Upon dismissal, an employee often has the right to compensation. The most well-known is the transition payment, which must be paid by the employer in almost all cases of dismissal. In some situations, a fair compensation may be awarded on top of this, for example if the employer has acted in a seriously culpable manner.
In this article, we explain what both types of compensation are, how they are calculated, and how you can ensure that you receive what you are entitled to.
What is the transition payment?
The transition payment is the statutory dismissal compensation.
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Intended as compensation and to facilitate the transition to other employment.
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You are entitled to it in the following cases:
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Dismissal via UWV or the court.
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Dismissal via a settlement agreement (VSO).
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Non-renewal of a temporary contract.
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👉 Only in the case of summary dismissal or voluntary resignation does this right lapse, unless the employer has acted in a seriously culpable manner.
What compensation can an employee receive upon early termination of a temporary contract?
Sometimes a temporary contract ends before the agreed end date, and this can raise questions about your rights to compensation. What can you expect if your employer terminates the employment relationship too early? Main rule: compensation for the missed salary period Is your temporary contract terminated prematurely, while the contract does not stipulate that interim termination is possible? In that case, you are generally entitled to compensation equal to the gross salary you would have received until the agreed end date of the contract. Example from practice: Suppose you have a one-year contract that started on 1 July. Your employer terminates your employment on 1 February—five months before the agreed end date. In this case, you can claim compensation amounting to five months' salary. Special situations- Sometimes the employer engages the subdistrict court to dissolve the employment relationship, even if interim termination has not been agreed upon. The court can then decide that you receive compensation, often amounting to the missed salary.
- Has the employer acted in a seriously culpable manner? Then the court can increase the compensation.
- Have you yourself acted in a seriously culpable manner? Then the subdistrict court can reduce the compensation or even award it to the employer.
Can the statutory transition payment be deviated from?
Yes, this is possible. Agreements can be made in a collective labour agreement (cao) or employment contract that are more favourable than the statutory transition payment. In other words: the statutory regulation is a minimum. Employers and employees may therefore always agree that a higher compensation will be paid upon dismissal. If such agreements have been recorded, the employer is contractually bound by them. Please note, deviations are only permitted in favour of the employee—a lower compensation than the statutory transition payment is not allowed.When can an alternative arrangement in a collective labour agreement replace the transition payment?
In some cases, a collective labour agreement (cao) provides room for a deviating arrangement. This can particularly apply to dismissal for economic reasons. The cao can then contain a different, possibly higher or lower, compensation that replaces the statutory transition payment. Important points in this regard:- The replacement arrangement does not need to be equal to the regular transition payment.
- The alternative compensation or provision must be aimed at reducing unemployment, for example through retraining, assistance in finding a new job, or continued salary payment.
- It is not permitted to simply deviate: this is only allowed in cases of economic dismissal according to the law (art 7:673b BW).
Can a higher compensation than the statutory transition payment be agreed upon in an employment contract or collective labour agreement?
Certainly, it is possible to make agreements in your employment contract or cao for a higher compensation than the statutory transition payment. This can, for example, involve an additional compensation on top of the transition payment, provided it is clear in which situations this additional compensation applies. Please note:- It is often agreed that the higher compensation only applies to dismissal initiated by the employer and not in cases of summary dismissal or if you resign yourself.
- The employment contract or cao must state that it concerns an additional compensation—so not instead of the statutory transition payment, unless other specific agreements have been made about this.
- A higher compensation can be awarded upon dismissal.
- It is possible that the cao provides for an arrangement that (in some situations) wholly or partially replaces the transition payment, particularly in cases of dismissal for economic reasons. Please note: such a replacement arrangement is usually intended to prevent or limit unemployment.
Must the employer cooperate in terminating a dormant employment relationship after two years of illness?
Yes, the employer is obliged to cooperate in terminating a so-called 'dormant employment relationship' if the employee requests this and after more than two years of illness can no longer work. The Supreme Court has ruled clearly on this: good employership means that an employer may not artificially keep the employment relationship in existence without salary payment, solely to postpone the payment of the transition payment. Concretely, this means that if you as an employee, after two years of illness and full incapacity for work, request the termination of your employment relationship, the employer must grant that request. This also includes paying the transition payment as it would have been due after exactly 24 months of illness. It does not matter whether your employer receives (partial) reimbursement via the UWV; it concerns your right to this statutory compensation. Please note: this obligation only applies when you can no longer work at all in your own position or in suitable, adapted work with your employer.In which cases can the subdistrict court dissolve a fixed-term employment contract?
Even if your temporary employment contract states that interim termination is not possible, the subdistrict court can still decide to terminate the contract early. This can occur, for example, when there are significant circumstances, such as economic reasons or long-term incapacity for work. In such cases, your employer may go directly to the subdistrict court, without first going through the UWV procedure. The court then assesses whether the termination is justified. It therefore does not matter that your contract contains an interim termination prohibition; the subdistrict court can still override this if the situation warrants it.How does the termination of a temporary contract work if interim termination is not permitted?
Sometimes a temporary contract states that interim termination is not possible. What does this mean exactly? In that case, neither the employer nor the employee may simply terminate the employment contract before the agreed end date. The contract therefore automatically continues until the agreed moment, for example from 1 July to 1 July the following year. Nevertheless, it may happen that an employer wants to terminate the contract early. There are a few scenarios for this:- Termination at the end date: Without an interim termination option, the termination must always take place at the agreed end date.
- Still wanting to stop earlier: Does the employer want to stop earlier without this being agreed in the contract? Then they must go to the subdistrict court and request permission to dissolve the employment relationship. The court then assesses the request and can – depending on the situation – determine that the employee is entitled to compensation. This is often the missed salary for the remaining contract period.
- Exceptions: In some (exceptional) situations, such as summary dismissal or economic reasons, the subdistrict court can still dissolve the contract without the right to interim termination being included in the contract.
Compensation upon business closure due to illness or infirmities
Many employers wonder whether they can also claim compensation for the transition payment when they have to close their business due to illness or infirmities. At present, the existing compensation schemes only apply when the business closes due to retirement or death of the employer. The rules for business closure due to illness or permanent infirmities are still being developed. A regulation is being worked on, but for this it must first be clear that the employer can structurally no longer work due to medical circumstances. This process has not yet been completed—it is therefore uncertain as of March 2024 whether and when this compensation option will actually become available. As soon as there is more clarity on this, the conditions and application process will be announced.What is the most common process for terminating an employment relationship in case of long-term incapacity for work?
In practice, in cases of long-term incapacity for work, the most common approach is to conclude a settlement agreement (VSO). In this agreement, the employer and employee jointly make arrangements about terminating the employment relationship, with the reason of long-term illness being recorded. By making clear agreements in a timely manner, both parties know where they stand and this often creates more calm and clarity. Often, matters such as the notice period, payment of outstanding holiday days, and the transition payment are included in this agreement. Please note: it is advisable to have an expert, for example from the UWV or a legal adviser, review the agreement before you sign. This way, you can be sure that your rights and obligations are properly arranged.For which dismissal reasons does the compensation scheme for small employers apply?
Small employers—these are entrepreneurs with fewer than 25 employees—are eligible for a special compensation scheme. However, this scheme does not simply apply to every dismissal. There are a few specific situations in which the government steps in:- Upon retirement of the employer: Does a small entrepreneur close their business because they are retiring? Then they can apply for compensation from the UWV for the transition payments paid to their staff.
- Upon death of the employer: If the owner of a small business dies and the business ceases to exist as a result, the compensation scheme also applies to the transition payments that must be paid to the employees.
When does a small employer qualify for compensation of transition payments?
For small employers (fewer than 25 employees), a scheme has existed since 1 January 2021 that offers relief in the event of business closure due to retirement or death. In these situations, it can be financially burdensome for the employer or their heirs to pay transition payments to the staff. Therefore, there is the possibility of having these costs compensated by the UWV. When does a small employer qualify?- There must be a business closure due to retirement or death of the owner.
- At least one dismissal must have been approved by the UWV for economic reasons.
- The full transition payments must actually have been paid to the employees after 1 January 2021.
- The application for compensation is made digitally at the UWV.
Is there compensation for partial dismissal due to incapacity for work?
Sometimes no full dismissal occurs, but the contract is partially terminated because the employee can permanently work fewer hours due to incapacity for work. This is called partial dismissal. Whether you as an employer are also eligible for compensation of the transition payment in such a partial termination (as with full dismissal after long-term illness) is currently not yet fully clear. The UWV still needs to take a definitive position on this. In short: for full clarity on compensation for partial dismissal due to incapacity for work, it is advisable to await the UWV's ruling and seek legal advice in case of doubt.Compensation of transition payment for long-term incapacity for work
Suppose: your employee has been incapacitated for work for more than two years and the employment relationship is being terminated. In this case, you as an employer must pay a transition payment. Fortunately, you can recover this compensation in many cases through the UWV. To qualify for this, the following conditions apply:- The employment contract has been terminated due to long-term incapacity for work, after two years of illness.
- This can occur through dismissal with permission from the UWV, through a settlement agreement, or (in some cases) through dissolution by the court.
- Only if the employee is no longer able to work due to illness (so not in cases of voluntary resignation or other grounds).
What steps and documents are needed?
To apply for compensation, you must submit an application to the UWV within 6 months of paying the full transition payment. For this, you will need, among other things:- The employment contract and proof of the salary paid during illness;
- Proof that the employment relationship was terminated due to long-term incapacity for work (such as a dismissal letter, UWV permission, or the termination agreement);
- If applicable: a declaration that your employee was ill for more than two years at the time of termination, including the name of the company doctor;
- The calculation and payment receipts of the transition payment.
Compensation of the transition payment for long-term incapacity for work
Has an employee been ill for more than two years and can they no longer do their work? Then the employment relationship may be terminated and the employee is entitled to a transition payment. But what if the employer has to pay this compensation—while the employee has not been able to work for years? Fortunately, there is a special scheme. Employers can apply for compensation from the UWV in this situation. This means that the amount they have to pay in transition payment upon dismissal after long-term incapacity for work will later be (partially or fully) reimbursed. This applies to employment relationships that have been terminated via the UWV, a settlement agreement, or dissolution by the court, as long as it is related to long-term illness. Important points of attention:- The scheme applies retroactively from 1 July 2015.
- The application for compensation must be submitted no later than six months after payment of the full transition payment.
- The application must include, among other things, the employment contract, pay slips during illness, supporting documents for the dismissal due to long-term incapacity for work, and proof of payment of the transition payment.
- Please note: There are plans to end this scheme for larger employers (25 employees or more) in the future.
When can an employer receive compensation for the transition payment?
In certain situations, employers can be (partially) compensated for the transition payment they pay. This applies, for example, when an employee is dismissed after two years of illness, or when a small employer closes the business due to retirement or death. In short, under these circumstances the government can contribute to the costs of the transition payment. Please note: specific conditions apply and the application must be submitted in a timely manner.Compensation of transition payment upon closure of a small business
When a small employer (with fewer than 25 employees) has to close their business due to retirement or death, employees are often eligible for dismissal with a transition payment. This can be through dismissal with permission from the UWV, or through a termination agreement in mutual consultation. The transition payment can be a significant cost for the employer or their heirs in such a situation. To alleviate this financial burden, since 1 January 2021 it has been possible for small employers to recover the paid transition payments from the UWV. However, several conditions apply:- The dismissal must be related to the retirement or death of the employer.
- For at least one employee, the dismissal must have gone through the UWV, so that it has been assessed on economic grounds.
- The full transition payment must have been paid after 1 January 2021.
- The application for compensation is made digitally at the UWV.
When can an employer claim back the transition payment from the UWV?
As an employer, have you paid the transition payment to an employee who was incapacitated for work for a long period? Good to know: in that case, you can claim back the paid transition payment from the UWV.- This applies if the employment relationship was terminated because the employee could no longer work due to illness or a disability.
- The scheme applies retroactively from 1 July 2015 (art. 7:673e BW).
- It does not matter whether the termination took place through dismissal with permission from the UWV, via the subdistrict court, or with a settlement agreement – as long as the employment relationship ended after two years of illness.
For which period does the retroactive effect apply?
The scheme for compensation of the transition payment applies retroactively from 1 July 2015. This means that employees who were dismissed on or after that date can also fall under this compensation scheme. Both employees and employers can therefore claim compensation for situations that occurred from that moment onwards.How is the transition payment calculated?
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1/3 gross monthly salary per year worked.
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For shorter periods, a pro rata calculation applies.
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The salary also includes fixed wage components, such as holiday allowance, fixed supplements, and structural bonuses.
đź“Ś Calculation example:
An employee earns €3,000 gross per month and has worked for their employer for 5 years and 8 months.
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5 × €1,000 = €5,000
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8/12 × €1,000 = €667
Total transition payment = €5,667 gross.
Deviations from the standard formula: when is this possible?
Although the standard formula is usually followed, there are situations in which deviations are permitted. This is where the so-called correction factor comes into play. This factor is set at 1 by default, but can be lower or higher, depending on the circumstances. Some examples where deviations can occur:- Serious culpability: If the consequences of the dismissal are particularly severe for the employee or the dismissal is largely attributable to the employer, the compensation can be higher (the factor increases).
- Employee quickly finds new work: When the employee has immediately found another job, the compensation can actually decrease.
- Behaviour of the employee: In cases of culpable conduct by the employee, or when the employee has started working elsewhere on their own initiative, the compensation can be reduced.
- Labour market position: Has the employee followed training at the employer's expense and thereby has a better position in the labour market? This can lead to a lower compensation.
- Financial situation of the employer: Is there demonstrable financial difficulty at the employer (think of well-substantiated annual accounts and forecasts)? This too can result in a lower compensation.
How is the amount of the transition payment determined in cases of long-term incapacity for work?
The same calculation formula for the transition payment also applies in cases of long-term incapacity for work. Important to know:- After two years of illness, when someone can no longer work at all, the employment relationship may be terminated at the employee's request.
- The employer must then pay the regular transition payment: 1/3 gross monthly salary per year worked.
- The calculation is based on the period until the end of the employment relationship, including the (illness) years during which no work was performed.
- The salary that counts is the last earned salary including fixed allowances, holiday allowance, and structural bonuses.
- 3 × €833 = €2,499
- 10/12 × €833 = €694 Total transition payment = €3,193 gross.
What conditions apply for deducting costs from the transition payment?
Not every cost item may simply be deducted from the transition payment. The rules are quite strict and clearly established:- Costs must be aimed at broader employability This means, for example, training costs that make the employee more employable in the labour market. Think of further training, courses, or retraining.
- Transition costs are also permitted Transition costs include costs directly related to the termination of the employment relationship. For example, outplacement programmes or maintaining a longer notice period, if this helps to shorten the time without work.
- Written consent of the employee is mandatory The employee must have given written consent before these costs are incurred to deduct them from the compensation. Verbal agreements are therefore not sufficient.
- Compliance with specific statutory requirements The costs and the manner in which they are determined must fit within the framework of the law and the Transition Payment Decree.
What costs can be deducted from the transition payment?
Not every employer has to pay the full amount of the transition payment. There are a few types of costs that may be deducted—but only if strict conditions are met:- Employability costs: Think of costs for training or courses that make the employee more broadly employable, outside the current position. For example: additional training that is also useful at another company.
- Transition costs: These are expenditures directly related to the end of the employment relationship. Examples include costs for outplacement support, job application training, or providing a longer notice period than legally required.
What is compensation for failure to observe notice periods?
If an employer terminates a temporary contract earlier than agreed, without interim termination being permitted, there may be so-called compensation for damages. This is a payment to the employee for the loss of salary due to the premature termination of the employment relationship.When must the employer pay compensation for damages?
- Early dismissal date: If a contract is terminated, for example, five months before the agreed end date, the employer must compensate these five months' salary as damages.
- No interim termination option agreed: Only if it was established at the start of the contract that interim termination is permitted may this be deviated from. If this is not the case, the compensation for damages applies.
- Exceptions: During the probationary period or in cases of summary dismissal, immediate termination is permitted without a notice period. In these cases, no compensation for damages is owed.
How is the damage calculated?
The compensation for damages consists of the gross salary (plus fixed supplements) for the remaining period of the contract. In the example above, where the contract was terminated five months early, this means five months of gross salary as compensation for damages. Please note: The court can decide to moderate the compensation, for example if there are special circumstances. However, if the employee themselves has been seriously culpable, the right to compensation for damages lapses.When can the dismissal compensation be higher or lower?
In addition to the standard calculation, there are situations in which the court can adjust the dismissal compensation. This is done through the so-called correction factor (C-factor). Normally, this factor is set at 1, but in special circumstances it can be deviated from.Possible reasons for adjustment
- Serious consequences for the employee: Is the dismissal particularly heavy for the employee, for example due to limited chances in the labour market? The court can then increase the compensation.
- Degree of culpability: If the dismissal is primarily caused by the employer's actions (think of poor employership), this can result in an increase.
- Culpability of the employee: When an employee has acted culpably, this can lead to a lower compensation.
- Found new work: Has the employee already found other work? Then the compensation can be lower.
- Labour market position: If someone has better chances of a new job thanks to training at the employer's expense, the compensation can be adjusted.
- Financial situation of the employer: In exceptional cases, the court may also take into account the financial capacity of the employer. This does require insight into the annual figures and forecasts.
What documents must you provide for a compensation application?
When applying for compensation for the transition payment, it is necessary to collect a number of documents. These papers demonstrate that you meet the conditions and ensure that the UWV can assess your application. Consider the following:- The employment contract with the employee and pay slips showing what salary was paid during illness.
- Proof of termination of the employment relationship due to long-term incapacity for work. This can be, for example, a dismissal letter, a decision from the UWV granting permission for dismissal, or a termination agreement stating that the employment relationship was ended by mutual consent due to long-term illness.
- If the employment relationship was not terminated via the UWV, you must include a written declaration stating that the employee was ill for more than two years at the end of the employment contract, including the name of the company doctor.
- Overview of the calculation of the transition payment and proof that this compensation was actually paid to the employee.
What if age counts? (Old dismissal compensation)
In addition to the current transition payment, in the past both the number of years of service and the employee's age were taken into account upon dismissal. The older you were during your years of service, the more heavily these counted towards the dismissal compensation. This is how it worked:- Years of service before age 35: each year counted as half a month's salary.
- Years of service from 35 to 44: each year counted as one full month's salary.
- Years of service from 45 to 54: each year yielded even 1.5 months' salary.
- Years of service from 55 until retirement: each year was worth 2 months' salary.
- The first years until age 35 are multiplied by 0.5.
- The years between 35 and 45 count fully (Ă—1).
- The years between 45 and 55 count extra heavily (Ă—1.5).
- The years of service from 55 count double (Ă—2).
How does the calculation of weighted years of service, salary, and the correction factor work in the subdistrict court formula?
In addition to the transition payment, there is also the subdistrict court formula, mainly used before the current regulation. This formula used three variables: years of service (A), salary (B), and a correction factor (C). How does this work exactly?- A: Weighted years of service Not every year of service carries the same weight. This depends on the age during those years:
- For each year of service up to age 35: counts as half a month's salary.
- For each year of service between 35 and 45: counts as one month's salary.
- For each year of service between 45 and 55: counts as one and a half months' salary.
- For each year of service between 55 and 65: counts as two months' salary. For example, if you worked 10 years between the ages of 45 and 55, this yields 15 'weighted' years of service (10 Ă— 1.5).
- B: Salary The salary used includes the gross monthly salary and fixed components such as a thirteenth month or structural supplements. Variable remuneration such as commissions and bonuses only count if they are structural and an average amount can be calculated. Holiday allowance usually counts, but expense allowances and pension contributions do not.
- C: Correction factor The correction factor (C) was usually 1, but could be adjusted depending on the situation. For example:
- C < 1: in cases of negligence or wrongful conduct by the employee.
- C > 1: in cases of particularly serious conduct by the employer, or if the financial consequences for the employee are significant. Factor C could further be influenced if the employee had found other work, if training had been followed at the employer's expense, or by the financial position of the company.
The old subdistrict court formula: how did the calculation work until 1 July 2015?
Before 1 July 2015, the so-called subdistrict court formula was often used to determine the dismissal compensation upon dismissal. This method differs considerably from the current transition payment. This is how the subdistrict court formula worked:- The compensation was calculated based on three factors: the number of (weighted) years of service (A), the gross monthly salary (B), and a correction factor (C).
- The formula: A Ă— B Ă— C = dismissal compensation.
Explanation of the factors
- A – Weighted years of service: Not every year of service counted equally. Years of service before the 35th birthday counted for 0.5, between 35 and 45 for 1, between 45 and 55 for 1.5, and from 55 even for 2. This meant older employees received higher compensation.
- B – Salary: The gross monthly salary was used, including fixed supplements such as a thirteenth month, holiday allowance, and structural bonuses. Variable components usually only counted if there was a fixed pattern, such as with structural overtime supplements.
- C – Correction factor: This factor was 1 by default but could be higher or lower, for example if the dismissal was attributable to the employer (then higher), or if the employee themselves was culpable (then lower). Only in exceptional cases could this factor exceed 2.
Practical example
An employee of 56 years with 23 years of service could therefore receive considerably more than a younger employee with the same number of years of service, because different years counted more heavily. A court also determined whether there were special circumstances to adjust the compensation. Please note: With temporary contracts without an interim termination clause, the number of remaining months until the end of the contract was often used as the compensation. After 1 July 2015, this formula was replaced by the current, more standardised calculation of the transition payment.What is the fair compensation?
The fair compensation is an additional compensation on top of the transition payment, which the court can award if the employer has acted in a seriously culpable manner. Examples include:
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Dismissal without a valid reason.
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Summary dismissal without an urgent reason.
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An employment dispute that was deliberately allowed to escalate by the employer.
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Not offering redeployment while this was possible.
👉 The amount of the fair compensation is not legally defined and varies per case. The court examines all circumstances of the case. This means that, among others, the following factors can play a role:
- The reason(s) for the dismissal.
- The degree of culpability of the employer, and possibly also of the employee.
- The consequences of the dismissal for the employee, such as loss of income or difficulty finding other work.
- The duration of the employment relationship.
- The effort and performance of the employee during the employment relationship.
- The financial situation of both the employer and the employee.
- The employee's opportunities to find work elsewhere.
- Any other compensations or benefits to which the employee is entitled.
Fair compensation after dismissal via UWV: is that possible?
Even with dismissal via the UWV, an employee can in some cases claim a fair compensation. However, this rarely occurs because the threshold for being awarded such compensation is very high. A fair compensation after a UWV procedure is only possible if the employer has acted in a seriously culpable manner. Think, for example, of situations where the employer:- Has not complied with the rules regarding the dismissal.
- Has seriously failed to treat the employee in a decent manner.
- Has deliberately built a dismissal file with incorrect information.
Fair compensation at the end of a contract by operation of law: is that possible?
Does an employment contract end automatically, for example because a temporary contract expires? Then the question sometimes arises whether the employee, in addition to the transition payment, can also be entitled to a fair compensation. In principle:- The employee can receive a transition payment if they have been employed for at least 24 months.
- A fair compensation is possible, but only if the employer has acted in a seriously culpable manner.
When can an employee choose a fair compensation instead of annulment of the dismissal?
If you have been dismissed, you can sometimes choose not to return to your old job, but instead request additional compensation from the court. This applies, for example, when:- The employment relationship was wrongfully terminated, but you do not want to or cannot return to your employer.
- You no longer have confidence in good cooperation after everything that has happened.
- You would rather receive financial compensation than re-enter employment with the same employer.
How do you apply for a fair compensation (and within what time limit)?
Do you think you are entitled to a fair compensation? Then you must take action yourself. You must submit a request to the subdistrict court. Please note: this must usually be done within two months of the end of your employment relationship. If you are too late, your right to this additional compensation lapses. Briefly summarised:- You apply for the fair compensation through a petition to the subdistrict court.
- This request must generally be submitted within 2 months of dismissal.
When can the subdistrict court increase or decrease the compensation?
The subdistrict court has the ability to adjust a compensation, depending on the seriousness of the employer's or employee's conduct. If the court finds that the employer has acted in a seriously culpable manner—think of gross negligence, violation of statutory obligations, or frustrating a proper improvement process—then the compensation for the employee can be increased as additional compensation. Conversely: if the employee has acted in a seriously culpable manner (for example through theft, fraud, or other reprehensible conduct), the court can decide not to award any compensation and even set a compensation payable to the employer. This 'penalty' for the employee can be at most equal to the salary for the notice period. Finally, the court can, if circumstances require it, decide to moderate the compensation. This occurs, for example, when punishing the employer or employee is not entirely appropriate, or when the consequences would otherwise be disproportionate. This ensures that the judgment on an appropriate compensation always remains tailored.How does a request for restoration of the employment relationship work?
Do you disagree with your dismissal after permission from the UWV? Then you can submit a request to the subdistrict court within two months of the end of your employment relationship to have the employment relationship restored. Note the following steps:- Submit the petition to the subdistrict court within two months of the termination of the employment contract.
- The court assesses whether the dismissal was justified and whether the employment relationship should be restored.
- If restoration is granted, you will be re-employed. In some cases, the court prefers to award an additional (fair) compensation instead of restoration.
How high can the fair compensation be?
In a combined dissolution ("cumulative ground"), the court may award an additional amount on top of the transition payment. This supplementary compensation can be a maximum of 50% of the transition payment. The exact amount depends on the circumstances, such as the seriousness of the employer's conduct and the consequences for the employee.How does the subdistrict court determine the amount of an additional compensation in a combined dissolution?
In a dissolution on multiple grounds (the so-called 'cumulative ground'), the subdistrict court can award additional compensation on top of the transition payment. This compensation can be a maximum of 50% of the transition payment, but the final amount varies per situation. The court looks at how "close to" or "far from" the individual dismissal ground the employer was:- If just barely one single dismissal ground was not met (for example dysfunction), the additional compensation tends to be on the low side.
- If the case was weaker on one specific ground, but convincing enough collectively, the compensation can be higher.
- The extent to which the employer fell short on the individual dismissal grounds.
- Whether there were relatively minor shortcomings, or rather more significant deficiencies.
Additional compensation for combined dismissal grounds
Sometimes an employer fails to demonstrate one strong dismissal ground, such as dysfunction alone or a disrupted employment relationship alone. In that case, the employer can request the dissolution of the employment contract based on a combination of multiple grounds, also known as the "cumulative ground" or "i-ground". When the court grants a dismissal in this manner, an additional compensation can be awarded – alongside the transition payment. This additional compensation is primarily intended as compensation for the fact that the file was actually not strong enough to dismiss you on one separate ground.How much is this additional compensation?
The court may award a maximum of 50% of the transition payment as additional compensation in a combined dissolution. The final amount depends on how significant the deficiencies in the file are:- Is the file almost complete, but just not sufficient for one ground? Then the additional compensation will generally be lower.
- Are there multiple weak grounds? Then the chance of a higher supplementary compensation is greater.
What does the "i-ground" mean in the dissolution of the employment contract?
Sometimes an employer fails to fully substantiate one hard dismissal ground—for example if the dysfunction file has some gaps or there is just no question of seriously culpable conduct. This is where the so-called "i-ground" (also called the cumulative ground) from article 7:669 comes into play. With the i-ground, the subdistrict court can combine various, partially present dismissal reasons. Think of a combination of dysfunction, a disrupted employment relationship, and/or culpable conduct that individually may not be weighty enough, but together still lead to sufficient substantiation of dismissal. Briefly summarised:- The i-ground gives the court room to allow dismissal based on a combination of multiple "light" grounds.
- This gives employers a better chance of success in court if the file falls short on one point, but the sum of circumstances is serious enough.
- Keep in mind: in the case of a dissolution on the i-ground, the transition payment can be increased with an additional compensation of a maximum of 50%, because the legislator considers dismissal on this ground as less weighty than on a fully "matured" dismissal ground.
Examples from practice
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Example 1: An employee was dismissed for dysfunction without a improvement process. The court awarded a fair compensation of €15,000 in addition to the transition payment.
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Example 2: An employee was offered a settlement agreement but engaged a lawyer. The compensation was increased by 3 additional monthly salaries.
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Example 3: During a reorganisation, an employee received the statutory transition payment plus an additional compensation from the social plan.
Checklist for compensation upon dismissal
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đź“‘ Check whether you are entitled to a transition payment.
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đź’¶ Check whether the calculation is correct (including supplements and bonuses).
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⚖️ Check whether there is seriously culpable conduct by the employer → possible right to fair compensation.
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đź“ť With a settlement agreement: negotiate extras on top of the transition payment.
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đź“ž Always have the calculation checked by an employment law lawyer.
- Is your employment contract terminated through dissolution proceedings before the court? Then the transition payment is due if the court proceeds with dissolution. The subdistrict court can make an explicit ruling on the compensation in the decision — convenient, as this is immediately enforceable.
- Has the court not ruled on the transition payment, or is the amount in your view incorrectly calculated (for example due to an incorrect salary or length of service), then you can submit a request within three months of the end of the employment relationship to have the correct amount determined.
- The employer can ask the court to determine that you are not entitled to the transition payment due to seriously culpable conduct on your part.
Common mistakes
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Thinking that temporary contracts do not entitle you to compensation.
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Relying on the employer's calculation.
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Not investigating whether fair compensation is possible.
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Signing a settlement agreement without requesting additional compensation.
Frequently asked questions (FAQ)
1. Do I always receive a transition payment upon dismissal?
Yes, except in cases of voluntary resignation or summary dismissal (unless the employer acted in a seriously culpable manner).
2. How high is the fair compensation?
This is determined by the court on a case-by-case basis. It can range from a few thousand euros to amounts that are much higher.
3. Can I also receive a fair compensation with a settlement agreement?
No, a fair compensation is only awarded by the court. However, in a settlement agreement you can often negotiate more than the transition payment.
4. Are bonuses and supplements included in the calculation?
Yes, structural bonuses and fixed supplements are included.
5. Must my employer always pay the transition payment immediately?
Yes, no later than one month after the end of the employment relationship.
Why Arslan Advocaten?
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Specialised in dismissal compensation and negotiations
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Check the calculation of the transition payment
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Litigate for the award of a fair compensation in cases of culpable conduct
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Negotiate in settlement agreements for higher compensation
Conclusion
The transition payment is a basic right upon dismissal, but often more is possible. If the employer has acted in a seriously culpable manner or if you negotiate well in a settlement agreement, the final compensation can be considerably higher. Therefore, always have your situation assessed by an employment law lawyer.