Notice Period and Severance Pay: Common Mistakes and How to Avoid Them

·7 min read
Notice Period and Severance Pay: Common Mistakes and How to Avoid Them

Being dismissed? Pay close attention to the notice period and severance pay. Learn the rules, common mistakes, and tips to avoid costly errors.

In the event of a dismissal, the notice period and transition compensation play an important role. Yet in practice this often goes wrong. Employers apply the wrong notice period or forget that an employee is entitled to a transition payment. The employment law lawyers from Arslan Advocaten explain what the rules are, what can go wrong and how you can prevent legal problems.

What is the notice period?

The notice period is the period between the moment of termination and the end of the employment contract. The length of the notice period depends on the duration of the employment relationship and the party terminating (employer or employee). The rules are laid down in Article 7:672 of the Dutch Civil Code.

Does the notice period apply to all types of employment contracts?

Yes, the notice period applies to both fixed-term and indefinite-term employment contracts. In both cases, employers and employees must therefore take into account the statutory or contractually agreed notice period before the employment contract can be terminated. Following the notice period is also mandatory for temporary contracts that may be terminated prematurely.

Influence of a UWV dismissal permit on the notice period

If the employer has obtained a dismissal permit from the UWV the notice period will change. In this case, the period in which the UWV processed the dismissal application may be deducted from the notice period—but there must always be at least one month's notice period remaining. Any further reduction is only possible if this has been explicitly agreed in the applicable collective labor agreement. This gives both employer and employee clarity about the end date of the employment relationship, even if a UWV procedure preceded it.

Does an employer need a dismissal permit from the UWV ?

Yes, in most cases the employer needs a dismissal permit from the UWV to terminate an employment contract. As soon as this permit has been granted, the employer may terminate the employment contract, but the statutory notice period is shortened by one month as standard. Please note: there is always at least one month's notice period left, even after the reduction. In some situations the notice period can be further shortened if this has been agreed in the applicable collective labor agreement.

Notice period for employees

An employee usually has a notice period of one month. The employment contract or collective labor agreement may contain a longer term, but it may never be longer than six months. If the notice period is longer, the employer must apply a proportionately longer notice period. Please note: this period cannot simply be shortened. Reducing the notice period for the employee is only possible if this is stated in the collective labor agreement that applies between the employee and the employer. The notice period for the employer may also never be shorter than that of the employee. This means that there is always minimal protection for both parties, even if the collective labor agreement contains deviating agreements.

Notice period for employers

The employer must take the duration of the employment into account:
  • 1 month for an employment contract of less than 5 years
  • 2 months at 5–10 years
  • 3 months at 10–15 years
  • 4 months for 15 years or more
The notice period for the employer is therefore a maximum of four months. This period can only be extended in writing if the employer and employee agree to this together. Shortening the notice period is only possible if this is laid down in the applicable collective labor agreement. If the notice period is applied incorrectly, the dismissal may be invalid or the employee may be entitled to additional wages for the period that is too short.

Shortened notice period for dismissal permit

If the employer has received a dismissal permit from the UWV the notice period may in principle be shortened by one month. Please note: there must always be at least one month's notice period remaining. In some cases - for example if a collective labor agreement makes other agreements about this - the notice period can be further shortened. Always check whether additional rules have been laid down in the applicable collective labor agreement.

What is the transition payment?

The transition compensation is a legal compensation that the employee receives in the event of dismissal, also in the event of non-extension of a temporary contract. This compensation compensates for job loss and helps with the transition to new work. According to Article 7:673 of the Dutch Civil Code, every employee is entitled to first working day href="https://arslan.nl/transition compensation/">transition compensation. The amount is 1/3 monthly salary per year of service worked. For part of a year this is calculated proportionately.

Example calculation

An employee with a gross monthly salary of €3,000 and 6 years of service receives: 6 × (1/3 × €3,000) = €6,000 gross in transition compensation.

Common mistakes regarding notice period and transition compensation

1. Incorrect calculation of the notice period

Many employers calculate the notice period incorrectly. Please note that the month only starts on the first day of the month after cancellation. A dismissal letter dated March 15 means that the employment contract only ends on April 30 with a notice period of one month.

2. Transition compensation not paid

Some employers think that no compensation is due for a temporary contract or probationary period. That is incorrect. The transition payment is due for every dismissal, unless the employee has acted in a seriously culpable manner.

3. Not taking into account cancellation prohibitions

There is a ban on termination in the event of dismissal during illness or pregnancy. If termination is nevertheless given, the employee can request annulment of the dismissal and demand reinstatement of wages.

4. No notice period in settlement agreement

In the event of termination via a settlement agreement, no statutory notice period applies. However, it is wise to take the unemployment benefit periods into account: the UWV requires that the notice period is respected, otherwise the benefit may be temporarily refused. Please note: after the end of the employment contract, an employee can usually claim unemployment benefits and sometimes severance pay. Always check carefully whether you are entitled to benefits in the event of dismissal and what the conditions are. More information can be found on the special web page of the UWVabout benefits after dismissal. This way you avoid unpleasant surprises and you know where you stand financially.

5. Incorrect calculation for part-time or variable wages

The transition payment is calculated on the average salary including fixed allowances and holiday pay. For variable work or changing hours, an average over the last 12 months is required.

Employees' rights

Employees can submit a request to the subdistrict court if the transition compensation is not paid or has been calculated too low. The judge can oblige the employer to pay, possibly with interest and costs.

Rights and risks for employers

Employers are advised to have the notice period and compensation legally checked in advance. An incorrect calculation can lead to double costs: continued payment of wages and reimbursement. The employment law specialists at Arslan Advocaten help employers to prevent mistakes and act legally correctly.

Frequently asked questions about notice period and transition compensation

Do I always have to observe the notice period?

Yes, except for summary dismissal or during the probationary period. Otherwise, the dismissal is invalid and wages remain due.

Do I receive a transition payment if I am dismissed by mutual consent?

Yes, unless otherwise agreed in the settlement agreement. Always have this checked by an employment law lawyer.

When must the transition payment be paid?

No later than one month after the end of the employment contract. In the event of late payment, the employee may demand statutory interest and increases.

Am I entitled to compensation in the event of dismissal during illness?

Yes, after two years of illness you are still entitled to a transition payment. See our article about dismissal during illness.

Arslan Advocaten helps with notice periods and transition compensation

The employment law specialists at Arslan Advocaten advise employees and employers on notice periods, transition payments and dismissal procedures. Do you want to avoid paying too much or receiving too little? Contact us for direct legal advice.

Frequently asked questions

Wat zijn mijn rechten bij ontslag?
Bij ontslag heeft u mogelijk recht op een transitievergoeding, een correcte opzegtermijn en in sommige gevallen een billijke vergoeding. Teken nooit zomaar een vaststellingsovereenkomst zonder juridisch advies.
Kan mijn werkgever mij zomaar ontslaan?
Nee, uw werkgever moet een geldige reden hebben en de juiste procedure volgen. Bij een vast contract is toestemming van het UWV of de kantonrechter vereist, tenzij u instemt met een vaststellingsovereenkomst.
Back to blog
Share this article

Need legal advice?

Schedule a free consultation with one of our specialists

Notice Period & Severance Pay: Avoid Common Mistakes