The transition payment is a financial compensation to which employees are entitled upon dismissal. The purpose of this compensation is to support employees in the transition to a new job. The transition payment is a statutory right that has existed since 1 July 2015. Employers are obliged to pay this compensation when they terminate the employment, unless exceptions apply.
When am I entitled to a transition payment?
You are entitled to a transition payment if you are employed and your employer terminates the employment. This may arise in various situations, such as:
- Termination of a temporary contract: Your employer does not renew your contract.
- Dismissal with UWV approval: Your employer terminates your contract with permission from the UWV (Employee Insurance Agency).
- Dissolution by the subdistrict court judge: Your employer asks the subdistrict court judge to dissolve your employment contract.
- Termination during the probationary period: Your employer terminates your contract during the probationary period.
Even when you resign yourself due to seriously culpable acts or omissions by the employer, such as sexual harassment or discrimination, you may be entitled to a transition payment.
When is there no entitlement to a transition payment?
There are situations in which the employer does not have to pay a transition payment, such as:
- In the case of summary dismissal: If the employee is guilty of seriously culpable conduct, for example theft.
- Closure of a business due to bankruptcy: If the employer is bankrupt or in debt restructuring.
- If an equivalent arrangement is included in the collective labour agreement: In some collective labour agreements, an alternative arrangement is included, such as a waiting pay scheme.
- Termination at the state pension age: Employees who have reached their state pension age are not entitled to a transition payment.
How is the transition payment calculated?
The amount of the transition payment depends on the number of years of service and the gross monthly salary. The basic formula is as follows:
- 1/3 of the gross monthly salary per full year of service.
- For each month that you have not worked in full, you receive 1/36 of the gross monthly salary.
What counts towards the gross monthly salary?
The gross monthly salary is the amount shown on your payslip before tax deductions. The following elements are included in the calculation of the transition payment:
- Gross base salary.
- Holiday pay (usually 8% of the gross annual salary).
- Structural bonuses and allowances such as shift allowances or overtime compensation.
Example calculation of the transition payment
Suppose you earn EUR 3,000 gross per month including holiday pay and you have been employed for 3.5 years. Your transition payment is then:
- For the first 3 full years of service: 3 x 1/3 x EUR 3,000 = EUR 3,000.
- For the remaining 6 months: 6 x 1/36 x EUR 3,000 = EUR 500.
- Total transition payment: EUR 3,000 + EUR 500 = EUR 3,500.
Transition payment in the case of partial dismissal
Sometimes an employee is dismissed and immediately offered a new employment contract with fewer hours. This can happen, for example, if there is less work or if the employee becomes partially incapacitated for work. In that case, the employee may be entitled to a partial transition payment. The condition for this is that the number of hours must be reduced by at least 20%.
The calculation of the compensation is then based on the reduction in hours.
What to do if the employer does not pay?
If your employer does not pay the transition payment within the statutory period of one month after the end of the employment, you can take the following steps:
- Send a written demand requesting payment of the transition payment within 7 days.
- Go to the subdistrict court judge: If the employer does not respond, you can go to the subdistrict court judge within 3 months after the end of your employment.
Possibility of payment in instalments
In some cases, the employer may request to pay the transition payment in instalments. This is possible if immediate payment would jeopardise the continuity of the business. However, the employer must pay the entire compensation within six months after termination of the employment.
Compensation in addition to the transition payment
In addition to the transition payment, there are other forms of compensation to which you may be entitled, such as:
- Notification compensation: If the employer is late in indicating whether a temporary contract will be renewed.
- Fair compensation: If the employer has acted in a seriously culpable manner.
- Fixed compensation: In the event of non-compliance with the notice period by the employer or employee.
Conclusion
The transition payment is an important right for employees upon dismissal and can contribute to a smoother transition to other work. It is important that you are well informed about your rights and obligations regarding the transition payment. If in doubt or if you have questions, you can always contact a specialised employment law lawyer at Arslan Advocaten.
Seek assistance from Arslan Advocaten
Do you have questions about your transition payment or is your employer not paying on time? The lawyers at Arslan Advocaten are ready to provide you with legal assistance. Contact us for a free consultation.