In many cases, you are entitled to a transition payment upon dismissal. In some cases, a higher severance payment may be agreed on top of this, for example in a settlement agreement. The difference between these payments is significant, and the financial consequences for you as an employee can be substantial.
In this article, we explain how the transition payment works, when you are entitled to a higher payment, and how to get the most out of your dismissal.
What is the transition payment?
The transition payment is the statutory severance payment that an employer is obliged to pay upon:
Dismissal via the UWV (Employee Insurance Agency) or subdistrict court.
Dismissal via a settlement agreement.
Non-renewal of a fixed-term contract.
The payment is intended to facilitate the transition to another job.
How is the transition payment calculated?
The transition payment amounts to:
1/3 of the gross monthly salary per year of service.
For shorter periods, this is calculated on a pro rata basis.
Example calculation:
Salary: EUR 3,000 gross per month.
Length of service: 6 years and 4 months.
Transition payment = 6 x EUR 1,000 + (4/12 x EUR 1,000) = EUR 6,333 gross.
Please note: some collective labour agreements include more favourable arrangements.
When are you entitled to the transition payment?
When your employer terminates the contract.
When your fixed-term contract is not renewed.
When you and your employer conclude a settlement agreement.
You are not entitled to a transition payment if you resign voluntarily, except in special circumstances (for example, resignation due to seriously culpable conduct by the employer).
Higher severance payment: how does it work?
The transition payment is the minimum. In many cases, an employee can obtain more:
Through negotiations in a settlement agreement.
In the event of seriously culpable conduct by the employer (equitable compensation).
Through a social plan in the case of reorganisation.
Examples from practice
Example 1: An employee received the statutory transition payment upon dismissal due to reorganisation. After negotiations through his lawyer, he received 3 additional months' salary.
Example 2: An employee with a one-year fixed-term contract still received a transition payment of EUR 800. He was initially unaware of this entitlement.
Example 3: An employee received, in addition to the transition payment, an equitable compensation of EUR 25,000 upon dismissal due to seriously culpable conduct by the employer.
Checklist for transition payment and severance compensation
Check whether the transition payment has been correctly calculated.
Review whether the collective labour agreement includes a more favourable arrangement.
Negotiate for additional severance compensation in a settlement agreement.
Consider proceedings for equitable compensation in the event of seriously culpable conduct by the employer.
Have the calculation reviewed by an employment law attorney.
Common mistakes
Assuming that fixed-term contracts do not entitle you to a transition payment.
Signing a settlement agreement without requesting additional compensation.
Failing to consider the consequences for pension or unemployment benefits.
Relying on the employer's calculation without verification.
Frequently asked questions (FAQ)
1. Am I always entitled to a transition payment?
In the case of dismissal or non-renewal, usually yes, except when you resign voluntarily.
2. How much is my transition payment?
1/3 of the monthly salary per year of service, calculated on a pro rata basis for shorter periods.
3. Can I receive more than the transition payment?
Yes, through negotiations or in the event of seriously culpable conduct by the employer.
4. Does my employer pay my legal fees?
Yes, a contribution towards legal fees is often included in the settlement agreement.
5. Do I also receive a transition payment when my fixed-term contract expires?
Yes, this has been a statutory obligation since 2020.
Why Arslan Advocaten?
Specialised in dismissal and severance compensation
We verify the calculation of your transition payment
We negotiate for higher compensation through settlement agreements
We regularly achieve additional compensation in proceedings
Conclusion
The transition payment is an important basic entitlement upon dismissal, but often there is more to be obtained. With effective negotiations or legal proceedings, the compensation can be significantly higher. Therefore, always have your situation assessed before signing an agreement.