Transition severance payment

In the Netherlands, an employee is also entitled to transition compensation if he himself resigns or if a temporary employment agreement is not extended because of seriously culpable acts or omissions on the part of the employer. Interested in finding out the amount of your transition compensation? Then use our calculation tool to calculate the transition compensation amount that applies in your situation.

Amount of the transition compensation

The amount of the transition compensation is determined on the basis of two components, i.e. monthly salary and the number of years employed. The compensation can amount to no more than one year’s annual salary, gross. If the gross annual salary is less than €77,000, then the maximum transition compensation is €77,000.

Salary components in context of transition compensation

Gross monthly salary and successively one 12th of the fixed agreed wage components:

• holiday allowance;
• fixed year-end bonus;
• structural overtime compensation;
• fixed shiftwork bonus;
• the average variable agreed wage components over three calendar years (consider, for example, a profit distribution/bonus).

Which items are not part of the gross monthly salary?

Company cars and expense reimbursement are not included in the calculation of the amount of transition compensation. Nor is the employer’s contribution to health insurance costs and/or to pension premiums included in the calculation. Finally, incidental, non-agreed wage components are not included in calculating the transition compensation.

No transition compensation in the event of seriously culpable acts

 An employee has no right to transition compensation if he has not yet been employed for two years, or if his dismissal is the consequence of seriously culpable acts or omissions.

No transition compensation for employees under the age of 18

Furthermore, employees who have not reached the age of 18 at the time of their dismissal and who have not worked for an average of 12 hours weekly also have no right to transition compensation.

No transition compensation for dismissal due to reaching retirement age

There is also no right to transition compensation if the employee is dismissed because he has reached retirement age (Dutch: AOW) or another age allowing pension entitlement.

No transition compensation in the event of bankrupt employer

There is also no right to transition compensation if the employer is bankrupt, has requested suspension of payments or if the debt repayment scheme for individuals (Dutch: WSNP) is applicable to the employer.

No transition compensation when other facilities are offered

If a collective employment agreement applies and that scheme contains an equivalent facility for transition compensation, there is also no entitlement to transition compensation.

No transition compensation in the event of contract extension

Finally, an employee in the Netherlands is not entitled to transition compensation if the employer offers the employee an extension of the fixed-term contract prior to its termination date. Here, it makes no difference whether the employee accepts the employer’s offer or not.

Reasonable compensation

Although the underlying principle of Dutch law is that the employee is entitled to transition compensation only at the end of the employment agreement, the court also has the possibility of granting reasonable compensation in a number of situations. This concerns only those cases in which seriously culpable acts or omissions on the part of the employer can be said to exist.