If your employer dismisses you, you are in principle entitled to the transition compensation. This is the statutory severance payment intended to facilitate the transition to other work. In some cases, the judge may also award you fair compensation. This only happens if the employer has acted in a seriously culpable manner.
In this article we explain what fair compensation is, when you are entitled to it, how high it can be and how it works with a settlement agreement.
How is the transition compensation calculated?
The amount of the transition payment depends on your monthly salary and the number of years you have been employed. Since January 1, 2020, a simple rule of thumb has applied: you receive 1/3rd of your gross monthly salary per year of service worked. It doesn't matter whether you worked for Philips for ten years or were only recently employed at a café on the corner; the percentage remains the same. A few points to note:- The compensation continues to the day accurately—so even for employees who have been employed for less than a year, the compensation is calculated pro rata.
- Things such as holiday pay, thirteenth month, fixed allowances and bonuses count when calculating your monthly salary.
- There is a maximum amount, which is adjusted annually (in 2024 this will be €89,000 or, if your annual salary is higher, a maximum of one annual salary).
What is fair compensation?
A fair compensation is an additional severance payment that the judge can award on top of the transition payment. It is intended as compensation for employees who have been seriously harmed by the actions of their employer.
This only arises in the event of a dismissal via the court (subdistrict court or higher appeal) and not as standard with a settlement agreement.
In addition, the appeal judge may award fair compensation if he finds that the employer's dismissal request was wrongly granted in the first instance. In that situation, there does not necessarily have to be seriously culpable conduct by the employer; it could simply be an unjust decision in the first round.Exception: no transition payment in case of seriously culpable conduct by the employee
Please note: you are not entitled to a transition payment if the dismissal is the result of your own seriously culpable actions or omissions. For example, consider situations in which you:- you are seriously guilty of fraud or theft;
- regularly does not show up for work without a valid reason;
- you are deliberately seriously culpable towards your employer, such as systematically ignoring reasonable instructions.
When are you entitled to fair compensation?
The judge can award fair compensation if the employer has acted in a seriously culpable manner, for example in the following situations:
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Dismissal without valid reason.
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Dismissal due to discrimination or intimidation.
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Employer makes work impossible due to structural bullying or an unworkable situation.
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The dismissal is a disguised summary dismissal without grounds.
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Employer does not comply with reintegration obligations in the event of illness.
Only in exceptional cases
The fair compensation will only be awarded in exceptional situations. It is not without reason that the legislator calls this a “mousehole”—it is really intended for cases in which theemployermisbehaves seriously. Examples are:- The employerdiscriminates or intimidates the employee.
- A false reason for dismissal is given with the aim of creating an unworkable situation and then dismissing based on that disruption.
- The re-employment condition is ignored by the employer.
Also possible for short-term employment
You may be wondering: can you receive a fair compensation if you have not yet been employed for 24 months (and are therefore not entitled to a transition payment)? The answer to that is yes. Employees with a short employment contract can also ask the court for fair compensation if the dismissal is the result of seriously culpable actions by the employer. The duration of your employment is therefore no obstacle to claiming this additional compensation.Can a statutory director also apply for fair compensation?
Yes, as a statutory director you can also ask the court for fair compensation. This is possible if you believe that your employment contract has been wrongfully terminated, even if there is no seriously culpable behavior by the employer. The judge assesses per situation whether additional compensation is appropriate.Practical examples
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Example 1: An employee was fired after a conflict with his manager, without any evidence of dysfunction. In addition to the transition payment, the judge awarded a fair compensation of 6 months' salary.
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Example 2: An employee was not offered suitable work during reintegration. The dismissal was therefore seriously culpable. In addition to the transition payment, the employee also received a fair compensation of € 25,000.
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Example 3: An employee was summarily dismissed due to a minor incident. The judge found this disproportionate and awarded fair compensation of 12 months' salary.
How high can the fair compensation be?
There is no fixed formula for the amount of fair compensation. The judge looks at, among other things:
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The duration of the employment contract.
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The salary and employment conditions.
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The seriousness of the employer's culpable actions.
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The consequences of dismissal for the employee.
The compensation can vary from several thousand euros to sometimes more than an annual salary.
Fair compensation and settlement agreement
With a VSO you usually only get the transition compensation (or a higher negotiation compensation). However, the possibility of fair compensation can be a strong bargaining tool
👉 If your employer knows that you have a chance of fair compensation from the court, he is often more willing to offer a better arrangement in the VSO.
Checklist: fair compensation
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📑 Check whether there has been seriously culpable conduct by the employer.
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⚖️ Consider proceedings before the subdistrict court if the VSO is unreasonable.
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💶 Use fair compensation as leverage in negotiations.
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📝 Always have your situation legally assessed.
Common mistakes
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Thinking that you are always entitled to fair compensation → this only applies to seriously culpable actions.
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Signing too quickly for a VSO without checking whether a higher compensation is feasible through the courts.
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Do not make a legal assessment of the chance of success in the subdistrict court.
Frequently asked questions (FAQ)
1. Do I always receive fair compensation in the event of dismissal?
No, only in the event of seriously culpable actions by the employer.
2. How much is the fair compensation?
The judge will decide that, depending on your situation.
3. Can I also receive fair compensation in a VSO?
Not formally, but you can negotiate a higher severance payment with this argument.
4. What is the difference between transition compensation and fair compensation?
The transition compensation is legally and always due, the fair compensation is extra and only in the event of culpable dismissal.
5. Do I need a lawyer to claim this?
Yes, a lawyer can assess whether the chance of success is high enough.
Why Arslan Lawyers?
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Experienced in procedures in which fair compensation is claimed
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Strong in negotiations about higher compensation with a VSO
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Always focus on your interests: maximum compensation and safe unemployment rights
Conclusion
The fair compensation is an additional severance payment that is only awarded in the event of seriously culpable actions by the employer. Although it is not a standard part of a settlement agreement, its possibility can be a powerful negotiating tool.