Wage Suspension versus Wage Freeze: What’s the Difference and What Should Employers Know?

In practice, the terms wage suspension and wage freeze are often mistakenly used interchangeably, with dire consequences for the employer. In this blog, we explain the differences between the two wage penalties and discuss a notable real-life case.

Wage Suspension
An employer may suspend its obligation to pay wages if a sick employee fails to comply with reasonable written requirements regarding the provision of information to establish their entitlement to those wages. This may, for instance, include seeing the company doctor.

The employee is not entitled to payment of wages during the suspension period. However, as soon as the employee starts complying, the employer will need to pay the wages anyway and retroactively. This often means that a wage suspension is less effective; if the employee starts to cooperate just before the monthly wage payment, they will not feel the impact of the wage penalty.

Wage Freeze
With a wage freeze, the employee loses their right to wages altogether. A situation where this could arise, for instance, is where the company doctor considers the employee to be 50% unfit for work and the employee refuses to carry out suitable work. If the employee does start to cooperate at some point, he or she will not be entitled to the wages applicable to the wage freeze period.

Obligation to provide a warning
In order for either wage penalty to be valid, the employer must provide the employee with a prior warning.

If the employer suspects that the employee is not fulfilling an obligation, it must call the employee to account and point out the possible consequences. This could be the warning that if the employee refuses to carry out suitable work, the wage will be frozen from a particular date.

Case law in the higher courts has found that the employer must choose the words carefully when issuing such a warning; if it erroneously refers in its warning to a wage suspension when in fact a wage freeze was intended, then it may not go on to apply a wage freeze.

Rotterdam District Court
However, in October 2024, the Rotterdam District Court ruled in summary proceedings that the employer was justified in applying a wage freeze, even though the warning letter also spoke of a wage suspension.

The company doctor had found, according to advice on phased reintegration, that the employee could start to carry out some work. The employee disagreed because she considered herself medically incapable of doing it. However, she could not back this up with expert testimony.

As the employee did not comply with her reintegration obligations, she received two official written warnings which warned of a wage suspension. Some time after that, she received a third official warning, the subject of which was “wage suspension”. This letter did, however, conclude with a warning that if the employee failed to fulfill the agreements in the letter, a wage freeze would be applied.

The district judge ruled that both situations were successive and that the notice about the wage freeze was not unclear.

Conclusion
This judgment may cause confusion, as unclear warnings usually come at the employer’s expense. In this case, however, the decisive factor was that the consequences for the employee were clear in advance.

In a nutshell, although on the basis of this judgment employers seem to be able to get away with carelessness as long as the purport of the wage penalty is crystal clear to the employee, it would be better for the employer to err on the side of caution and exercise the necessary care when drafting a warning about wage penalties.

Judgment: ECLI:NL:RBROT:2024:13550

Link: https://uitspraken.rechtspraak.nl/details?id=ECLI:NL:RBROT:2024:13550