  The final legislation may, of course, differ from these proposals. If the proposal becomes law, the invocation of non-compete clauses will probably decline. At the same time, employers would likely keep a closer eye on violations of non-competes (since they could recover the paid compensation in that way). On the employee side, given the compensation, litigation to have a non-competition clause nullified might also decline.  How can La Gro be of assistance?  Would you like to know more about non-compete clauses? Is a former employee violating his non–compete? Do you have a different question? Expertise in 18 legal fields enables La Gro to offer broad legal assistance. Feel free to contact me or one of my specialist colleagues .    
We are La Gro
On June 3rd 2024, we moved from our current office within the WTC The Hague, to a larger floor in the same building. This move is accompanied by a new direction, a new corporate identity and a new, shortened name: La Gro. With this name we maintain our name recognition, while simultaneously becoming more accessible to the international market. The expansion in The Hague coincides with the closure of our office in Leiden. For clients from the Leiden area, a meeting place remains available at Element Office Leiden, next to CS Leiden. https://www.lagro.com/app/uploads/2024/05/917.24226-LogoAnimatie_LaGro_01.mp4
Mathijs Arts
Mathijs Arts
Attorney at Law
Bad leaver provision too bad?
A legal exploration of the scope and permissibility of the ‘bad leaver’ provision in The Netherlands. In the complex landscape of partnership and shareholder agreements, terms such as ‘good leaver’ and ‘bad leaver’ are crucial in determining the rights and obligations of departing shareholders. Leaver provisions are agreed to ensure that a departing shareholder is not left as a (passive) shareholder when the involvement in the company changes. A “good leaver” generally leaves without any problems, while a “bad leaver” often results from a situation of conflict or unwanted departure. These distinctive terms have significant implications, especially with regard to share transfers and their financial consequences. Because of the impact of the consequences, it is important to have a clear picture of the legal aspects when entering into such a clause. In this contribution, we will highlight the role of reasonableness and fairness in the interpretation and application of “bad leaver” clauses in The Netherlands. In doing so, we will also provide recommendations for drafting clear and objective bad leaver clauses, as this will prevent costly and complicated litigation later on. Good leaver vs. bad leaver A leaver provision regulates the obligation of a shareholder to offer the shares he holds in the company under certain circumstances. A ‘good leaver’ is generally a shareholder who leaves the company without pre-qualified reasons of ‘bad’ or ‘early’ leaver. For example, after expiry of a certain term, by mutual consent, or after retirement or death or long-term illness. In such cases, depending on the terms of the agreement, the leaver may be obliged to offer the shares at “fair market value” or a predetermined approximation of the fair price. However, things get more complicated when the shareholder is classified as a “bad leaver”. Depending on the agreement, the shareholder may in that case be obligated to transfer the shares at a contractually determined purchase price that will generally be lower than the ‘fair market value’. The agreement may even provide that the departing shareholder will not receive more than the nominal value for its shares. The financial consequences of qualifying as a bad leaver and the settlement included therein can therefore be significantly detrimental to the departing shareholder. For example, the bad leaver may have to offer its shares of considerable value for as little as one euro or a greatly reduced price. A ‘bad leaver’ provision is therefore often a point of contention for the parties. In case law, this more than once leads to the question whether this forced transfer and its adverse consequences are in line with the standards of reasonableness and fairness. There is also debate in the literature as to whether the bad leaver provision should be reduced on the basis of Section 6:91 of the Dutch Civil Code (‘DCC’) in conjunction with Section 6:94 DCC because it should be regarded as a disguised penalty clause. Interpretation of the bad leaver provision Before being able to test the reasonableness and fairness and the qualification of penalty clause, we must first determine how the ‘bad leaver’ provision should be interpreted. As with any other contractual agreement, freedom of contract applies in principle. The Court of Appeal of The Hague, in a judgment dated 28 March 2023[1], emphasised that the provision cannot be interpreted (purely) linguistically alone; in this case, the Haviltex standard applies, looking, among other things, at the intention of the parties. However, it becomes difficult to interpret the ‘bad leaver’ provision differently the more objectively it is formulated. This could include a ‘bad leaver’ provision that refers to the urgent reason for dismissal described in Section 7:678 DCC. In this case, when assessing whether there is a ‘bad leaver’, the text and the law will be followed more quickly. 7:678 DCC. In this case, the assessment of whether there is a ‘bad leaver’ will more readily follow the text and the law. Section 7:678 DCC makes the provision more concrete but at the same time creates a high threshold for assuming a ‘bad leaver’ situation. A clear and objective provision therefore plays an important role in the interpretation of the ‘bad leaver’ clause. However, it will not provide any guarantees because the Haviltex standard will still apply. Reasonableness and fairness or a penalty after all? Next, we return to the question of how far one can go with the bad leaver clause in terms of adverse financial consequences for the leaver before it is deemed contrary to reasonableness and fairness. After all, it does not seem reasonable to have to offer shares worth, say, more than €1 million at the nominal value of €1. In a dispute before the District Court of The Hague on 20 June 2018[2] (which was upheld on appeal), the question was whether the former director of the company was bound by the ‘bad leaver’ provision and therefore had to transfer his shares at their nominal value. The management agreement had been terminated by the company for urgent reasons and the court considered this a justified dismissal under Section 7:678 DCC. According to the management agreement, the former director had to transfer his shares at nominal value in case of dismissal due to an urgent reason. The (former) director tried in vain to get out of the provision by invoking reasonableness and fairness. However, the court did not go along with his reasoning. The court considered that this clause had already been agreed upon in the letter of intent. Moreover, the party was assisted in this by specialists, including lawyers and accountants. According to the court, the director therefore had to be aware of the scope and (financial) consequences of the clause. To the extent that this was not the case, this should still be for the director’s account and risk. Finally, the court emphasises that the threshold for assuming urgent reasons is high and can only be accepted in case of seriously culpable behaviour of the director. As a result, the court concludes that the former director is bound by the provision and an appeal to reasonableness and fairness does not succeed. Thus, the mandatory offer of shares at par value does not automatically violate reasonableness and fairness. Regarding the qualification of the bad leaver provision as a penalty clause as referred to in Section 6:91 DCC, the court in this ruling ruled that the offer obligation in this case could not be qualified as such. After all, the obligation arose from the occurrence of a certain event and not a breach of the obligation, namely the termination of the management agreement. In addition, the court ruled that a penalty clause must focus on compensation for damages or to induce performance. This, as in this dispute, will not easily be the case. Thirdly, here too, the intention of the parties was important and a different penalty provision had been agreed elsewhere in the contract from which the court inferred that the bad leaver provision would then not be intended as a penalty. A mitigation of the bad leaver provision under Section 6:94 DCC was therefore not valid. According to the court, the former director was therefore justified in offering his shares at nominal value. The ultimate difference between the nominal value and the market value in this case amounted to almost €5,000,000. The importance of a well-formulated bad/good-leaver provision is thus evident. Conclusion and recommendations The above shows that the forced transfer of shares at par value as a result of a bad leaver provision is in principle possible and permissible. Under which circumstances this is possible will depend on the specific circumstances of the case. It is advisable for both the company and the (future) shareholders to draw up a delineated and objective bad leaver provision and to clearly write down its consequences in order to avoid ambiguities in the future. Here, attention should be paid to the definition of ‘bad leaver’ and when it applies. Consequences such as price, damages or competition provisions should be explicitly specified. However, the interpretation and application of the provision always remain subject to the Haviltex standard and therefore it is very important to seek timely legal advice. Contact If you have questions about the good leaver or bad leaver clauses, or if you would like to discuss further, please contact Mathijs Arts, Reinoud van Ginkel, or one of our other Mergers and Acquisitions (M&A) specialists.  [1] ECLI:NL:GHDHA:2023:961 [2] ECLI:NL:RBDHA:2018:7368
Gerard Zuidgeest 1
Gerard Zuidgeest
Attorney at Law
Mourning leave
On April 10, 2024, the Minister of Social Affairs circulated a new letter on the complete overhaul of the leave system. This overhaul is intended to make the system more comprehensible for both employers and employees. No legislative proposal for this revision is ready at this time, but the minister’s letter emphasises the intention to draft legislation. In the letter, the minister explains that leave can be broken down into different clusters of comparable forms of leave with the intention to unify the conditions and implementation. The proposed clusters are as follows:  Care of children: maternity leave, adoption or foster care.  Care for loved ones: short and long-term care leave for a sick relative (mantelzorg) or a sick child.  Personal situations: short-term leave for unforeseen or special circumstances.  Separately, a legislative proposal to implement a new form of leave has entered the public consultation phase: the introduction of mourning leave. Current leave upon the loss of a close relative is short and applies until the funeral; it is not intended as mourning leave. The legislative proposal introduces a minimum standard of five days (the hours of one work week) of mourning leave for working parents upon the death of a partner or minor child. During that period the employee retains the right to full pay. It will be possible to (partially) deny mourning leave in case of compelling business reasons.  How can La Gro be of assistance?  Do you have a question about employees going on leave? Do you want to introduce additional leave within your company? Do you have a different question? Expertise in 18 legal fields enables La Gro to offer broad legal assistance. Feel free to contact me or one of my specialist colleagues.   
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