Are departing employees being greedy?

Minister Maxime Verhagen has said that the golden handshake of €325,000 received by the former ...

Minister Maxime Verhagen has said that the golden handshake of €325,000 received by the former chairman of the Dutch competition authority (NMa) on his departure last year was too high. The minister claims that an investigation has shown that there was nothing he could do about this.

But what aspect of a golden handshake that was determined in advance by contract required investigation? Isn’t Verhagen supposed to be in charge of the NMa? He should take responsibility for this scandal rather than blaming his employee.

Much attention is given to high salaries and termination settlements paid by public and semi-public institutions. In many cases these are arrangements agreed in advance by contract. Why is this such a sensitive issue? We expect organisations to comply with the obligations they have agreed to, don’t we? So who signs these contracts?

It’s all a question of proportion. Normal employees expect a termination settlement and it’s only reasonable that someone who works 80 hours a week at a job no-one else can do should receive a little more. Certainly if he is prepared to accept the risk of public censure as a football trainer. However, it is debatable whether an employee who is paid using taxpayers’ money should be comparing his salary to his peers in business. Their salaries are funded by the market and if they are unsuccessful the collapse of the business will ensue.

How about imposing a maximum salary for employees in the public and semi-public sectors, say up to five times a teacher’s salary? And then blaming the directors for awarding too much salary rather than criticising the departing employee.

My advice to freelancers is to agree in advance the terms on which the relationship can be terminated. For company directors, a higher salary is preferable to an excessive golden handshake. Like vague bonus arrangements, they can result in unpleasant reputational damage and the legislation is getting stricter in this area so caution should be exercised.