Sidelining a director is seriously culpable – but a generous exit package reduces the fair compensation

On 20 October 2026, a decision of the ’s-Hertogenbosch Court of Appeal of 27 November 2025 was published on the dismissal of a statutory director with a contractual severance payment (ECLI:NL:GHSHE:2025:3392).

A deliberately disrupted relationship

The director was dismissed by shareholders’ resolution in June 2023. The court found that the employment relationship was indeed disrupted at that time, but that the employer had deliberately steered towards that situation. A consultant was given ever wider powers and the director was effectively side-lined, apparently in the hope that he would resign himself so that the contractual severance payment would not be due. That constitutes seriously culpable conduct.

Fair compensation sharply reduced

Nevertheless, the court reduced the fair compensation awarded by the sub-district court from EUR 800,000 to EUR 50,000 gross. The director had already received a contractual severance payment of EUR 618,093 gross, which the court called a decisive factor. The remaining value of the employment contract was also very limited and he had considerable earning capacity elsewhere. The compensation could not be set at zero, as that would make the protection against seriously culpable conduct illusory.

Takeaways

• Sidelining a director in the hope that he will leave of his own accord risks an award of fair compensation.

• A generous contractual exit arrangement weighs heavily in determining the amount.

• A careful and transparent dismissal process remains the best route, also for directors.

This blog provides general information and is not legal advice. For advice on a specific situation, please contact us.