When you receive a settlement agreement (VSO), the severance payment plays a crucial role. This often includes the transition compensation: the legal compensation to which every employee is entitled upon dismissal.
Severance pay vs. transition compensation: what is the difference?
The transition payment is a form of severance payment. But please note: not every severance payment is automatically the transition payment. The difference is in the rules. The transition compensation and its calculation are laid down by law. The law states exactly when you as an employee are entitled to this. However, if you conclude a VSO with your employer, you are free to agree together what severance payment you will receive. This does not necessarily have to be exactly the statutory transition compensation. Sometimes the compensation is higher, sometimes lower, or it consists, for example, of a period of exemption from work with full salary. In the case of a settlement agreement, there are no fixed rules: everything is negotiable, as long as both parties agree. Yet this is where things often go wrong. Employers sometimes offer too low an amount, or forget to include certain components. That is why it is wise to always have your settlement agreement legally checked before you sign it. In practice, it appears that about 95% of settlement agreements require adjustment—errors can easily creep in, or everything to which you are entitled is simply not included. Avoid unnecessary risks and have your VSO checked by an experienced employment law specialist. This way you can be sure that you will get what you are entitled to and you will be stronger in any negotiations.In this article we explain what the transition payment is, how to calculate it, which mistakes are common, and how you can get more out of it through negotiations.
Check yourself whether dismissal is allowed in your case
Are you unsure whether dismissal is allowed in your situation? You can easily check for yourself whether dismissal is permitted for your employer. For example, check:- Whether there is a valid reason, such as dysfunction, reorganization or long-term illness.
- Whether your employer adheres to the correct procedure (via UWV or subdistrict court).
- Whether your contract and collective labor agreement contain specific dismissal rules.
What is the transition payment?
The transition payment is the statutory severance payment that you receive if your employer terminates your employment - even if this is done via a settlement agreement. This compensation is intended to facilitate the transition (“transition”) to another job.
Every employee who has been employed for at least 1 day is entitled to a transition payment in the event of dismissal.
How do you calculate the transition payment?
The basic rule is:
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1/3 monthly salary per year worked
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A pro rata calculation
applies for remaining months
The calculation is based on the gross monthly salary, including:
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Holiday pay
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Fixed allowances (shift work, thirteenth month, structural bonus)
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Average overtime compensation (if structural)
- Any bonuses or profit distributions
- Irregularity allowance and/or shift allowance
- End of year bonus
👉 Example:
An employee with a monthly salary of € 3,000 including allowances and 6 years of employment is entitled to:
6 x (1/3 x € 3,000) = € 6,000 transition payment.
What determines the amount of your compensation?
The amount of the transition compensation depends entirely on your personal situation. Are you suddenly fired without prior warning, have you always performed well and had a long employment relationship? Then the minimum transition payment may sometimes not be in proportion to your efforts. In such cases it is wise to negotiate a higher compensation. It is different if the employer has built up a strong file or if you have taken the initiative for a settlement agreement yourself. Your negotiating position is then usually different. Do you have doubts about your situation or do you want to know what a reasonable compensation is? Feel free to present your situation to a legal expert for non-binding advice. This way you know exactly where you stand and you can have a stronger conversation with your employer.What is the maximum amount of transition compensation (2026)?
There is a legal maximum for the transition compensation. In 2026, this ceiling will be set at €102,000 gross, or one gross annual salary if this is higher than the legal maximum. So if you receive an annual salary above € 102,000, your own annual salary is the upper limit for the transition payment. This maximum amount is redetermined every year by the government.Errors that often occur in the calculation
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Forgot your holiday pay – this should always count.
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Fixed allowances not included – such as shift allowance or thirteenth month.
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Incorrect duration of employment – extension periods often count.
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No pro rata calculation for individual months – even 1 day counts.
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Do not include successive contracts – successive temporary contracts with the same employer must be added together.
Practical examples
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Example 1: An employee received a VSO with € 4,500 compensation. After checking, it turned out that his shift allowance of €300 had not been included. The correct compensation was €6,000.
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Example 2: An employee worked for 9 years and 10 months. The employer charged 9 years. The lawyer also claimed the 10 months, which resulted in an additional €800.
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Example 3: An employee had 3 consecutive temporary contracts with a short interruption. The employer did not take this into account. The judge ruled that this was necessary, which doubled the transition payment.
Can you get more than the transition payment?
Yes, the transition payment is the minimum. There is often room for negotiation. For example:
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Extra monthly salaries as compensation
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Training budget or outplacement
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Exemption from work with full pay
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Termination of non-competition clause or compensation therefor
👉 Example: An employee initially only received the transition payment (€ 5,000). After negotiations, he received €7,500 plus a training budget of €2,000.
When is more possible?
The amount of your severance payment depends on your personal situation. Did the dismissal come as a surprise, without previous discussions or warnings, and was your employer always satisfied? Do you also have a long employment contract? Then the minimum transition payment is often not in proportion to your years of service and commitment. In such a case you can usually demand more and it is wise to negotiate vigorously. Note: it is different if your employer has built up a rock-solid file or if you have taken the initiative to leave yourself. Then the room for negotiation is often smaller, but even then customization is possible. In short: don't be fobbed off with just the statutory transition compensation. Always start a conversation and negotiate your terms.Checklist: transition compensation in your VSO
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📊 Calculate yourself (or have calculated) what your rights are
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📑 Check whether holiday pay and allowances have been included
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📅 Check whether all years and months of service count
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💶 Negotiate for more than the transition compensation
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⚖️ Have your VSO legally assessed
Frequently asked questions (FAQ)
1. Am I always entitled to transition compensation with a VSO?
Yes, unless you resign without good reason.
2. How much is the transition payment?
1/3 monthly salary per year worked, including fixed allowances and holiday pay.
3. Do I also receive compensation for short employment contracts?
Yes, even with 1 day of employment, you are entitled to a pro rata transition payment.
4. Can I get more than the transition payment?
Yes, it is often possible to negotiate for additional months of salary or other benefits.
5. Does my employer have to reimburse my attorney's fees?
This is customary and can be included in the VSO.
Why Arslan Lawyers?
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Specialists in employment law and dismissal
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Carefully calculate your transition compensation
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Negotiate for higher compensation and better conditions
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Costs are often recovered from the employer