Dismissal compensation in the Netherlands - severance pay

Financial compensation in the event of dismissal

Your employer wants to dismiss you or doesn’t want to extend your employment contract. There will be a lot of questions rising. One of the most important questions will be: am I entitled to a severance payment (transitievergoeding)? Many employees can claim a transition allowance in the event of dismissal (the legal allowance in the event of dismissal). Who is entitled to a transition allowance and how is the amount of the transition allowance calculated?

Who is entitled to a transition payment and who is not?

In principle, all employees who are dismissed are entitled to a transition payment. This also applies if the fixed-term employment contract expires by operation of law. All employees who do not resign themselves are entitled to a transition allowance with the following exceptions:

• upon termination of the contract by mutual consent (unless agreed otherwise);
• the employee was dismissed because he acted with serious culpability or was culpably negligent, unless the sub-district court decides otherwise;
• if the employee who has been made redundant is less than 18 years old and worked an average of 12 hours a week on average;
• if the employee has been dismissed because he has reached the pension age or other retirement age;
• if the company has gone bankrupt, or if the employer has ended up in the debt restructuring / suspension of payments.
• if a different provision has been agreed with the CAO. Only in the event of dismissal for business economic reasons can a transition agreement be deviated from in the CAO.
• if the employee has entered into a subsequent temporary contract with the employer before the (legally) terminated contract.
• If the employee resigns himself, he is not entitled to a transition payment. However, if the employee resigns himself because the employer is acting culpably or is seriously negligent, there may be a right to transition compensation (always consult with a dismissal-specialist about this). If an employment contract with mutual consent is terminated, through a settlement agreement, an employer cannot be obliged to pay a transition allowance. But of course the employer and employee can agree on that. A transition payment cannot be claimed if the CAO provides for a reasonable financial compensation or in provisions that increase the chance of new work. Only in the event of dismissal for commercial reasons, this CAO provision applies.

How is the transition payment ( transitievergoeding) calculated?

The amount of the transition payment is calculated over the entire duration of the employment. Every day counts. Simply put, the transition allowance is 1/3 monthly salary per year worked. However, the reimbursement must be accurately calculated to the day, rounding off to half years or full years is not allowed.

How to calculate:  First determine how many days the employment contract has lasted. The determination can be based on the period from the first day of employment up to and including the intended end date of the contract. Example: an employee is in service for 18 whole years and 90 days from the start of the employment contract to the end of the employment contract. The transition payment is then 18 x 1/3 = 6. Then there is 90 days / 365 days = 0.2465th year. That last number must be multiplied by 1/3, after which the fraction 0.082 results. The total of 6 + 0.082 = 6.082. This number must be multiplied by the gross monthly salary. What belongs to the gross monthly salary? Look for the gross monthly salary in the employment contract or the payslip. Add to this the holiday allowance. If fixed year-end bonuses, shift work allowances or overtime allowances are agreed upon, these must also be added to the gross wage. Any bonuses, profit distributions or variable end-of-year bonuses that are average over the previous three years also count. Other wage components do not count. The annual bonuses, profit distributions, holiday pay, etc. must of course be divided by 12 in order to determine the gross monthly amount, after which this amount can be added to the contractual gross salary. Maximizing transition compensation Every year a ceiling is set on the transition payment. Regardless of the outcome of the compensation calculated in the above-mentioned manner, the transition compensation can never exceed the maximum ceiling (€ 83,000 in 2020). If the employee has an annual salary of more than € 83,000, the maximum transition allowance is one annual salary. Higher reimbursement often possible Employer and employee may deviate from the legal rules on transition nutrition in mutual consultation. They can agree a severance payment that is lower or higher than the statutory compensation. These agreements can, for example, be made during the negotiation of a settlement agreement.

Extra compensation in the event of serious culpability In the event of serious culpable acts or omissions on the part of the employer, the employee may request additional compensation from the subdistrict court. Examples include: discrimination, sexual harassment, gross neglect of the reintegration obligations, false grounds for dismissal, and deliberate disruption of the employment relationship.

Reduction of the transition payment with costs incurred for "employability" employee If the employer has incurred costs for the benefit of the employee with the aim of preventing or reducing unemployment (such as outplacement costs), these costs may be deducted from the transition allowance. The same applies to training costs that are not aimed at the employee's own position.

Calculate the transition payment with a handy calculation tool.  Due to the many variables, it is not easy to calculate the amount of the transition payment. To make this job easier for you, our organization Ontslagspecialist (the Dismissal Specialist) created a handy calculation tool with which you can easily calculate the transition payment online. Click for the calculation tool on: how high is the transition payment?

Please note: claim reimbursement in time! If all goes well, the employer pays the transition allowance on its own. However, if the employer is unwilling or unable to pay, you must claim the transition compensation through the court within 3 months of the end of the employment contract. We can help you with this.

Advice and legal assistance with the transition payment or severance payment in case of dismissal

Higher reimbursement is often possible! The rules regarding the transition payment and any additional payment are not simple. Always ask for advice before you agree with dismissal or compensation. The lawyers of Ontslagspecialist are specialized in all rules concerning dismissal. Based on that expertise, we can negotiate a higher severance payment with your employer. The latter is especially possible if the reason for dismissal is debatable.

Avoid mistakes and always consult our specialists first. Call 0900 - 123 73 24 or mail us for help with your dismissal case and severance payment.